Transnet, South Africa: Coughing canary in the climate coal mine

"A filthy, climate-wrecking, community-polluting, profit-boosting project".

Transnet: Coughing canary in the climate coal mine

Patrick Bond

Pambazuka Issue 695

22 September 2014

Facing the most serious civilizational threat ever, what is the South African government doing? The new Infrastructure Development Act pushed into law by Economic Development Minister Ebrahim Patel will fast-track carbon-intensive mega-projects on behalf of mainly foreign corporate beneficiaries.

Still, each project must provide convincing EIAs to move ahead. Environment minister Edna Molewa is presently cutting her climate regulatory budget, so we can expect her to ignore regular administrative opportunities to at least query – and sometimes delay – Patel’s filthiest, climate-wrecking, community-polluting, profit-boosting projects.

For example, Transnet is driving the first two major projects promoted by the Presidential Infrastructure Coordinating Commission (PICC). So Transnet CEO Brian Molefe’s response to climate change is just as important as Molewa’s. Transnet and other state agencies are apparently unwilling to factor in climate when building PICC Strategic Investment Projects (SIPs).

Fortunately, progressive environmentalists – e.g. Earthlife Africa, groundWork, Greenpeace, Treasure the Karoo Action Group and the South Durban Community Environmental Alliance (SDCEA) – are fighting SIP mega-pollution. In the most important current controversy, Transnet’s attempt to expand the main Durban berths for unloading mega-ships, activists forced Molewa’s staff to rise to the challenge, but only half way. Last October, they surprised the shipping industry by ruling that not only did Transnet fail to factor in damage to the Durban harbour’s life-giving central sandbank, but its environmental consultants hadn’t thought through whether sea level rise and severe storms would swamp and maybe destroy the R5.6 billion investment.

What happens here is vital, for this is the pilot project within the second largest SIP, promoted by former Planning Commission leader Trevor Manuel and his replacement, Cyril Ramaphosa, as well as the local Durban ruling elite. They may not win, because amongst their critics is the 2014 Goldman Environmental Prize winner for Africa, Desmond D’Sa at SDCEA. He regularly draws world attention to the toxic pollution that goes unchecked in the South Durban Basin and in late April, The Economist and The Guardian covered D’Sa’s fight against the port-petrochemical expansion.

SDCEA (of which as a Bluff resident I am a lay supporter) has repeatedly protested Africa’s largest refinery complex, where Engen, BP and Shell create airborne havoc. At last count, more than half the children at the school between South Durban’s two main refineries, Settlers Primary, have asthma, the world’s worst known case.

In July, D’Sa and SDCEA researchers Eunice Asante, Tristan Ballard and Priya Pillay used an EIA challenge to flesh out the sea level rise threat, culminating years of debating climate with Transnet and its consultants Nemai, ZAA (a Cape Town marine consultancy) and even the taxpayer-funded Council for Scientific and Industrial Research. Transnet's previous filings were based on data five years old, and downplayed rising waters and extreme storm damage, even though the firm’s own Durban infrastructure was badly damaged in 2012 when big waves – caused in part by the harbour entrance’s deepening and widening – pushed a ship into cranes.

After late 2013’s humiliating slap down, Transnet filed a new EIA in June. But instead of getting new consultants, Molefe used exactly the same sloppy companies – Nemai and ZAA – and emerged with the same data. Their filing came weeks after the revelation in Nature that the West Antarctica ice sheet was now irretrievably melting, a process that will dump such a huge slab into the ocean that Nature authors estimated a four meter rise when there’s full submersion in coming centuries.

Transnet didn’t mention this, claiming that the time period of this debate is 2014-2060, and at that latter date, Transnet estimates only 0.58 meters sea level rise. But SDCEA’s researchers found a glaring flaw: Nemai and ZAA misread the latest Intergovernmental Panel on Climate Change report and as a result, was 20 percent off in its calculations. As SDCEA complained, Transnet “mistakes the mean sea level rise for 2081−2100 relative to 1986–2005 for the likely sea level rise by 2100.”

SDCEA first challenged Transnet on climate change in a 2008 EIA for the Durban-Johannesburg oil pipeline, but its arguments were simply ignored. Molewa’s predecessor, Marthinus van Schalkwyk, rubber-stamped Transnet’s doubling of capacity to pump the oil, hence increasing the refinery activity that D’Sa’s constituencies greatly fear. There have been dozens of horrific accidents and explosions at South Durban’s refineries and oil storage tanks since the 1990s.

