Coal Rail Dynamics Supportive Of Forecasts

BMI View:  Rail infrastructure remains our favoured segment within South Africa's infrastructure sector, owing to continued demand for increased capacity to transport minerals. With underutilised port capacity and demand set to grow from the country's power sector, coal rail projects in particular offer the most supportive demand dynamics. 

The issuance of tenders for the prefeasibility studies of upgrading the rail link between the coal-mining town of Lephalale, in the Waterberg area of Limpopo, and the key coal-logistics junction at Ermelo, in Mpumalanga, is in line with our view of the rail sector in South Africa to be the outperforming infrastructure segment.

South Africa has failed to maximise its potential coal exports during recent years of commodity prices booming due to logistical bottlenecks preventing the 91mtpa capacity of the Richards Bay Coal Terminal (RBCT) being fully utilised.  Transnet is undertaking a ZAR200bn (USD18bn) overhaul and upgrade of its rail logistics operations, including adding an additional 700km of rail network. The cost of the new line linking the Waterberg mining area to Ermelo, which already connects to the RBCT, including wagons, rolling stock and other necessary infrastructure, is estimated to stand at around ZAR37bn (USD4.6bn).

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This article is tagged to:
Sector: Mining, Infrastructure, Freight Transport
Geography: South Africa

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