Sunday, May 22, 2022

Choice of route, gauge key to viability of Trans Kalahari Rail Project

The consultants engaged by Botswana government to evaluate the viability of the Trans Kalahari Rail Project (TKR) have suggested a wide range of options that could make the project viable including the choice of route and gauge.

The Australian company, Aurecon also revealed that manganese and copper projects in the country have been identified as factors that could add to the viability of the project.

Costs of the project are rising every year and it is estimated it would cost over P130 billion since reviews to the “Pre-Feasibility Study of the TKR Report” prepared by CPCS in 2011.

“The major impact policy makers can have on the project costs is through the choice of route and gauge,” the consultants said.

According to Aurecon, three routes and three gauge options were modelled along with diesel and electric locomotives. The base case (lowest cost) option is standard gauge diesel locomotives along the optimized route.

“This option is marginally more expensive than the narrow gauge option but this capital cost differential is offset by lower above rail operating costs”

On the other hand, the standard gauge diesel option had the lowest capex requirement assuming consists of 240 wagons with a payload of around 25,000 tonnes. At the same time, the electric locomotives have a lower cycle time because they do not have to refuel and accelerate marginally faster than diesels, Aurecon said.

Therefore, the total non mine capital expenditure under the base case is approximately $13.4b

“This is approximately $3b less than the electric options and $800m less than the bilateral agreement assumptions”.

The annual opex for mine, rail and port is estimated at around $840m per year under the base case with these costs are dominated by above rail costs such as fuel.

Lower fuel costs for electric locomotives reduce the annual operating costs for this option by around $100m per year.

Aurecon have also suggested that accessing cheaper investor capital would also improve the viability of the railway significantly.

The consultants said in the discussion report that that the northern alignment is marginally better than southern alignment ÔÇô driven by environmental and social criteria.

It is revealed in the report that standard gauge preferred to Cape gauge options. Importantly, the volume requirements have been identified including eleven clusters of potential mines to join the TKR project.

In a bid to make the project more viable, copper resources in north west Botswana identified to and manganese ore resources in southern Botswana identified to add to the viability of the TKR.

Equally, the mineral resources along the TKR corridor in Namibia has the ability to further improve the viability of the project. The consultants have also said there are opportunities that could accrue from the project including electrification.

Aurecon said at projected volumes of > 60Mtpa, electrification of the rail line makes economic sense as it provides additional benefits including opportunity to convert coal unsuitable for export to power.

“Electricity generation from own resources provides significant balance of payments benefits compared to importing up to 450 million litres of diesel fuel each year”.

Aurecon has identified a number of alignment improvements that will reduce the length by a total of approximately 108km (in addition to the 24km reduction resulting from the GoB enhancement between Mochudi and Kang).

The consultants also made government aware of the risk associated with the project including major coal developer seeking to take control of the project once the Botswana government has invested significantly to initiate the project. The major user will then seek to dictate terms favourable to them.

The other risk is low coal price as principal driver for the project is the commercial viability of export coal. “Timing is a critical issue ÔÇô the project delivered at a time when the market can/will sustainably support it”.

The movement of animals across the Schwelle imposes a challenge to linear infrastructure such as the TKR across this area with three main wildlife corridors identified, linking the Kgalagadi Transfrontier Park and the Central Kalahari Game Reserve.

“Recommendation is to provide access for the migratory animals by constructing the rail line on a low bridge or viaduct type structure on defined sections across the Schwelle”

The project will run from Mmamabula to Walvis Bay.


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