Transnet gets the go ahead for rail development

Transnet is moving ahead with the construction of an additional rail tunnel running parallel to its existing Overvaal tunnel taking coal from Ermelo to the Port of Richards Bay. 

The infrastructural expansion is expected to unlock South Africa’s coal exporting capacity despite a predicted decline in coal exports for 2019.

Once complete, the new tunnel will boost capacity from 81Mt to 132Mt.

The freight and rail parastatal has said that the tunnel will “mitigate the operational risk created by the existing single line tunnel, thereby protecting Transnet’s revenue”.

However, Richards Bay coal terminal has confirmed that last year’s bulk coal tonnage of 77Mt was a record and that it is yet to maximise output on the existing tunnel.

The viability of such a venture is further drawn into question considering that government’s Integrated Resource Plan has highlighted a move away from coal, and that financial institutions such as Nedbank have withdrawn from all coal-related ventures in an effort to contribute to a “clean energy future”, a spokesperson for the bank said.

But Transnet Freight Rail’s coal GM, Mandisa Mondi, said their “investment plan is geared to give confidence to the industry that we are hungry for more tonnes to move in”.

Meanwhile the coal export price is up 17.7%, production grew by a meagre 0.21%, and the cargo export size decreased 1.3%.

This raises concern over whether the tunnel project will become a liability to South Africa’s economy, coming as it does at a time when the parastatal is trying to recover from years of gross malfeasance.

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