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Coal transportation infrastructure in South Africa

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World Coal,

Coal-carrying infrastructure projects in South Africa will benefit from rising coal-for-export production, according to a new report from Business Monitor International (BMI), making them among the most viable infrastructure developments in the country.

As part of a US$18 billion upgrade of its coal logistics operations, rail operator, Transnet, is adding an additional 700 km of railway – including a new line linking the Waterberg mining area to Ermerlo in Mpumalanga, which connects to the Richards Bay Coal Terminal (RBCT). The cost of this link is estimated to stand at around US$ 4.6 billion.

“Overall we have been cautious on Transnet's ambitious capital expenditure plans on account of their sheer cost in an environment of weakening commodity prices, a sluggish growth story in South Africa and the weak rand making raising capital particularly expensive,” BMI said.

“However, those projects geared towards the transportation of coal, such as the proposed link between Lephalale and Ermelo, are in our view some of the most viable,” the research firm continued.

The planned upgrade to will see the current coal-carrying capacity increase from 4 million tpa to around 20 million tpa by 2018, with the potential to boost that to 80 million tpa in the future. It will come online as new mine developments in the Waterberg region reach production.

“BMI's Mining team is bullish on the prospects of South African coal production and, even though BMI's Power team are forecasting around 2.6% average yearly growth in coal-fired electricity generation between 2014 and 2023, which will eat into domestic supplies, we expect the tonnage of coal heading for export to increase markedly. As such increased domestic power demand and growing production are heavily supportive of the connection of Lephalale to the coal export corridor and the RBCT.”

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