Fin24

Transnet: Eskom hungry for coal

2012-05-29 21:44

Parliament - Transnet will face increased demand for coal delivery from Eskom of up to 30 million tons by 2019 to supply its power plants, CEO Brian Molefe forecast on Tuesday.

"Indications are that the demand for the transportation of coal to Eskom's power stations will grow from seven million tons to 30 million tons by 2019," he said in a submission to Parliament's portfolio committee on economic development.

"The above opportunity has arisen out of Eskom's consumption for their power stations as well as Eskom's strategy to migrate coal traffic from road to rail."

Eskom's two new coal-fired plants Kusile and Medupi were expected to come online from late 2013. They are respectively the third and fourth biggest coal-fired plants in the world.

Transnet had consolidated its freight rail's coal business into a single unit serving the domestic and export markets, and its seven-year expansion programme would see export capacity ramped up to 97 million tons a year.

Molefe said the coal line upgrading required 110 dual voltage locomotives, of which 95 had been put into operation.

He said the logistics utility's R300bn expansion plan would also see its manganese handling capacity expanded to 16 million tons.

Plans to achieve this include doubling 232 kilometres of line between Kimberly and De Aar and building an expanded port terminal in the port of Ngqura, in a bid to grow South Africa's 20 percent market share in the metal.

Molefe maintained that Transnet would fund 70% of the programme to expand rail, port and pipeline infrastructure from its operating profits, and would manage to source the rest from capital markets.

He conceded however, in response to questions from MPs, that the ongoing European debt crisis could yet force the logistics utility to adjust its expectations.

"The R200bn will be funded from the reinvestment of our profits. The R87bn, or R86.5bn over a seven-year-period, will be funded in the markets."

In the current financial year, Transnet's borrowing requirements would be about R14.1bn.

This would escalate to R15.6bn the following year and peak at an unprecedented R20.5bn in 2015/16, Molefe said.

In that year, 20% of the money was expected to come from commercial paper, 34% from domestic bonds, 29% from development finance institutions, the export credit agencies and a general medium-term note (GMTN), and 17% from bank loans and other forms of finance.

"We have already established benchmarks in the euro market and the dollar market. If these sources of funding are not enough we will consider a second issuance of GMTNs, we will consider private placement or we can do fellow funding with export credit agencies," Molefe said.

"So we don't think there is a problem in the funding."

Molefe said by the seventh and final year of the infrastructure expansion drive Transnet would have a negative funding requirement, or positive cashflows of about R7.1bn.

He said the expansion programme would put 220 000 jobs into the economy, not well over half a million as reported.

"We will create employment for 588 000 people (but) I must qualify this."

The figure would include the current total of 368 000 jobs linked to Transnet's operations. This consists of 59 000 jobs within the company, 145 000 indirect jobs and 164 000 in the wider economy.

"At the moment our impact in the job market as Transnet is about 368 000 people... by 2016/17 at the height of the MDS (market demand strategy) the additional jobs that will be created are 220 000."

Molefe said Transnet hoped to create 15 000 direct jobs -- bringing its staff component up to 74 000 -- and to spend R7.6bn on training in the seven years spanning its expansion programme.

The programme's projects to be concluded by then include expanding port facilities in Durban, Richard's Bay, East London, Ngqura and Saldanha, completing a multi-product pipeline and maximising the iron-ore export corridor.

Comments
  • Dominic - 2012-05-29 23:15

    Apparently Richards Bay Coal Terminal export about 75M tons of coal PA. Surely this would suffice to satisfy current and future needs without looking for additional coal reserves in crucial wetlands throughout the country (given that over 50% of the countries wetlands are already transformed beyond rehabilitation)? When will the countries natural asset stop providing free goods and services, for which taxpayers will then have to pay for. Will the Chinese, who currently benefit, pay for those? What cost will the country pay then? How will they hold us over a barrel of a loaded gun when the coal reserves are depleted and we have no water? Will they even care? Short term gains do not always equal long term goals/gains. Food for thought...

