Primary Energy Division TO RAIL MIGRATION. 14 October Transport Forum

Transcription

1 Primary Energy Division COAL HAULAGE: ROAD TO RAIL MIGRATION 14 October 2010 Transport Forum

2 COAL LOGISTICS STRATEGY DEVELOPED TO ENSURE SECURITY OF SUPPLY & TO IMPROVE THE COST & SAFETY OF PED S COAL LOGISTICS Objectives of the PED logistics strategy Security of supply + Put the appropriate and relevant logistics solutions into place to ensure that power stations are supplied with coal from the targeted sources Where possible, build in the ability to switch modes of transport/or sources of supply in the event of supply problems Cost optimisation + Ensure that the transport of coal is done in the most cost optimal manner i.e., conveyor or rail Limit road transport due to high cost, and unacceptable safety / social impact and risk. Minimise additional cost of road repairs Safety and social responsibility Ensure that all coal logistics are done in a safe and socially responsible manner Minimise adverse environmental impact of coal transport Involve BEE participants, where possible Where possible, accelerate reduction in trucking 2

3 NECCESSITY OF THE RAIL MIGRATION STRATEGY 2010/10/28 3

4 LONG TERM COAL SUPPLY STRATEGY WAS APPROVED BY BOARD IN DECEMBER Pursue long term contracts with mines Minimize long term transportation costs and increase flexibility Improve coal consistency and quality Develop the Waterberg Rail-link Enter into long term contracts with mines in close proximity to the power stations, in order to ensure the mines actually develop the projects in a timely fashion, and will help avoid the higher costs associated with short-term contracts For all logistics routes, Eskom should pursue the financially optimal solution for the long term, which will be either a conveyor or a rail based solution Establish an effective rail backbone in Mpumalanga to increase flexibility and improve supply security Maintain some trucking capability (<5%) to provide sufficient transport flexibility Assess and implement opportunities to improve coal consistency and quality (potentially including changes to existing contracts), or affect operational changes in the plant, based on plant by plant analyses Upgrade the existing Waterberg Rail-link connecting the Waterberg coal fields to the Mpumalanga power stations in order to Improve security of supply through increasing the available supply sources for Mpumalanga stations 5 Develop risk based stock-days Formalise stockpile levels per station based on a full assessment of the specific risks per station Conduct a regular risk review and adjustment to re-assess appropriate stock days per station 4

5 LONG TERM LOGISTICS STRATEGY APPROVED BY BOARD IN APRIL 2009 ON FOUR KEY PRINCIPLES Establish a logistics department in PED reporting to the MD A logistics department will be structured within PED and staffed with skilled personnel to manage road (with assistance from the lead logistics provider, ROTRAN) and rail transportation. This department will also drive the PED relationship with all stakeholders such as Transnet and will be responsible to ensure the implementation of short- to long-term logistics solutions and optimisation initiatives Engage Transnet to develop short and long-term rail solutions Transnet to be engaged in the development of the proposed short and longterm rail solutions primarily in the Mpumalanga area - other than the Waterberg Rail Link - and to negotiate the required outcomes for PED Pursue Waterberg feasibility study with Transnet Pursue alternative ownership models, including Eskom participation Appoint a Lead Logistics Provider to manage road deliveries To pursue a Lead Logistics Provider model, and to investigate the possibility of ROTRAN developing an in-house competency to be able to fulfil this function, failing which, to pursue alternative recognised service providers. Develop funding options for long-term logistics solutions Funding for long term logistics solutions, incorporating rail and conveyor options, is estimated at Rxbn over the next 5 years, including the Majuba Heavy Haul Line. Eskom will invest in PS infrastructure and certain loading sites. To form, and/or participate in, joint ESKOM task teams to develop funding structures and to investigate and select appropriate funding partners for the long-term logistics solutions, including Majuba HH 5

