Like other major coal exporting countries, South Africa has experienced supply chain bottlenecks with RBCT and Transnet Freight Rail at loggerheads over export volumes to be railed to the RBCT and tariffs.
Coal of Africa said the confrontation between the two groups would come to a head next year when the RBCT will be able to export at a rate of 91 million tonnes per annum from June.
However, TFR's commitment is to rail just 78Mtpa within five years. Current export levels are running at around 60Mtpa.
“We're going this route because it avoids a lot of the problems that the juniors are encountering trying to export through the RBCT,” said Coal of Africa managing director Simon Farrell.
“We're not far from a comprehensive agreement with TFR and other parties that will secure a long-term solution for our plans to export 10 million tonnes per year of coal from South Africa by 2012 at the latest."
The strategy is based on Farrell's background in Australia's mining industry where he said a more proactive approach to secure infrastructure and logistics is used to reach export markets.
The partnership will see Grindrod become the "anchor tenant" for Coal of Africa’s Matola export terminal in Maputo in Mozambique, through which it will initially export 1Mtpa.
In addition, Coal of Africa will export 900,000tpa of coal through the Dry Bulk Terminal at Richards Bay, using Grindrod's adjacent Kusasa handling facility.
Coal of Africa has negotiated rights to participate in up to 100% of any increased capacity at Matola and up to 50% of any increased capacity at Kusasa, in return for commitments to help fund the expansion of the terminals.
Having already achieved two breakthroughs in negotiations with TFR, Farrell is confident about achieving the company’s forecast export levels.
Coal of Africa has agreed on a 75% take or pay rail contract with TFR – agreeing to pay higher rail tariffs than those currently being paid by RBCT members.
Coal of Africa logistics executive Anand Moodliar justified the take or pay contract on the basis that the higher tariffs were still affordable given the rise in international coal prices.
Coal of Africa was trading at $A2.63 mid-morning today on the Australian Securities Exchange.