      Dominic - 2012-05-29 23:19

      Furthermore, job provision in the green economy, in the same time scale, may even double what is projected here, at a far less cost to the environment. More food for thought...

      Dominic - 2012-05-29 23:48

      As a final comment, the biological offsets for the Durban and Richards Bay Harbour expansions may be far bigger than the financial gain, in particular if one were to interrogate the ecosystem goods and services these areas provide, and what tax payers would need to contribute to making this viable. Already, tax payers are needing to cough up because Govt did not realise in the early 1990's that providing electricity to the rural areas may be so expensive. How expensive will be digging out critically endangered habitat in 10 yrs time will be is anyones guess, but I am pretty sure the taxpayers will need to fork out for it!

      Koos - 2012-05-30 00:34

      Since when does these clowns care about anything or anyone except themselves. When there are money to be made they will be the first to destroy something to get to the $$$$.

      Carl Thobejane - 2012-05-30 05:14

      so are we suggesting that they should have not planned to supply electricity to rural areas, or are u suggesting alternatives for rural areas. i think we should at least come up with solutions.

      Koos - 2012-05-30 07:00

      The solution is quite simple. Nothing is for free, pay for what you use. No free water, no free electricity. I pay for my water so I make sure taps are closed on not leaking. Go to any place where people don't pay for water, the taps are either leaking or always open. The same goes for electricity. I turn all light off when I go to bed. Just look at the council buildings as a starter. Just the opposite. I stayed on a farm. We never had electricity. Then later on we could get electricity if you were prepared to pay for the laying of the cable. As we were using gas we stayed without Eskom power until the farm were given to our fellow countrymen to destroy.

  • Koos - 2012-05-30 00:37

    Transnet is also jumping on the Eskom bandwagon. I would suggest a coal transport tax to allow for the money end. A lot of the power stations have conveyorbelts running directly from the mine to the station. Those conveyors belong to the mine.

  • siliziwem - 2012-05-30 02:17

    lot of money heh...can i get R1 m only!

      Julie - 2012-05-30 06:19

      Funny how quiet Transnet stays 'schtum' about our pensions? Any word on that issue? Whenever the name TRANSNET is mentionin in the media, it is to tell how much they are going to spend millions - nay - billions on expansion, upgrading, etc., but nary a word on how they plan to improve the lives of the people who developed and built the rail system that became the backbone of our economy, and who now receive starvation pensions - some as little as R800 a month while the fatcats now in power receive millions in so-called 'performance bonuses' wihout ever having dirtied their hands by throwing a shovelful of coal in the grate of a lovomotive; greased a heel, handled a lathe or other workshop tool, compiled a train in adverse weather... but these people who did all tha are deliberately being starved to death for the fatcas to get their dirty hands on their pension money - the little there is... Shame on you, Peter Moyo, Brian Molefe and the rest of your ilk...

      siliziwem - 2012-05-30 08:27

      i feel for you Julie!

  • Rodney - 2012-05-30 08:13

    ALL this WAS in place only a few years ago but due to our new managers in the wrong places our roads are now f##ked up and they can not get to toll us for fixing the roads now they decide " Hey maybe and now we should go back to the old system ". Now we will have to rebuild all the rail lines and rail trucks that were stolen.

  • Rodney - 2012-05-30 08:13

    ALL this WAS in place only a few years ago but due to our new managers in the wrong places our roads are now f##ked up and they can not get to toll us for fixing the roads now they decide " Hey maybe and now we should go back to the old system ". Now we will have to rebuild all the rail lines and rail trucks that were stolen.

  • John - 2012-05-30 11:16

    "Eskom's two new coal-fired plants Kusile and Medupi...are respectively the third and fourth biggest coal-fired plants in the world." yet our government continues to screw consumers with several "green taxes". Clearly these taxes are a money-making racket!!

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