Feb 6, 2023
South Africa’s Coal Export Snags Worsen as Rail Shipments Slump
(Bloomberg) -- Rail disruptions on the key line to Africa’s biggest coal-export terminal are intensifying, choking off more than half the fuel the facility is capable of shipping.
Deliveries to Richards Bay Coal Terminal on South Africa’s east coast slumped to a three-decade low of 50.4 million tons in 2022 as armed gangs sabotaged the line and rail operator Transnet SOC Ltd. struggled to keep cargoes flowing. Since the start of the year, the pace of shipments has dropped further to a rate of 44 million tons, according to people familiar with the matter who asked not to be identified because the information isn’t public.
The disruptions to a key South African export industry come as the appetite for coal in Europe following Russia’s invasion of Ukraine pushes prices to a record. Some producers — including Glencore Plc, Thungela Resources Ltd. and Exxaro Resources Ltd. — have resorted to sending coal by truck to alternative ports, even though they are also shareholders in RBCT.
A Transnet spokeswoman wasn’t immediately able to comment.
While RBCT has been expanded to an annual export capacity of 91 million tons, the troubled rail corridor is hobbling its operations. Transnet said Thursday that it will take as long as three years to recover from the corruption that engulfed the state-owned company under President Jacob Zuma’s rule.
Alongside security issues, underinvestment in infrastructure and a lack of locomotives are curbing rail capacity. Exports may only grow to about 60 million tons by 2025, depending on the outcome of certain initiatives.
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