Transnet has completed a feasibility study on shifting the manganese rail line to Ngqura and is satisfied it will be cost- effective, Socikwa said in an interview on the sidelines of a conference in Cape Town.

Upgrading the line, which runs from Hotazel in the Northern Cape province to Ngqura, may cost 4.5 times more per metric ton than if the iron-ore line to Saldanha on the west coast were expanded to include manganese, Heidi Sternberg, an analyst at Standard Bank Group Ltd.’s SBG Securities unit, said in an April 20 research note. Transnet’s calculations show the cost to be lower, Socikwa said.

“The notion of significantly higher costs is not the information that we have,” Socikwa said. “We’re currently running manganese out of Port Elizabeth and Ngqura is close by, so there won’t be much difference.”

Mining companies have sought increased port and rail capacity as they invest to boost output of manganese, used to harden steel. Producers currently export from the Eastern Cape province capital of Port Elizabeth, where Transnet will close its manganese terminal, and through the south eastern ports of Durban and Richards Bay. Ngqura is 20 kilometers (12 miles) northeast of Port Elizabeth.

Assmang Ltd., a unit of Johannesburg-based African Rainbow Minerals Ltd., and Samancor Manganese, owned by Melbourne-based BHP Billiton Ltd., as well as Anglo American Plc, are the three main producers of manganese in South Africa’s Kalahari Basin region, which has about 80 percent of the world’s known reserves.

Transnet also plans to increase capacity of the Saldanha iron ore terminal to 82 million metric tons by 2018-19, from 60 million tons, at a cost of 5.8 billion rand ($688 million), Socikwa said.

 

 

Source: http://www.moneyweb.co.za