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SA, Swaziland to build R17bn rail line

Jan 12 2012 12:57 Reuters

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Johannesburg - South African logistics group Transnet and Swaziland Railways have agreed to build a new rail line via Swaziland that would ease congestion on a main coal export line and boost trade in the region, the companies said on Thursday. 

The total project, estimated to cost up to R17bn, includes the construction of a new 146 km rail line from Lothair in South Africa to Sidvokodvo in Swaziland, and upgrades to existing infrastructure linking the new line with ports in South Africa and Mozambique. 

Coal producers in South Africa including Anglo American [JSE:AGL], BHP Billiton [JSE:BIL], Exxaro Resources [JSE:EXX], Optimum Coal and Xstrata have been eager to export more coal to meet rising demand from India and China but have been limited by bottlenecks on the lines leading to the port. 

Transnet has been investing heavily to upgrade its lines and rail cars, but export figures are still far below the expanded capacity at the Richards Bay Coal Terminal (RBCT) of 91 million tonnes. 

The project could provide a major boost for Swaziland, Africa's last absolute monarchy which analysts said has been run for years almost as a personal fiefdom by King Mswati III and now teeters on the brink of financial collapse. 

South Africa has offered a bailout loan but Swaziland has refused, seeing attached conditions calling for political reforms as too stringent, government officials said. 

Coal exports from RBCT stood at 65.5 million tonnes in 2011. 

Transnet CEO Brian Molefe said with the Swazi line, which will take all general freight off the coal export line, and other upgrades he expects capacity to rise sharply. 

"That should take our capacity on the coal line beyond 91 million tonnes, closer to 100 million tonnes," he said. 

Construction of South Africa's first new rail line in several decades and upgrades will begin next year and are expected to be completed by 2016. 

A large portion of the costs, up to R12bn, would be covered by South Africa and the remainder by Swaziland. 

Gideon Mahlalela, chief executive of Swaziland Railways, said there would be funding available for the project despite the impoverished country's economic woes. 

"The banks are actually coming to us. We are not going to them. They say they have money available," he said. 

Transnet said a planned rail link to the Waterberg coal fields would be completed within the same period. Waterberg is expected to become the country's next coal hub as reserves in the Witbank area near depletion. 

The Waterberg line is expected to initially carry over 20 million tonnes, but could eventually handle up to 80 million tonnes of coal a year if there is sufficient demand.

 
transnet  |  rail  |  coal
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