Coal news and updates

Transnet scraps coal terminal after making up with BHP Billiton

Transnet SOC Ltd., South Africa’s state-owned ports and rail operator, has scrapped plans to build a new export facility near the Richards Bay Coal Terminal after resolving a dispute with RBCT’s largest shareholder, BHP Billiton Ltd.

In negotiations with BHP, the transport company won 4 million metric tons of extra capacity for smaller, black-owned mines at RBCT, the world’s biggest coal-export terminal, Transnet Chief Executive Officer Brian Molefe said in an interview. That doubles the allocation for junior miners in South Africa, which is pushing companies to increase black participation in the economy to make up for apartheid.

“We kissed and made up with BHP Billiton so we’re not building another terminal,” Molefe said.

Transnet had considered building another export terminal near Richards Bay, on South Africa’s northeast coast, to service black-owned mining companies because they were struggling to move coal through RBCT due to allocations favoring larger miners such as BHP, Anglo American Plc and Exxaro Resources Ltd. The companies own the terminal in the country that’s the continent’s biggest coal producer.

BHP signed a 10-year, 24 billion-rand ($2.2 billion) deal with Transnet last month to transport coal to ports. The operator is confident that agreements will be signed with 28 other miners, which include Glencore Plc, Anglo and Exxaro, by the end of November.
Profit Decline

Transnet’s first-half profit fell 25 percent to 2.14 billion rand after after finance costs rose and writedowns of older equipment more than doubled.

This is a “watershed” year for the company as it is investing about 16 billion rand in improving the country’s rail and port infrastructure, Molefe said. “We are not concerned because we are in a phase of the company where we are adding capital stock.”

Transnet plans to spend 312.2 billion rand in the seven years to 2019 to improve rail links and port capacity in South Africa, the continent’s second-biggest economy.

The company’s earnings before interest, taxes, depreciation and amortization climbed 6 percent to 12.8 billion rand while revenue advanced 6.4 percent to 30.3 billion rand, Transnet said in the statement.

Transnet forecasts a 9 percent advance in coal deliveries to 74.2 million tons in the year to March.

Source: Bloomberg