Sunday, July 3, 2022
  • Login
Upgrade
The Southern African Times
  • Home
  • Southern Africa
  • Global
  • Business
    • African Start ups
    • African Continental Free Trade Area
  • Tech
  • Opinion
  • Sports
  • Lifestyle
    • Health
    • Culture
    • Food and Drink
    • Entertainment
  • SAT Jobs
No Result
View All Result
  • Home
  • Southern Africa
  • Global
  • Business
    • African Start ups
    • African Continental Free Trade Area
  • Tech
  • Opinion
  • Sports
  • Lifestyle
    • Health
    • Culture
    • Food and Drink
    • Entertainment
  • SAT Jobs
No Result
View All Result
The Southern African Times
No Result
View All Result
Home Business

South African coal miners turn to trucks as rail service deteriorates

by SAT Reporter
May 3, 2022
in Business
0
South African coal miners turn to trucks as rail service deteriorates
0
VIEWS

Mining companies in South Africa have resorted to trucking coal to ports to meet a surge in European demand since the war in Ukraine started, bypassing the deteriorating rail infrastructure they blame for billions of dollars in lost revenue.

Poor maintenance, a lack of spare parts for trains, copper cable theft and vandalism have disrupted state logistics firm Transnet’s freight rail services, causing coal and iron ore exports to fall in recent years.

In April, Transnet declared force majeure on contracts with producers but with coal prices near record highs, mining firms including Glencore (GLEN.L) have turned to trucks, one industry source said. A Glencore spokesperson declined to comment.

Trucking coal costs about four times more than rail, according to miner Menar. It has started using trucks but said the high coal prices mean miners can absorb the cost, for now.

“The industry at large are on their knees, so they are resorting to drastic measures,” said Clifford Hallatt, chief operating officer at Canyon Coal, a joint venture between Menar and commodity trader Mercuria.

At Canyon Coal’s Khanye Colliery some 90 km (55 miles) from Johannesburg, it takes about 80 trucks – each carrying 34 tonnes – to replace one average Transnet train, making it unsustainable financially, boosting emissions and clogging roads.

But the company says it has little choice.

A year ago, it was loading five or six Transnet trains a week from Khanye. That has dropped to just two or three now, and its stockpiles of coal have been mounting, Hallatt said.

Demand, meanwhile, has shot up since the war in Ukraine. The European Union has announced a ban on Russian coal and mining companies in South Africa say they are fielding calls from European countries looking for imports.

As for prices, Australian thermal coal futures were trading at about $80 a tonne at the start of 2021. A week after Russia sent its forces into Ukraine, they rocketed to a record high of $440 and are now trading at $326 a tonne.

Menar is trucking about 120,000 tonnes of coal a month and plans to increase that to 200,000 tonnes, Hallatt said.

As a whole, South African coal miners are putting about 400 trucks on the road a day, trucking some 6 million tonnes of coal on an annualised basis, according to the industry source.

“We are aware that there’s been an increase in the number of coal trucks now running into the ports and that’s not a good situation,” Transnet Freight Rail Chief Executive Sizakele Mzimela told Reuters.

Transnet shipped 58.3 million tonnes of coal to the Richards Bay Coal Terminal last year, 24% below its annual capacity of 77 million tonnes. Transnet expects an improvement in the delivery of coal this year, to about 60 million tonnes.

But limited rail capacity cost bulk commodity exporters at least 35 billion rand ($2.2 billion) last year in lost revenue, according to South Africa’s Minerals Council.

Transnet’s Mzimela said the state-owned firm feels the industry’s pain.

“The frustration is more about the lost opportunity, because of course if we were able to move more, we would benefit, they would benefit. We are tied at the hip,” she said.

Reuters Graphics
Reuters Graphics

OTHER OPPORTUNITIES?

Mzimela said Transnet was open to miners investing in their own rolling stock, as well as allowing private rail operators to run on some container route slots. But it does not plan to open its iron ore and coal lines to private firms.

That falls short of what mining firms, who are helping to fund private security to combat theft along rail lines, want.

Menar said it was pushing to invest in state-owned rail lines and procure its own locomotives and wagons as part of attempts to overcome the country’s infrastructure bottleneck.

Hallatt told Reuters that Menar would also consider operating a section of the bulk commodity rail lines, although that’s an option Transnet’s Mzimela rejects.

Since the security collaboration started, the number of drones monitoring the coal line from Mpumalanga to Richards Bay has more than doubled and incidents have fallen to about 19 a week from 35 previously, according to Transnet.

The copper cables carrying electricity from substations along the line to signalling systems are regularly stolen, for example, as well as other metal parts along the track.

For the first time, South Africa was ranked among the 10 least attractive jurisdictions for mining investment in the Fraser Institute’s annual mining industry survey last year.

