Richards Bay coal exports throttled

• Shipments at 30-year low while prices peaked • Terminal counts cost of Transnet disruption

Hampered by persistent troubles at Transnet, coal exports through the Richards Bay Coal Terminal (RBCT) dropped to about 50-million tonnes in 2022, the worst performance since 1993, when it shipped out 51-million tonnes.

Coal exports processed through the terminal, which exported about 70% of the coal that left SA last year, were down from 59-million tonnes in 2021 and 70-million tonnes in 2020. In 2017 about 76-million tonnes of coal left SA through RBCT.

The decline was a direct result of cable theft and the low availability of locomotives, which has disrupted Transnet Freight Rail (TFR) rail volumes to the terminal. This was at a time when coal export prices increased about 400%.

RBCT is owned by coal miners such as Sasol, Thungela and Exxaro.

RBCT CEO Alan Waller, who presented the company’s annual results for 2022 on Thursday, said it had budgeted for increasing export performance in 2023 to 60-million tonnes.

Two major events that caused huge disruption in TFR operations in 2022 were the derailment of a coal train on the North Corridor in November, after which Transnet declared force majeure on the coal export line to Richards Bay, and a strike by Transnet workers in October.

The disruptions caused by extensive cable theft, strikes and prolonged underinvestment meant that local coal miners were not able to make full use of the opportunity to increase coal exports to benefit from high global demand and prices.

According to the SA Association of Freight Forwarders, the 11-day strike meant SA lost the opportunity to move R65.3bn worth of goods.

Henk Langenhoven, chief economist at the Minerals Council SA, said that at an average price of about R2,985/tonne over the past 12 months, the opportunity cost of RBCT not reaching its 60-million tonne target for the year amounted to roughly R30bn.

“We know that only about 20% of the lost tonnages were

due to cable theft and electricity disruptions … The bulk of the explanation lies with inefficiencies on rail and in the ports,” Langenhoven said.

“This reality has prompted the Minerals Council’s board to urgently approach the Transnet board to facilitate a joint effort to find solutions for the problems on the bulk commodity export lines. Intensive work has started at the levels of the two boards, at a managing steering committee [level] and at a technical level on the export channels for coal, chrome, iron ore and manganese.”

Average coal export prices from Richards Bay increased roughly fourfold from the start of 2021 to their high point in August last year when a tonne traded for about R3,810.

Over a five-year period, SA coal exports declined 20% from about 80-million tonnes in 2017 to about 64-million tonnes in 2021. According to projections released by the International Energy Agency in its latest forecast and analysis of global coal markets, total coal exports from SA for 2022 reached roughly 70-million tonnes, up about 10% from 2021 but still 10-million tonnes down compared with five years ago.

TFR said, however, that initiatives to improve security, some of which are run in partnerships with its customers, are bearing fruit. For example, there has been a notable decrease in security incidents in the current financial year.

In response to a question from Business Day, it said that for the 2022/2023 financial year to date (as at end of December 2022) there was a decrease of 22% in the number of security incidents to 2,520 compared with the previous financial year over the same period. “Similarly, there has been a reduction of 33% in the length of cable stolen, from 1,206km to 811km.”

TFR’s loss of revenue for the year to date (end of December) due to security incidents is about R1.34bn, down from R1.67bn in the previous year.

Waller said that although the industry had “some big wins” in its collaboration with TFR to reduce the effects of cable theft, railways “have been hit very badly in the last two weeks and have seen an increasing trend in cable theft so far this year”.