Van Schalkwyk did so in spite of the implicit environmental racism of Transnet’s then CEO Mario Ramos (now ABSA bank CEO), when she detoured the new pipeline hundreds of kilometers through South Durban and Umbumbulu instead of the traditional direct route that passes through the white residential areas of Kloof and Hillcrest and white farming areas. The pipeline price, meanwhile, soared from R6 billion to R23 billion.

Speaking frankly in December 2012 when describing that project, former public enterprises minister Malusi Gigaba conceded “systemic failings… Transnet Capital Projects lacked sufficient capacity and depth of experience for the client overview of a megaproject of this complexity. There was an inadequate analysis of risks.” As Gigaba admitted, “Transnet’s obligations on the project such as securing authorisations – EIAs, land acquisition for right of way, water and wetland permits – were not pursued with sufficient foresight and vigour.”

Next, consider the mega-ships that Durban will attract if Transnet goes ahead. These will continue to deindustrialize our economy, leaving a smattering of jobs in shipping and only minerals exports and electricity-intensive smelting ‘beneficiation’. Worse, Walmart’s next-generation ships, now under construction in Korea, will carry 24 000 containers, reflecting the maniacal pace of consolidation and overcapacity in this industry.

When asked whether maritime commerce’s use of bunker fuels – now 4 percent of world emissions – is a concern for climate (as I did in the EIA process), Transnet’s answer is that the mega-ships have lower costs/unit and emissions/unit, which is true. But the bigger question is whether we could establish a more coherent, balanced economic strategy that will not be vulnerable to whimsical global trends, what with that projected eight-fold increase in container capacity by 2040.

Also, consider that these ships will be traveling into Durban via the most dangerous current in the world, Agulhas. Here, periodic ‘monster waves’ have in recent years sunk even a vast coal-carrying vessel in Richards Bay (September 2013) and an oil tanker just north of Durban (July 2011), along with hundreds of other ships over the centuries. No ship is safe, especially as extreme weather intensifies.

In spite of these structural woes, Transnet has hyperactive ambitions. Last month Patel announced he would raise credit for “connecting the coal-rich Waterberg to the Richards Bay Coal Terminal, or to Eskom’s power stations, Medupi and Kusile. Mining companies commit themselves to Transnet to export so many thousands or hundreds of thousands of tonnes of coal on the railway lines. Transnet then takes those agreements to the banks to raise the capital to build or expand the railway capacity.”

But what if the coal price crashes, as it has the last few months – by 44 percent – and Transnet suffers declining revenues from its main minerals-transport customers? Already Transnet’s financial woes include a vast class action lawsuit by pensioners accusing it of theft, apparently for good reason, and regular ridicule for running the world’s two most expensive ports in terms of container throughput costs: Durban and Cape Town. (How can such costs decline, given the capital and interest payments – as well as operating and maintenance costs – on hundreds of billions of rands of upgrading?)

The biggest problem for Transnet’s vision is that freight rail cannot compete with the deregulated, chaotic trucking industry, with all its corner-cutting and illegality. No one in Durban will forget how a runaway container truck driven by an illegal immigrant without a driver’s license was told by his boss to avoid a R40 toll on the main Joburg-Durban highway, instead taking a back route down the very steep Field’s Hill on September 5 last year. Two dozen working-class kombi passengers died when it crashed, because the brakes were faulty. That container belonged to Taiwan-based Evergreen, the world’s fourth largest shipper – but like all, prone to hiring fly-by-night transporters.

Will a sickly Transnet and its sponsors in the national Treasury locate bankers for destructive projects like the coal-export rail investments and South Durban port-petrochemical expansion? Last November when Transnet went to the City of London to float a bond, it had to pay a whopping 9.5 percent interest rate. Details were never provided about the cost of China’s $5 billion loan in March 2013, but it was obvious that part of that payout was Transnet’s $4.8 billion in Chinese joint-venture locomotive deals signed a year later, which the metalworkers union alleges were graft-filled.

Financial sanctions is a strategy SDCEA is considering for Transnet. But whatever weapon is picked up, the society needs to rethink our overexposure to the volatility of the world economy, and localise the production chains, for our own sake not just climate’s.

* Patrick Bond's 'Politics of Climate Justice' was just named amongst the Guardian's ten leading books on the topic.