South Dunes' proposed coal terminal at Richards Bay, 200km north of the Indian Ocean port of Durban, would be incorporated into the existing facility operated by Richards Bay Coal, raising its capacity to around 72 million tonnes a year. The additional coal handling facilities are expected to be commissioned at the end of 2003.

Richards Bay managing director Dave Murray said the inclusion of the South Dunes coal terminal was a cost effective strategy to increase South African coal exports.

"In the face of a more competitive international coal market, and pressure on production and transport costs, the South African coal industry's determination to maintain its competitive position proved to be the major motivation for this strategy," Murray said.

The agreement also represents a significant black empowerment initiative, the companies said.

Two key shareholders - Anglo Coal and Billiton's Ingwe Coal - have agreed to forego their participation rights in the project. Richards Bay Coal is 26% owned by Anglo American and 40% owned by Billiton.