I was part of a panel discussion with coal industry leaders at the recent McCloskey’s 2022 Southern African Coal Conference, in Cape Town, South Africa.

Here panellists highlighted many of the frustrations of South Africa’s coal industry. Coal miners are deeply concerned with the systemic failures of the railway network, extended power blackouts and policy uncertainty that all negatively impact their businesses. 

I pointed out that coal exports had declined to 58-million tons in 2021 and according to analysts they are expected to decline to 49-million tons in 2022 owing to rail constraints. In the same period, if we look at Australia for example. It went from 100-million tons to 300-million tons and Indonesia from 100-million tons to 600-million tons. This also created many jobs in both these countries. 

South Africa has the best coal terminal in the world, the Richards Bay Coal Terminal, with a capacity of 100-million tons, but we are using half of the capacity. We have never moved to a level of being comfortable to move 100-million tons. A maximum of 76-million tons has been exported. There is space in the port and there is coal available. However, the main issue is the ability of Transnet to provide coal trains to the sidings timeously and efficiently, in line with the contracts that they have signed to do so. 

Transnet needs to consider allowing a third party to have access to the rail lines so that they can move their own coal. They are happy to give the access to containers to be moved to Durban. The catch is, that investors in this scheme would have to invest in locomotives and wagons for only two years! This is will be a very expensive undertaking for just two years. In fact, it is impossible to do so. We are having this discussion which is not going to take us anywhere. I fully understand the industry’s growing frustration with Transnet, but legal action will not ultimately solve our operational problems. 

Transnet is going to have to find a solution very quickly because if you can’t move product, mines are going to be closed and dollars are not going to come to the country. If we don’t get dollars from the export of manganese, coal, chrome and iron-ore, etc… South Africa’s Treasury will come under even greater pressure, of that we can be most certain.