Transnet Sees Manganese Railroad Study Completed by February

Transnet SOC Ltd., South Africa’s state-run port and rail utility, plans to complete a feasibility study on expanding a manganese rail line to its deepwater Ngqura export harbor in Eastern Cape Province by February.

Transnet is seeking to expand capacity on its line to the city of Port Elizabeth, which passes Ngqura, to 12 million metric tons a year from 7 million tons now, Siyabonga Gama, head of the company’s freight-rail business, told reporters at the Tshipi mine in Northern Cape province today. Transnet may boost the figure to as much as 22 million tons after 2017, he said.

Manganese producers including African Rainbow Minerals Ltd. and BHP Billiton Plc’s 60 percent-held Samancor Manganese that are seeking access to a line used to transport iron ore from the mining center of Sishen in the Northern Cape to the West Coast harbor of Saldanha won’t be able to use the railroad, Gama said.

“We need a single channel to run iron ore, and a different channel to run manganese,” he said, adding that Saldanha will remain an iron port.

South African manganese producers are facing rail and port infrastructure constraints. Transnet is able to transport about 4.8 million tons a year by rail for export from Port Elizabeth and 1 million tons through Durban, Africa’s busiest port. About 1 million tons are trucked to Richards Bay harbor, Gama said.

Rail, Port Constraints

Producers including Kalahari Resources and Tshipi e Ntle Manganese Mining Ltd. in the Kalahari basin, the richest deposit in the world, need to wait for rail slots before shipments can begin, Gama said. That may be in March 2013, when current rail contracts expire. Kalahari Resources and Tshipi are pre-qualified for rail allocation “for long-term purposes,” Gama said. “They are not allocated any capacity at the moment.”

Output will depend on capacity to transport ore, Tshipi Chairman Saki Macozoma said at the mine. Tshipi forecast annual output of 2.4 million tons from the first half of 2012 on its website.

“We won’t extract more than we can sell,” he said. The company is in talks with Transnet over an “interim solution” before rail capacity is available in 2013, Macozoma said, adding that Tshipi is not interested in transporting ore by road.

The company will also rely on diesel generators as Eskom Holdings SOC will only provide power from 2013, he said.

The state-run electricity company is struggling with power shortages after the government delayed expansion plans. South Africa is seeking alternatives to coal-fired power stations after blackouts closed mines in the country in early 2008.

Transnet, which is funding the feasibility study, said it is “open-minded” about companies joining the project and is having “very detailed” discussions with potential partners. It’s too early to talk about the expansion’s costs, Gama said.

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