Bots, SA coal transport war

SHARE   |   Monday, 10 August 2015   |   By Keitebe Kgosikebatho
Bots, SA coal transport war

There are fears  that Botswana's plan to develop the Trans-Kalahari Railway (TKR) could be sabotaged by South Africa following a decision by the latter to open a new heavy-haul railway that would create a new route via Swaziland for coal traffic and general freight to Richard's Bay and Maputo in Mozambique.

SA's state owned railway operator Transnet recently announced having completed a pre-feasibility study on the new route via Swaziland, which they said would enable  Botswana to export its vast coal reserves through the South African port of Richards Bay. Botswana Railway officials told The Patriot on Sunday on Tuesday that their South African counterparts had notified them about the pre-feasibility study and had at some point involved them. “Yes, we are aware of the study as Transnet’s partners as far as railway business is concerned this side of the border,” said Stephen Makuke, Botswana Railways Director of Business Development.

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According to Makuke, although they too have vested interest in transporting coal exports from all points in the country where it is available, the new corridor that Transnet is proposing is not part of their plan. He said Botswana's primary objective currently is to develop the TKR and market it as the ultimate heavy-haul railway to serve the SADC region.

Botswana is sitting on massive and as yet largely-untapped coal deposits. Extractable reserves at Mmamabula near Mahalapye, in the area which would be served by the new Transnet railway, are estimated at 1.5 billion tonnes. The large volumes, according to Makuke, provide a reason for TKR to remain a viable project even if a second player comes into the picture. Plans by Transnet for the link from the existing Transnet Freight Rail (TFR) railhead at Lephalale to the coalfields in southeastern Botswana, according to Makuke, will provide a healthy competition. “But then again it will depend on which one of the lines gets completed first,” he said.

A Bilateral agreement between Botswana and Namibia signed in March 2014 will see Namport develop a coal terminal at SADC Gateway Terminal and award a concession to a developer. An estimated 65 Million Tonnes of Botswana coal will be exported through the new Coal Terminal per annum upon completion. The biggest importers of coal will be China and India. Construction will take five to seven years, with commissioning by 2019 to 2021. TKR capital expenditure is around US$ 11 billion plus another US$ 30 billion in operational costs over 30 years.

Botswana Railways Corporate Communications Manager Kebabonye Morewagae indicated that the TKR was still a project at its infancy level and hence still at national level and under the Ministry of Minerals, Energy and Water Resources (MMEWR). “BR cannot at this particular stage shed light on the developments as the project is handled by MMEWR,” he said.

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Botswana Railways Chief Executive Officer Dominic Ntwaagae shared Makuke's sentiments, saying although it might be seen by some that the construction of the heavy-haul line would directly sabotage Botswana’s plans to position the TKR as the ultimate to-go-to heavy haul line in the region, they at BR did not see it that way. “I honestly think it is a purely business move,” he said.
The proposed project by Transnet would require the construction of a 3-4 km bridge across the Limpopo river.

Transnet says the link would stimulate the economies of Botswana and South Africa's Limpopo province, estimating that up to 100 million tonnes of coal per year could potentially cross the border by rail. The line would ultimately be part of a new 560km heavy-haul railway linking Botswana and South Africa's Waterberg coalfield with Lothair, near Ermelo, where it would meet the planned 146km Swazilink line. This would create a new route via Swaziland for coal traffic and general freight to both Richard's Bay and Maputo in Mozambique.

Meanwhile Makuke says they are handling the issue with an open mind and are looking at the bigger picture. According to Makuke, should Transnet succeed, their line would still serve Botswana better as it will assist in minimising traffic in local railways. Makuke said their plans as far as coal transportation is concerned were aimed at using the TKR, which is expected to be aligned to the upcoming Kazungula bridge joining up to either Walvis Bay dry port or Mozambique.

Australian based Trans Kalahari railway line consultants, Aurecon, have handed over to Botswana Government, a preliminary assessment of the viability and modalities surrounding the development of the rail line late last year. The report titled ‘Trans-Kalahari Railway Preliminary financial and commercial assessment’ was prepared by Tom Frost and Ben Ellis dated 11 December 2014 and preceded a final assessment report presented in January this year.

Among their findings the consultants noted that the railway line is expected to unlock the monetisation of Botswana’s coal resources, which are seen as a way to augment the depleting diamond resources that have been the mainstay of the country’s economy. Aurecon has given the resultant capital expenditure costs at a total of USD14.2 billion, comprising USD8.6 billion for electrified rail, and USD1.9 billion for above rail, and USD3.6 billion for the port. The “Pre-Feasibility Study of the TKR Report” prepared by Canadian firm, CPCS in 2011, contained capital and operating costs estimates for the rail and port but the new assessment by Aurecon is said to be 90 percent different due to several considerations.

A BR official, who did not want to be named, however highlighted that had coal mining been as vibrant and productive as it is expected to be then Botswana would be assured that TKR would not face stiff competition from any player. “Coal mine license holders are currently sitting on them and very little mining activity can be seen. I think the ball is in our government’s court to make sure that massive coal mining takes place to ensure optimal utilisation of the TKR,” he said.