The battle for Durban's expansion begins.

Given South Africa's rising volumes of trade, the Durban Container Terminal, the biggest in Africa, will need to expand capacity in the near future if it is not to lose business to terminals elsewhere in the sub region. But there are strong objections to expansion plans from environmentalists and other stakeholders. Neil Ford lays out the arguments.

**********

Durban Container Terminal (DCT) is widely recognised as a vital cog in the South African and indeed African economy. It is the biggest container terminal in Africa and handles the lion's share of containerised cargo moving into and out of Southern Africa.

[ILLUSTRATION OMITTED]

Yet South Africa's current strong economic performance is driving up trade volumes and it is now feared that demand will outstrip terminal capacity within a few years. The struggle to secure planning permission for a massive expansion programme has now begun but it is likely to be a long and difficult road.

The raw statistics for DCT underline the importance of the terminal. The port of Durban as a whole handled 4,545 vessels during financial year 2006-07, equivalent to about one third of all ships calling at South African ports, while DCT handled 2,335,000 twenty foot equivalent units (TEU) during the year out of total capacity of 3.72m TEU, including 3m TEU at DCT and 720,000 at the separate Pier 1. Given the surplus in capacity, it might be expected that there would be no real hurry to begin expansion work. However, the 2006-07 figure represented an 18% increase on the previous year's total and South Africa's state owned transport umbrella group, Transnet, worries that the current facilities could be insufficient to satisfy demand by 2010. Moreover, it is predicted that total demand for terminal capacity could reach 8m TEU by 2020. As a result Transnet has begun a process of initial public consultation on its development plans, in the hope that additional capacity can be provided before traders are forced to go further afield, to other South African ports, or even to the container terminals at Maputo in Mozambique and Walvis Bay in Namibia.

The Transnet plans involve the construction of a new harbour basin at the Bayhead site, where two new container terminals could be developed with 10 dedicated container berths. This would provide additional annual handling capacity of around 5m TEU. Total development costs are unknown, not least because the plans have not yet been finalised but various sources have mentioned figures of between R15bn and R25bn.

Undefined timetable

However, the whole process of public consultation, discussion with government and those businesses currently located at Bayhead, plus the various environmental impact assessments (EIAs), are likely to take several years, so construction is unlikely to begin until 2010 at the earliest.

This would allow the first terminal, on the east side, to come into use by 2014, with the second, western terminal following in 2017 but the timetable remains uncertain at this time. Indeed, before any work on the new terminals can begin, excavation of the basin itself and dredging of the Esplanade and Maydon channels leading to the Bayhead will be required.

The target date of 2014 would obviously be far too late to ensure that DCT is able to keep up with rising demand but Transnet hopes that the container terminal at the new port of Coega, otherwise known as Ngqura, can act as a "safety valve" from 2010 until 2014.

[ILLUSTRATION OMITTED]

Established in the Eastern Cape, close to Port Elizabeth, Coega is being developed as an integrated port and industrial zone project, with both container and bulk port facilities. The National Port Authority (NPA) originally held talks with P & O Nedlloyd over the development of a container terminal at the new port in 2005 but the two sides were unable to reach an agreement, so the NPA began construction work on its own.

It was originally expected that a 500,000 TEU terminal would be put in place but in May this year the minister of public enterprises, Alexander Erwin, revealed that a 3m TEU facility would now emerge. As a result, development costs have now increased from R3.5bn to R8bn, but this will include the upgrading of the rail line between the port and Gauteng.

The first two berths should be complete by the end of 2008, as most infrastructure is in place, although cargo handling equipment has yet to be installed. The new berths should help to absorb rising demand in the period before new capacity is brought on stream at Durban. Two further berths will be constructed at a later date.

However, there seems little likelihood of Coega becoming a permanent solution to the lack of container capacity at Durban. The general manager Group Planning for Transnet Capital Projects, Krish Reddy, said that Coega was "too far from Gauteng to be a long term option".

The chief executive of the NPA, Kgomotso Philele, has also revealed that private sector investors could be brought on board to operate Coega container terminal, probably in a joint venture with the NPA, rather than under a fixed term concession.

Nosipho Damasane, the general manager of operations at South African Port Operations (SAPO) in the Eastern Cape, told delegates at the International Association of Ports & Harbours (IAPH) conference in the US in April that talks with private sector investors were now being held.

Given the demand for additional capacity and the revenues that expansion would generate, financing the project does not look to be a problem. Providing sufficient road and rail capacity with the rest of the country could prove more of a headache.

Rail operator Spoornet is currently investing in upgrading sections of track and other rail infrastructure, while a programme of commissioning new engines and rolling stock has been announced. However, the lack of rail capacity is already likely to pose a problem to the expansion of Richards Bay Coal Terminal (RBCT).

Costly rail network upgrade

Although most container terminal and rail capacity is state owned, there still seems to be a problem in ensuring the coordination of new projects.

The government and Transnet have promised to encourage much greater use of South Africa's railways in transporting freight around the country, in an effort to reverse the switch from rail to road that has taken place over the past decade, but providing sufficient rail capacity to serve an 8m TEU container facility in one corner of the country is still likely to provide a headache for port and rail planners alike.

In particular, rail links between the existing port and the main railway are restricted by something of a bottleneck, so the cost of upgrading rail infrastructure at the port itself is likely to significantly add to costs. In addition, there are two other problems with the location of the planned construction programme at the Bayhead site. Firstly, businesses currently occupying the site include a petrochemical storage facility, several shipyards, a marina and a host of other leisure facilities. It is expected that most if not all would be forced to relocate.

Secondly, despite its proximity to port and industrial facilities, the area provides an important habitat for both migrant birds and fish, particularly around the sandbanks of Durban Bay. It is internationally recognised as a site of special scientific interest and is protected by a range of international and domestic protection agreements.

Transnet's previous attempt to construct a new container terminal on Durban Bay, in the 1990s, foundered on the detrimental affect that the project would have on the sandbanks and the ecology of Durban Bay as an estuary. The 1999 report that scuppered the previous plans stated: "Despite the modification of the bay from its original state ... to a port, Durban Bay remains the most diverse habitat in Kwa-Zulu-Natal."

No environmental fait accompli

The environmental coordinator for the Wildlife and Environment Society and Coastwatch, Di Dold, commented: "We are not against the digging out of Bayhead. But we are against only one option for access to the new terminal being presented ... Do not give us a fait accompli. Amazingly, despite all the junk in the harbour, the Durban Bay operates as an estuary."

[ILLUSTRATION OMITTED]

Some environmental groups argue that the project could proceed as long as direct access to the new terminals is provided from the harbour mouth via the Island View Channel rather than the Maydon Wharf Channel. The Island View route would be shorter but would be more expensive as it would involve the relocation of petrochemical businesses in the area.

The relatively urgent need to develop additional container capacity at Durban highlights the need for long term planning in the shipping sector. A report on DCT's future in 1999 estimated that demand for handling capacity would rise by an average of 6% a year but this prediction has turned out to be an underestimate.

In many ways, it is a pity that planners wait until such a late stage before the debate over commercial and environmental priorities is seriously tackled. It would be far better to complete all the necessary EIAs ahead of schedule, so that new capacity could be added as and when required.