South African mining company Exxaro Resources has signed a coal export transportation agreement with freight transport firm Transnet to increase coal volumes from Waterberg to Richards Bay Coal Terminal.

Under the ten-year agreement, Transnet will transport an aggregate of 7.8 million tonnes (Mt) of export coal, of which 3Mt will come from the Waterberg once all the projects are ramped up.

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Exxaro Resources CEO Mxolisi Mgojo said: “This is an exciting milestone for Exxaro and is a realisation of our vision to contributing to the unlocking of the Waterberg, thus creating jobs and powering economic development in South Africa. As such, we will be investing 50% of our R20bn ($1.46bn) coal CAPEX programme over the next five years in coal in the Waterberg area.”

The agreement overrides the previous agreement between the parties and allows Transnet to enhance rail infrastructure capacity to service both domestic and export markets from the Waterberg area.

“This is a realisation of our vision to contributing to the unlocking of the Waterberg, creating jobs and powering economic development in South Africa.”

Transnet Group CEO Siyabonga Gama said: “We are pleased with reaching a key milestone with Exxaro to improve rail infrastructure in the Waterberg area which includes the strengthening and expansion of the Waterberg Link.

“We are a key enabler to growing the South African economy and are playing our role in developing more rail capacity and unlocking the capacity of the Waterberg region to domestic and export markets.”

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Transnet is expediting its Waterberg Programme in order to complete the second phase of the project in March 2019.

This phase will increase export rail capacity to 6Mt through incremental upgrades of existing rail networks and facilities.

The agreement will also allow the GG6 expansion of Exxaro’s Grootegeluk operation in the Waterberg area that needs rail capacity to Richards Bay Coal Terminal.