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Cablegate: Saldanha: Red and Green Port Moves Iron Ore and Crude Oil

VZCZCXRO7261
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSA #0386/01 0571232
ZNR UUUUU ZZH
R 261232Z FEB 08
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 3591
INFO RUCPDC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0755
RUEHRL/AMEMBASSY BERLIN 0607
RUEHBY/AMEMBASSY CANBERRA 0631
RUEHLO/AMEMBASSY LONDON 1442
RUEHMO/AMEMBASSY MOSCOW 0755
RUEHOT/AMEMBASSY OTTAWA 0587
RUEHFR/AMEMBASSY PARIS 1294

UNCLAS SECTION 01 OF 02 PRETORIA 000386

SIPDIS

SIPDIS
SENSITIVE

STATE PLEASE PASS USAID
STATE PLEASE PASS USGS
DEPT FOR AF/S, ISN, EEB/ESC AND CBA
DOE FOR T.SPERL, G.PERSON, A.BIENAWSKI, M.SCOTT, L.PARKER

E.O. 12958: N/A
TAGS: EWWT ENRG EPET EMIN ELTN SENV SF
SUBJECT: SALDANHA: RED AND GREEN PORT MOVES IRON ORE AND CRUDE OIL

REF: Pretoria 351

1. (SBU) SUMMARY: South Africa's Saldanha Port processes
increasing quantities of bulk commodities iron ore and crude oil,
aiming to build up its volumes through a significant expansion,
given demand for iron ore in China and elsewhere. Development in
and around the Western Cape Saldanha Port has been limited, given
its remoteness and scarcity of fresh water, compared to its sister
port of Richards Bay in the east. Expansion will depend on close
coordination with the inland iron ore mine and the rail company, as
well as meeting environmental and economic hurdles. End Summary.

2. (SBU) Minerals/Energy Officer and Specialist visited the bulk
commodity Port of Saldanha, 150 kilometers north of Cape Town, on
February 8, after attending the Mining Indaba meetings. The port is
run by the National Port Authority, under state transport company
Transnet. Port Manager Eugene Kearns and his team provided a
detailed presentation on the operations and vision of Saldanha Port
and arranged a comprehensive visit of the jetty, iron ore-loading
facilities, and the port vessel tracking system center.

--------------------------------------------
Iron Ore and Bulk Movement - Plans to Expand
--------------------------------------------

3. (SBU) The bulk commodity port of Saldanha is focused on the
movement of iron ore (38 million tons per year) and crude oil (10
million tons per year). Saldanha takes advantage of the largest
natural port in southern Africa and is partly protected by an
artificial breakwater. The port cooperates with Transnet Freight
Rail in the transport of iron ore 861 kilometers from the Kumba Iron
Company mine at Sishen in the Northern Cape. Port officials told
Energy Officer the port is in the process of an ambitious two phase
expansion for iron ore processing, first to 47 million tons per
year, then doubling to 93 million tons per year, currently in
feasibility and environmental impact studies.

4. (SBU) Port officials showed off their extensive physical
facilities to Energy Officer and Specialist. They said the railway
is the only combined diesel and electric rail system in the world.
The port services thirty-five ore trains per week, each comprising
220 wagons of 100 tons each. Each train is split in two and rolled
into the double tippler, which tips two wagons at a time into a
conveyor belt system connecting to an expansive storage area,
currently under expansion. Separate conveyer belt systems connect
to two iron ore ship berths on the 990 meter jetty. In addition,
there is one oil berth and a multi-purpose terminal quay and
warehouse for limited "break-bulk" cargo handling.

-----------------------------------------
Oil for the Refinery and Strategic Stocks
-----------------------------------------

5. (SBU) Saldanha is a significant oil handling port for South
Africa. Chevron/Caltex imports 8.7 million tons of crude oil per
year, piped to its refinery near Cape Town. State oil company
PetroSA takes advantage of the forty-nine million barrels of
strategic storage capacity to trade crude oil, exporting 2.1 million
Qstrategic storage capacity to trade crude oil, exporting 2.1 million
tons per year. Energy Officer and Specialist observed the huge,
secure facilities outside of town, remnants of the go-it-alone
strategic stock facilities of the former apartheid regime. The port
oil berth can handle the largest Very Large Cargo Carrier (VLCC)
vessels. The port has leased out space to Grinnaker (formerly
Ferrostal) to construct and operate an oil rig servicing and
construction facility, aiming to service the west coast of Africa
(reftel).

------------------------------------------
But Saldanha Port Has Not Met Expectations
------------------------------------------

6. (SBU) Like Richards Bay in the east, Saldanha was built as a
specialized port thirty years ago, but Saldanha has not taken off
like Richards Bay. Its remote location and water scarcity have been
negative factors. Surrounding development is limited to two steel
plants (Arcelor Mittal Steel and Duferco Steel, both also processing
iron ore from Sishen) and a titanium sands processing facility.

PRETORIA 00000386 002 OF 002

--------------------
A Red and Green Port
--------------------

7. (SBU) Port officials described environmentally friendly aspects
of the port. Dust pollution is mitigated by frequent watering of
iron ore storage piles and processing (as well as temporary
stoppages in excessively windy conditions), but the Kalahari red
color from the iron ore is pervasive on all vehicles and buildings.
At the Vessel Tracking System watch-tower at the mouth of the port,
port officials showed off the private mussel and oyster aquaculture
active around the jetty and port. The port officials shared a
number of documents attesting to the environmentally sustainable
processes and assurances of the port facility, including equipment
and procedures for assuring no oil spillage. Energy Officer and
Specialist visited the adjacent national park with pristine beaches
and a salt lagoon boasting significant biodiversity.

8. (SBU) COMMENT: The Saldanha port team took visible pride in
showing off their port, including its green credentials. The beach
behind the hotel where Energy Officer stayed did not appear
impeccably clean, but the thriving program for leasing space to
aquaculture was visible in the bay. Port officials were bullish
about expansion plans, displaying some sensitivity to being the
"poor twin sister" to Richards Bay. Successful expansion will
depend on meeting environmental hurdles and coordinating closely
with Sishen Mine and Transnet Freight Rail.

BOST

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