Coal sales to Africa increase as Asia’s drop

RICHARDS Bay Coal Terminal (RBCT) said yesterday it had increased its customers in north and east Africa. The exporter beat its export target despite the slump in the coal price crippling the industry.

The terminal’s improved efficiency, along with a closer relationship with Transnet Freight Rail (TFR) among others, helped cushion the impact of the coal price drop to $48 (R805) a ton from about $70 a ton this time last year because of a global glut.

The private-sector-owned terminal, which has capacity of 91 million tons, is not out of the woods. It has placed its expansion plan to add another 19 million tons to the facility on ice. It was not expecting a boost in exports this year.

Nosipho Siwisa-Damasane, the RBCT chief executive, said the port had exported 75.3 million tons last year compared with 71.2 million tons in 2014, a 5.7 percent improvement.

“We think, given the challenges of the sector, that we have built confidence in South Africa Incorporated, in partnership with Transnet Freight Rail,” Siwisa-Damasane said.

Targets beaten

“We are seeing change because TFR is performing,” she said on delivering the firm’s 2015 production results.

She said the company had beaten its 74 million-ton target as exports to countries such as Tunisia, Egypt, Kenya and Uganda had doubled last year.

African exports were 7 percent higher last year while there was a 7 percent decline in exports to Asia.

About 59 percent of exports went to Asia, mostly India, 19 percent to Europe – 6 percent less than a year earlier – and 14 percent to Africa.

“Our market mix is no longer the same. We have not sent a vessel to China,” SiwisaDamasane said.

She said India had helped plug the gap caused by China and Europe.

The company was unlikely to export more than 75 million tons of coal this year because of the depressed environment.

“The 75 million-ton level is going to be difficult to break because of the coal prices,” said Siwisa-Damasane.

RBCT has placed its plan to increase capacity to 110 million tons on hold. “Our discussions for the phase 6 expansion have stopped,” she said.

RBCT chairman Mike Teke said the mining industry had seen the worst time.

“I have never seen anything like this. I believe there is an opportunity for consolidation in the industry. We are going to see changes,” he said.

Late last year the company said it was injecting R1.34 billion into an equipment replacement programme. “We think it’s an opportunity for us to invest in tough times and reap the rewards when the cycle turns,” Siwisa-Damasane said.

RBCT handles coal from mines owned by companies including Glencore, Anglo American and South32. South Africa is the seventh-biggest producer of the fuel globally, according to the World Coal Association’s website. – Additional reporting by Bloomberg