Transnet drags down RBCT exports
The “consistent and drastic decline” in coal volumes delivered via rail saw exports by the Richards Bay Coal Terminal (RBCT) slump by another 3million tonnes in 2023 after already hitting a 30-year low in the previous year.
The decline in exports, said RBCT chair Nosipho Damasane, was due to continuing trouble on the Transnet Freight Rail (TFR) export coal line caused by ailing infrastructure due to a lack of maintenance, underinvestment, the high rate of security incidents such as cable theft, and derailments.
In addition, TFR has not yet concluded long-delayed negotiations with Chinese manufacturer CRRC E-Loco Supply (CRRC) to secure spare parts.
Coal railed to RBCT dropped from 50.4-million tonnes in 2022 to 47.92-million tonnes last year. The total exported volume was slightly less at 47.2million tonnes compared with 50.35-million tonnes in 2022.
Coal delivered to the terminal by TFR has declined significantly in the past four years, dropping by about 20-million tonnes since 2020.
TFR is contracted to supply RBCT with 60-million tonnes of coal a year. However, the terminal has a design capacity of about 90-million tonnes. Between 2013 and 2020, RBCT consistently exported upwards of 70-million tonnes — and as much as 76.4-million tonnes.
During a presentation on the terminal’s 2023 performance on Thursday, RBCT CEO Alan Waller said exports for the year were far below the 60-million tonnes aligned to the TFR contractual rate.
Despite improvement during the final quarter of 2023, RBCT has set a target of 50-million tonnes exported for 2024.
“This is to make sure we give our shareholders as accurate an outlook as possible. It is a given that the TFR contractual volume remains at 60-million tonnes and that remains our target in terms of what we want to get to,” Waller said.
RBCT is owned by coal miners such as Sasol, Thungela and Exxaro.
Russell Baatjies, acting CEO of TFR, believes RBCT’s 50-million target is “conservative. Our immediate focus is to get back to [delivering] 60-million tonnes this year. Over the longer term our aim is to reach at least the 77-million tonnes proved capacity.”
The three main issues affecting TFR’s performance on the coal line, he said, are security, infrastructure and the acquisition of spares for locomotives.
“As soon as we have a firm agreement with [CRRC] or an agreement in place with an alternative supplier, we will have a firmer idea of when [we] will be able to get back to the previous [proven] capacity.”
Transnet has been struggling since 2019 to get a service provider that can assist in supplying spare parts for some of the trains it bought in a controversial deal for 1,064 locomotives. It has about 200 locomotives that remain idle and cannot be returned to the railway lines as the CRRC refuses to provide it with spare parts.
In 2023, the coal industry said it would step in to provide
THE TERMINAL HANDLED ABOUT 92% OF SA ’ S TOTAL COAL EXPORTS IN 2019, BUT THIS FELL TO ABOUT 65% IN 2023
financial assistance to cashstrapped Transnet, which has R130bn debt, to procure locomotive spare parts.
Damasane said they have had “strong engagement” with the Transnet acting executive, including signing the longoutstanding co-operation agreement between RBCT and Transnet, “which allows the two parties to explore opportunities for joint investment in assets and infrastructure”.
Transnet has seen a number of new and acting executive appointments since CEO Portia Derby, chair Popo Molefe and TFR CEO Siza Mzimela resigned in 2023.
Between November and now, said Damasane, the signing of the mutual co-operation agreement has allowed RBCT to procure locomotive spares for batteries and compressors.
Waller said the agreement does not mean that the industry is paying for the spares. “Ultimately, Transnet will pay for the spares. In the case of the compressors and batteries, RBCT placed the orders with suppliers and it will pay those suppliers, but there is a recovery mechanism in the agreement where over a period of time Transnet will refund that money,” he said.
Some of the components ordered by RBCT were from “non-Chinese” vendors.
“We are buying compressors from the same service provider that Transnet bought them from [on a] previous occasion. We were just able to fast-track this process. For the batteries we went to market and found an alternative supplier who was able to deliver the parts faster and at the right quality.”
The performance of TFR has forced coal exporters to make use of trucks to transport coal to other export terminals, but this comes at a much higher cost.
Hugo Pienaar, chief economist at the Minerals Council SA, said SA’s total coal exports from January to November 2023 increased slightly to 66.9-million tonnes from 66.6million tonnes for the same period in 2022. However, volumes remain 5.6-million tonnes down from the corresponding period in 2019.
At an average Richards Bay rand coal price of R2,250/tonne in 2023, the loss in export revenue for SA when comparing 2019 and 2023 volumes amounts to about R12.6bn.
The lower volumes are due, in part, to the decline in rail deliveries to RBCT. The terminal handled about 92% of SA’s total coal exports in 2019, but this fell to about 65% in 2023. Almost 26-million tonnes (35%) of SA coal export tonnages were exported through harbours other than the RBCT, such as the Transnet-run port in Richards Bay, which receives deliveries by truck, said Pienaar.
“Of that 35%, we do not know how much is on road versus rail. But we know that miners have made extensive use of trucks in recent times. It is hard to be overly precise on this, but the mix between rail and road has gone from north of 90% on rail in 2019 to a split of 65%-70% on rail and 30%-35% on road in 2023.”