South Africa and Swaziland signed a memorandum of understanding (MoU) on Thursday reaffirming their support of a new R17-billion, 146 km cross-border rail connection from Lothair, in Mpumalanga, to Sidvokodvo, in Swaziland.

The link would divert general freight from the existing heavy-haul corridor from Ermelo to the Port of Richards Bay, in KwaZulu-Natal, enabling Transnet to raise the yearly capacity of the coal line to over 90-million tons.

The privately owned Richards Bay Coal Terminal (RBCT) had a current nameplate capacity of 91-million tons, while the railway line had a theoretical capacity of less than 80-million tons.

During its 2011/12 financial year, Transnet Freight Rail (TFR) moved 67.7-million tons along the line to the RBCT, an 8.8% increase on the 62.2-million tons achieved in the prior year. During the current financial year the utility aimed to haul between 75-million tons and 77-million tons along the export corridor.

Under a larger R200-billion rail investment plan – itself the largest portion of the State-owned company’s R300-billion, seven-year market demand strategy to 2019 – Transnet intended to increase the capacity of the coal channel to Richards Bay by 44% to 98-million tons.

It also planned to increase its general freight flows by 113%, from 80-million tons to 170-million tons, over the same period and bolster the volumes of domestic coal moved by rail by more than 300%, from around 7-million tons to nearly 30-million tons.

The proposed rail link through Swaziland, which would be the first large-scale rail investment in Southern Africa since the construction of the Richards Bay line in 1976, could create additional general-freight capacity of 15-million tons.

Public Enterprises Minister Malusi Gigaba, who signed the MoU on behalf of South Africa, described the project as a forerunner for Transnet’s expansion plans into the Waterberg coalfields, which is considered South Africa’s next coal-mining frontier.

TFR was planning a phased opening of the Waterberg, with the first phase likely to facilitate the movement of 23-million tons and later phases raising overall capacity to as much as 80-million tons. But the immediate priority was to reduce congestion at Ermelo by diverting general freight through Swaziland.

Swaziland Public Works and Transport Minister Ntuthuko Dlamini said the connection, or ‘western link’, would reduce the cost of transport for the region and facilitate the competitive “export of goods to overseas markets”.

The two countries again committed to support project fundraising efforts, with Transnet expected to contribute about R12-billion and Swazi Rail about R5-billion. Questions, however, have been raised about whether Swaziland, which has serious fiscal constraints, will be in a position to meet its financial commitments to the venture.

Gigaba said the first phase would be a single line with crossing loops spaced approximately 40 km apart. The greater project, which consisted of four distinct areas, spanning three countries, would cost approximately R17-billion, excluding rolling stock, contingencies, escalations and engineering, procurement and construction management costs.

He added that the project was core to delivering the so-called strategic integrated project 1, or Sip 1 project, unlocking the northern mineral belt of the Limpopo province. The Presidential Infrastructure Coordinating Commission was overseeing the Sip 1 initiative.

In addition, it was aligned to the larger North-South Corridor proposal to link the regional economies of Southern Africa and further complement the existing coal feeder system and other bulk mineral corridors.

“We will now have improved access to Eastern seaboard ports as well as improved access to the Southern African logistics network and markets. And what is really exciting is that we will now have access to the North-South Corridor, which includes countries like Zimbabwe, Zambia, the Democratic Republic of Congo and Tanzania.”