As confidence in the longevity of the commodities boom has grown, more companies - in more sectors of the SA mining industry - have announced plans for expansions or investments in new mining projects.

Some of the largest investments outside the precious metals sectors are now taking place, or are expected, in the coal and iron ore industries.

Many of the more recent projects became more attractive as the commodities cycle progressed through different stages. Base metals used in industrial applications were among the first to benefit from rising demand.

Prices of metals such as copper, nickel and aluminium began rising several years ago. These increased in response to the long phase of growth in the world economy, with high rates of growth and infrastructural investment in developing economies, particularly China.

A strong upturn in precious metal prices followed. This was driven by industrial consumption, US dollar weakness (which has affected all commodities), investment demand, the appearance of exchange traded funds specialising in these metals and supply shortfalls.

Prices of some industrial metals have accelerated, as concerns about shortages increased. Since the second quarter of 2007, prices of iron ore, a key product for the global steel industry, have climbed steeply.

Iron ore is sold in world markets mainly at contract prices, in an export sector dominated by three suppliers: Rio Tinto, BHP Billiton and the Brazilian company, Vale.

Kumba Iron Ore CE Ras Myburgh, who was seconded last month to assist Eskom, says the seaborne market for iron ore has grown at a compound annual rate of 8,1% from 454 Mt in 2000 to 782 Mt in 2007, mainly because of demand growth in China.

Kumba is working on several expansion projects. Its immediate plan is to double export capacity by 2013 to just over 45 Mt/year. Its next significant expansion is 9 Mt/year from Sishen South, with first production expected in 2012.

It has a pipeline of other projects in the Northern Cape, elsewhere in SA and Africa, with potential to increase its output to 70 Mt/year - though this, says Myburgh, will be reviewed against operating and market conditions.

Prices of products across the energy spectrum have also risen strongly since early 2007. This has been led by crude oil, which has climbed from below US$55/barrel in January 2007 to more than $130/barrel in May this year.

Since the fourth quarter of 2007, prices of steam or thermal coal (used in power stations) and metallurgical coal (used in steelmaking) have surged on concerns about supply deficits.

According to Exxaro Resources, SA's fourth-largest coal producer, the average Richards Bay spot steam coal price for 2007, at $62,82/t, was 21,3% higher than the average for 2006. In 2008, the company says, the price is expected to exceed $100/t. Reasons include China's move from being a net exporter of steam coal to a net importer in 2007, and strong demand growth from India, both contributing to tight market conditions.

Changes in consumption patterns, with users switching from expensive oil and gas, added to the growth in demand for export coal.

Logistical constraints such as inadequate rail and port facilities have curtailed coal exporters' capacity to deliver sufficient volumes as new mines have increased production at the same time.

This has been a particular problem for Australia's coal industry. Long queues of ships have appeared at the congested Dalrymple Bay coal terminal in Queensland, which has been unable to handle required volumes.

The terminal has undergone a two-stage expansion - the first one is to lift its export capacity from 55 Mt to 68 Mt by December 2007, and the second to increase this to 85 Mt by December 2008. Rail and port capacity has fallen behind schedule.

This experience should be watched closely from SA. Eskom's expansion in the domestic sector and buoyant export markets have encouraged the local coal mining sector to enter a major growth phase.

New coal export projects will depend heavily on a capacity expansion that has been under way for some time at the Richards Bay Coal Export Terminal (RBCT).

This, known as the phase V expansion project, is designed to increase the terminal storage and handling capacity from its present annual 72 Mt to 91 Mt.

The estimated cost of the terminal expansion is R1,1bn, and it is expected to be completed by the end of the first half of next year. Like the Dalrymple Bay terminal expansion, it will depend on provision of rail capacity when needed.

The RBCT expansion is intended as a long-term project, as coal export volumes have been running below the existing capacity. In part, the expansion is aimed at encouraging growth by black-owned coal mining companies.

This will be done through allocation of the coal export quotas and through shareholdings. South Dunes Terminal, a two-thirds black economic empowerment company, will take up 6 Mt/year of the expansion.

However, many players, including the large diversified mining groups, are investing in new coal export mines or have plans to do so.

Anglo American's coal division, Anglo Coal, has two big projects in SA, both to produce coal for Eskom and exports. The $505m Zondagsfontein mine, near Ogies in Mpumalanga, is to deliver 6,6 Mt/year by 2010.

The 50%-held Mafube Macro venture is starting production this year and will eventually produce 5,4 Mt/year. Anglo Coal also has several expansions and new mines in Australia.

Among JSE-listed companies, the biggest direct beneficiary of growth in the local coal sector is Exxaro Resources, which has numerous new coal projects and expansion. It also has a 6,3 Mt/year export entitlement in the RBCT expansion.

CE Sipho Nkosi says Exxaro has offered to supply 13,5 Mt/year of the additional 45 Mt/year required by Eskom over two years. Of this 9,6 Mt/year have been contracted, he says. Last year the company signed a long-term agreement to supply 8,5 Mt/year of thermal coal to phase one of Eskom's new 2 400 MW Medupi power station.

Likely new coal producers include the Australian company, Coal of Africa, which has dual listings for its shares in Australia and SA. It has significant stakes in the large Thuli and Baobab projects in Limpopo, and a big landholding in the Soutpansberg coalfield.