South African Coega port plan faces cost concerns
South
Africa's largest
iron ore producer, Kumba Resources, is involved in a debate regarding the upgrading of Coega's Ngqura port. Kumba, which has been planning to develop the rich
iron ore reserves in the Northern Cape area of South
Africa, has been in plans to develop the Coega port in order to accomodate the increased
iron ore shipments. However, the high cost of infrastructure at the Coega port as well as the high cost of expansion plans already in action at South
Africa's primary
iron ore export port, Saldanha are forcing Kumba to reconsider the feasibility of the port.
The Saldanha expansion is expected to boost the port's current capacity of 29 million tons per year to 41 million tons. The Eastern Cape port is currently being considered as an alternative port terminal for the Northern Cape's
iron ore assets. Officials from Kumba report that the key to the implementation of the port development plans is the high demand from
China. If this year's 18% hikes in contract prices can be maintained next year, officials say that the expansion plans are more forceful. For now, however, they are maintaining a wait-and-see outlook.