Johannesburg - Construction work on the R500 million rail line that would link Coega with the Port Elizabeth rail network would go ahead as planned and work would start in conjunction with the developments in the port of Ngqura, transport utility Spoornet said yesterday.

It is expected that the entire Coega project will be completed in 2005.

Mike Asefovitz, the spokesperson for Spoornet, said the project would start as soon as engineers had finished pre-feasibility studies.

Asefovitz said the operation of the line would have a socioeconomic impact on the Eastern Cape, one of the poorest areas in the country.

These included raising the financial viability of the Coega port and creating much needed job opportunities.

Jeff Radebe, the minister of public enterprises, has said the Orex and Coallink rail lines would be upgraded to facilitate coal and iron ore exports.

Spoornet is also expected to build a new R30 million rail line for the export of ferrochrome from Brits through Richards Bay. The line would generate about R2.7 billion a year.

In its annual report for the 2001/02 financial year, Spoornet said the short-term outlook for iron ore was not encouraging, as it was affected by the downturn in the steel industry.

"However, Orex's main customers, Kumba Resources and Associated Manganese Corporation, intend expanding the current capacity ... by the year 2010/11," Spoornet said.

In preparation to accommodate the higher volumes, the rail utility said it would invest over R112 million in infrastructure and rolling stock in the next four years.

Meanwhile, Mafika Mkwanazi said recently that the buoyant performance of the rand against major foreign currencies was expected to have a negative impact on Transnet's iron ore and coal export lines.

Although the figures were still being audited, Mkwanazi said early indications were that the two export lines did not perform as well as they had expected.

On the upside, though, the stronger rand/dollar exchange rate means Spoornet can import components for repairs and maintenance at an affordable price.