South Africa’s Transnet has signed a ZAR10B (US$683M) 10-year take-or-pay contract with Ledjadja Coal to transport 3.6 Mtpa of coal from the Waterberg Basin in Limpopo Province to Richards Bay, showing that the Waterberg is finally being opened up.
The coal will be supplied by the Boikarabelo mine and shipped out of Richards Bay Terminal Grindrod from June 2022, providing a huge boost for the terminal as it seeks to expand its operations over the next few years.
Ledjadja is owned by ResGen, which is dual listed in South Africa and Australia and is developing Boikarabelo in conjunction with its black empowerment partner Fairy Wing Trading 136.
Boikarabelo is one of 10 planned mines in the Waterberg that Pretoria hopes will be developed to compensate for falling coal production in Mpumalanga Province, the traditional heartland of the South African coal industry.
Transnet has agreed to increase the coal-carrying capacity of the existing railway between Lephalale in the Waterberg and Richards Bay in phases as new mines are developed. About half of the rail route to Richards Bay comprises the existing coal line from Ermelo to the port.
Leapeetswe Molotsane, interim CEO of ResGen, said: “The signing of the deal is an important effort in opening up the Waterberg region, in line with South Africa’s strategic imperatives embedded in SIP 1 [strategic infrastructure project].
“Boikarabelo is a genuine public-private partnership with key South African stakeholders such as Transnet. Securing rail capacity with Transnet is such a huge milestone for the company as it results in multiple economic benefits for Lephalale and surrounding areas.”
Phase 1 of the line’s development, including the provision of a 1.8 km passing loop at Matlabas, has already been completed, allowing 100 wagon trains to pass each other.
Two more passing loops are planned to allow more frequent coal services. ResGen signed a series of non-binding financing agreements for the project in early December, suggesting that financing was dependent on a deal being agreed with Transnet.
Mike Fanucchi, chief customer officer at Transnet, said: “This contract will enable Transnet to fulfil its mandate of lowering the cost of doing business in South Africa. This contract will stimulate an appetite of coal miners in and across the Botswana border.”