BHP Signs $2.1 Billion Coal Deal With South Africa’s Transnet

Transnet SOC Ltd., South Africa’s state-owned ports and rail operator, signed a 10-year, 24 billion-rand ($2.1 billion) coal-haulage deal with miner BHP Billiton Ltd. to transport the fuel to the country’s ports.

“The agreement with BHP is a massive boost for certainty around Transnet’s capacity-expansion programs on the export-coal line,” Brian Molefe, the operator’s chief executive officer, said in a speech handed to reporters today in Kempton Park, east of Johannesburg. South Africa is part-way through a 312 billion-rand infrastructure-development program to improve its rail network and better the efficiency of raw-materials exports.

BHP, based in Melbourne, is the first major customer to commit to a long-term contract with Johannesburg-based Transnet, Molefe said. South Africa is the sixth-largest coal exporter globally, according to the World Coal Association, and the continent’s biggest miner of the fuel.

Transnet will haul 17 million metric tons to 18 million tons annually from BHP’s mines in the eastern Mpumalanga province to the Richards Bay Coal Terminal on the country’s northeastern coast, Jon Evans, assistant vice president of BHP Billiton Energy Coal South Africa, told reporters. RBCT is the world’s biggest such facility, according to its website.

All exporters using the terminal will sign individual 10-year contracts that apply from April 1 this year, Transnet said in an e-mailed statement.

Transnet Freight Rail, the company’s largest division, plans to haul 75 million tons of coal in the year ending March 2015, compared with 68.2 million tons the previous year. Coal accounted for 32 percent of TFR’s volume in the 12 months through March, according to the company’s annual report.

Transnet is confident that agreements with its remaining 28 coal customers will be signed by the end of November, Molefe said. Other miners include Baar, Switzerland-based Glencore Plc and Exxaro Resources Ltd. of South Africa.

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