6 5 OF THE 6 ESKOM PS WHERE RAIL IS PLANNED ARE LINKED TO MAIN RAIL NETWORK WITH ESKOM OWNED LINES Duvha Hendrina 2.5Mtpa Camden 2.1Mtpa/ 5Mtpa ~18Mtpa a challenge Grootvlei * 2.5Mtpa Tutuka 7Mtpa Majuba GFB 9Mtpa Majuba HH 14Mtpa * Grootvlei is not linked directly by an Eskom rail line, but there is a TFR branch line between Balfour and Grootvlei 6

7 ESKOM, TFR AND THE MINES MUST MAKE NECESSARY INVESTMENTS* TO ENSURE RAIL SYSTEM MEETS VOLUME ASPIRATIONS Organisation Capital Planning Strategy Invest in world class off-loading infrastructure at all Power Stations Ensure private sidings are constructed between main-line and Power Station Invest in Inland Consolidation Terminals to allow for rail solutions where Mine/Power Station are not close to railhead Invest in Containers and handling equipment where required (or outsource) May require bi-modal / multi-modal solutions to link railhead with Power Station, if infrastructure is prohibitively expensive Invest in main-line upgrades to provide for growth in Eskom traffic volumes Invest (with Eskom) in Inland Consolidation Terminals to allow for rail solutions where Mine/Power Station are not close to railhead Includes track and overhead power Provide rolling stock (wagons and locomotives) Rolling stock could be ex-coal Line fleet, or newly built All investments are recovered by way of rail tariff Invest in world class loading infrastructure at all Mines serving Eskom (rapid loaders) Ensure private sidings are constructed between main-line and Mines serving Eskom May require multi-modal solution (Containers) to link railhead with Mine, if infrastructure prohibitively expensive * May require Supply Chain funding approach so as to achieve optimal funding structure 7

8 NATIONAL TREASURY REQUIRES THAT THE RAIL MIGRATION PLAN BE IMPLEMENTED National Treasury has agreed to provide funding to DPE/Eskom for the road repair program This is contingent on 3 objectives being achieved: Coal Haulage Network Roads (~1,400km) be transferred to SANRAL Rail Migration plan be contractually concluded between ESKOM and TFR Robust performance mechanism put in place to monitor and manage both: The progress on road repairs as well as rail migration. 8

9 IMPACT OF RAIL DELAYS ARE BOTH QUANTITATIVE & QUALITATIVE - QUANTITATIVE 3. Road repairs The road repair program is at maximum reconstruction capability per annum Delayed rail migration causes deteriorating road conditions to be accelerated Security of supply will be threatened SANRAL indicates that if a poor road is left for 3 5 years, cost of upgrade goes up 3.5 times; and if left for 5 8 years, the cost goes up 18 times 9

10 IMPACT OF RAIL DELAYS ARE BOTH QUANTITATIVE & QUALITATIVE - QUALITATIVE Rail Migration shared (high level) with all affected Communities Communities accept that roads are being repaired, but have now moved on to a campaign to rid their towns/streets from Coal Trucks Accidents Fatalities Noise/dust pollution Negative impact on economies of these towns Communities agitated and threaten action; blockades (Ermelo/Bethal) Security of supply and lives of drivers threatened Rail Migration shared with all Road Transporters delivering for Eskom Rail delays will affect the truck reduction strategy, and more specifically the phasing out of fleets of vehicles over a staggered period in 3 year tranches Transporters will not invest in vehicles for short periods of time to cover for any rail delays; impacting on security of supply 10

11 4 CURRENT RAIL INITIATIVES 1. Majuba GFB operating at 8.5Mtpa (annualised) 2. Camden Container Solution first train due 5 th October Tutuka approved by Board 4. Grootvlei ERA phase 5. Hendrina concept design 6. Duvha mode selection 7. Majuba Heavy Haul project launched with World Bank funding 8. Waterberg concept study completed 9. Kusile Sorbent mode selection 11

12 THANK YOU