Rail holds key to manganese export potential

SA manganese ore exports
haven’t taken the hard hit
that other export sectors
have during the global crisis,
according to Iain McIntosh,
trade and marketing director
of Mitsui OSK Line (MOL).
This has been supported
mainly by China’s continued
appetite for steel production
even during the tough times
of the past couple of years.
“Steel production
recovered globally from
late 2009 – and more so in
2010,” said his manganese
exports’ case study
commissioned by Dry
Cargo International. “China
still produced significant
increases even in 2009, so
SA exports of manganese
ore weathered the global
crisis quite well.
“It also looks set to
increase volumes further in
2010 and into the future.”
SA clearly has a big
advantage in the supply of
this mineral.
It is one of only a few
suppliers of this valuable ore
– and boasts some 80% of
global reserves.
“Demand over the period
2010-2015 looks likely to
provide significant volume
growth,” said McIntosh.
But there are challenges,
he added.
Like most bulk resource
in this country, its mining
sources are a considerable
distance from the
ports – with all the cost
disadvantages of long-haul
landside transport.
“It requires a good supply
chain to port to keep down
the free-on-board (FOB)
costs,” said McIntosh.
There are three main
producers – Samancor
(BHP), Assmang and United
Manganese of Kalahari.
The ore is mined in the
north-west of the country
in what has been named the
Kalahari Manganese Field
(KMF) – and despatched by
train from Hotazel through
either Port Elizabeth or
Durban as the shipment
points.
For local steel production
needs, some of the ore
is also moved by road to
Johannesburg.
Volumes are set to reach
over five-million tonnes this
year.
Whilst Durban moves
around one-million tonnes
(mt), with about 15%
containerised, the main
gateway for bulk exports
remains through the Port
Elizabeth manganese bulk
terminal – which, at about
1 100-kilometres, is closer to
the mining area.
“The efficiency of this
specific supply chain is
critical in terms of the
volume growth of this
product from SA,” McIntosh
said. “And the essential
driver for available tonnage
of exports is a good rail
system.”
The Transnet Freight Rail
(TFR) network supplies
capacity for 4.6-mt per
annum. The port of PE
handled 3.2-mt of bulk ore
during 2009 and is expected
to exceed 3.5-mt this year.
“So,” said McIntosh,
“there is room for further
growth in port volume given
the rail capacity available.
“However, that available
rail capacity begins to look
tight if you look at the
short-term demands for ore
exports.
“Mine capacity is
currently restricted to
around six to seven million
tonnes a year. But the
demand in the shorter term
is more in the region of
14-mt.”
A number of
developments are under
way to realise this potential,
McIntosh told FTW.
At the rail loading
end, a rapid load-out
station installed by
Bateman Engineered
Technologies (BET) is
just part of an overall plan
to improve efficiencies.
Aside from accurate load
distribution, the station has
a design capacity to load
2 000-tonnes per hour (t/h)
– and a 104-wagon train can
be turned in just over three
hours. But, said McIntosh,
in practice it has been found
that the station actually has
a capacity to load 7000-t/h.
Meantime, the PE
bulk terminal has had
an upgrade costing
the equivalent of over
R380.8-m in the last
18-months. It has a 251-
metre berth of 11.6-m
draught fed by two loaders
each with 400-600-t/h
capacity. Therefore, with
its 460 000-t stockpile
capacity, the terminal
can work Handy-sized
vessels of 35 000-
45 000-deadweight (DWT)
capacity – with an average
port stay of one and a half
to two days.
But, with its 14-metre
draught, the newly opened
port of Ngqura in the
Eastern Cape (27-kms
from PE) is also now being
favoured by Transnet as an
alternative.
The deeper draught would
allow larger vessels to be
handled, and there is also
berth capacity to handle
more than one vessel.
Ngqura should be ready
to take on bulk loading of
manganese ore by 2015.
“At the same time,” said
McIntosh, “a feasibility
study is under way on using
the Sishen-Saldanha iron ore
line (824-kms) and the west
coast bulk iron ore terminal
as an alternative.
“This route has the benefit
of much larger capacity
trains. But, given the huge
demands to increase iron
ore exports through this
gateway, the study may
find this option is not
straightforward.”
He also indicated that the
capital expenditure (Capex)
involved to develop all these
options was significant.
“It may have to involve a
private sector partnership –
which Transnet seems keen
to develop.”
With considerable growth
likely over the next few
years, the key to success
will ultimately be rail
network development to
feed an already solid port
gateway infrastructure.
“Upward potential for
export demand could reach
over 14-mt per annum by
2015,” said McIntosh, “given
the increased demand for
steel production in China,
Japan, Korea, and a recovery
in demand in Europe.”