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Transport capacity deters Indian investors in SAfrica coal industry

The lack of capacity at national rail carrier Transnet is deterring Indians who are keen to invest in South Africa's coal industry, according to a leading law firm.

Manus Booysen, an investment partner at law firm Webber Wentzel Bowens, told reporters here after returning from a week-long trip to New Delhi that exporting huge amounts of coal to India was being hampered by Transnet’s insistence that coal mining companies finance the expansion of railway line linking to ports.

"South Africa can significantly increase its coal exports to India if Transnet were to increase the capacity of the railway line to fully use the Richards Bay coal terminal's capacity of 91 million tonnes (MT) per year," the weekly 'Sunday Times' quoted Booysen as saying.

Booysens said this delay by Transnet had led to Indian companies reconsidering investment in South Africa.

Booysens said there was about 20 MT of capacity at the port which Transnet could not convey from the main coal belt of Witbank.

Transnet reportedly wants to reserve for emerging black empowerment miners a portion of the line while expecting existing coal mining companies to fund the entire project.

An analyst, who requested anonymity told the weekly that there had been many discussions about Indian investment in South African coal mining for many years, but nothing had materialised.

"For years now the (Indian investors) have been trying to enter the South African coal market, not simply as buyers of coal, but also to buy partnerships or whole mines," the analyst said.

"Their idea is that South Africa could be a cheap source of large coal tonnages for India. It didn't happen and might never happen," the analyst added.

He said India wanted low energy, high ash, coal, that might be cheaper than that India was currently importing from Indonesia, but South African mines were not amenable to moving high ash coal.

The analyst said it costs exactly the same to move the better quality coal as the lower grade product.

Source: PTI