Gabrielle Reid, associate director for strategic intelligence at S-RM, said the logistical challenges were now prompting some South African miners to look outside the country for growth opportunities.

“Our most recent experiences with rail in South Africa make for a compelling diversification case,” July Ndlovu, chief executive of thermal coal producer Thungela Resources (TGAJ.J), told analysts on a call in March.

“Given the concentration that we’ve got in a single geography and the concentrated risk associated with that infrastructure, I think it stands to reason that we should look at other opportunities.”

Previous Post

Why Nonalignment Is an Urgent Imperative for the Global South

Next Post

Nigeria oil minister says Russia interested in gas pipeline to Morocco

SAT Reporter

Related Posts

11th World Urban Forum: amplifying the voices of African cities
Business

11th World Urban Forum: amplifying the voices of African cities

by SAT Reporter
July 2, 2022
Key takeaways from CBN’s new cybersecurity guidelines for Other Financial Institutions (OFIs) in Nigeria

Key takeaways from CBN’s new cybersecurity guidelines for Other Financial Institutions (OFIs) in Nigeria

by SAT Reporter
July 1, 2022
10 African countries with the lowest foreign exchange reserves

10 African countries with the lowest foreign exchange reserves

by SAT Reporter
June 29, 2022
UK appoints new trade commissioner to lead UK-Africa trade and investment relationship
International news

UK appoints new trade commissioner to lead UK-Africa trade and investment relationship

by SAT Reporter
June 28, 2022
Egypt, Saudi Arabia ink deals worth $7.7 bln on crown prince’s visit

Egypt, Saudi Arabia ink deals worth $7.7 bln on crown prince’s visit

by SAT Reporter
June 23, 2022
Next Post
Nigeria oil minister says Russia interested in gas pipeline to Morocco

Nigeria oil minister says Russia interested in gas pipeline to Morocco

Premium Content

The Impending War?

The Impending War?

August 15, 2021
South Africa’s mining industry to support COVID-19 vaccine rollout

South Africa’s mining industry to support COVID-19 vaccine rollout

January 16, 2021
Caster Semenya to appeal in European court over testosterone levels in female runners.

Caster Semenya to appeal in European court over testosterone levels in female runners.

February 26, 2021

Browse by Category

  • African Continental Free Trade Area
  • African Start ups
  • Algeria
  • Analysis
  • Angola
  • Asia
  • BOTSWANA
  • Botswana
  • Burkina Faso
  • Burundi
  • Business
  • Business
  • Cameroon
  • Central Africa
  • China
  • Climate Change
  • Climate Changev
  • Congo Republic
  • COVID 19
  • Culture
  • Democratic Republic of Congo
  • Eastern Africa
  • Egypt
  • Entertainment
  • Environment
  • Ethiopia
  • Europe
  • Fashion
  • Finance
  • Food
  • Food and Drink
  • Foods
  • Ghana
  • Global
  • Guinea
  • Health
  • Immigration
  • in Southern Africa
  • International news
  • Just In
  • Kenya
  • Lesotho
  • Libya
  • Life Style
  • Lifestyle
  • Malawi
  • Malawi
  • Mali
  • Markets
  • Middle East
  • Mozambique
  • Namibia
  • Nigeria
  • North Africa
  • Opinion
  • Politics
  • Rwanda
  • Senegal
  • Seychelles
  • South Africa
  • South Sudan
  • Sports
  • Startup Africa
  • STOCK EXCHANGE
  • Tanzania
  • Tech
  • Togo
  • Travel
  • Travel
  • Tunisia
  • Uganda
  • Uncategorized
  • West Africa
  • World
  • World
  • ZAMBIA
  • Zambia
  • ZIMBABWE
  • Zimbabwe

Browse by Tags

African business news Africa New Africa News african footballer African investments african markets African news African start-up banking Business China Classic Content currency Egypt Explore Bali Finance football Life Style mali news Markets Market Stories Namibia news Nigeria Oilandgas Opinion Pandemic Politics Premium reserve bank of Zambia Russia South Africa Southern African News sports Stay Home Travel United Stated Vaccine Work From Home Wuhan Zambia Zimbabwe Zimbabwe Harare Manufacturing Africa Employment creationn Zimbabwe job creation

WHO WE ARE

The Southern African Times is a regional bloc digital newspaper that covers Southern African and the world news. The paper also gives a nuanced analysis on news and covers a wide range of reporting which include sports, entertainment, foreign affairs, arts and culture.

Facebook Twitter Youtube Instagram Rss

Copyright © 2022 The Southern African Times | Powered by The Southern African Times

Privacy Policy

Terms and Conditions

  • Home
  • Southern Africa
  • Global
  • Business
    • African Start ups
    • African Continental Free Trade Area
  • Tech
  • Opinion
  • Sports
  • Lifestyle
    • Health
    • Culture
    • Food and Drink
    • Entertainment
  • SAT Jobs

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?