S. Africa’s Transnet set to receive $1bn ADB loan
A major independent technical assessment on South Africa’s logistical issues is expected to be published next month, providing Transnet and the mining industry with a roadmap on how to finally fix systemic rail and port issues that have severely hampered exports for the last four years.
Logistical issues have been the main headache for South Africa’s mining industry, costing producers billions of dollars in lost exports of everything from coal and iron ore to manganese and chrome ore. Total mining production in the country remains 7% below its pre-COVID levels of December 2019, largely because of persistent rail and port problems.
Various interventions are underway to reform rail in South Africa, including efforts by the National Logistics Crisis Committee, led by the Presidency. But a key milestone in the path to recovery is the outcomes of an independent technical assessment.
“One of the key things that Russell (Baatjies, CEO of Transnet Freight Rail) and the team have been focusing on, together with us, is the independent technical assessment,” Kumba Iron Ore CEO Mpumi Zikalala told the media during the release of the company’s interim results last week.. “That report will still be finalized in August. And it will give us a sense of what it is that needs to be fixed, whether one is looking at the actual rail track itself or looking at the rolling stock above rail. And it also focuses on the port as well.”
Zikalala said the assessment is being conducted by a credible and independent engineering firm with an aim to help expedite the delivery of critical projects through mutual collaboration between the Ore Users Forum and Transnet.
The mining industry, including coal producers, has collaborated more closely with Transnet following the appointment of CEO Michelle Philipps, ending years of friction between the two sides. So far this year, the industry has helped Transnet with funding to provide much needed locomotives, and has also stepped in to provide security when needed.
The publication of the independent technical assessment will help highlight other key areas for Transnet and the industry to focus on.
However, Transnet continues to struggle with derailments, locomotive availability, cable thefts, power cuts and community unrest.
All of the disruptions forced Transnet to delay its planned maintenance on South Africa’s main export coal rail line by two weeks to 23 July-1 August to allow exporters to build up their stocks at the Richards Bay Coal Terminal (RBCT).
RBCT coal stocks slowly increased last week, as suppliers managed to squeeze in some late deliveries which were unloaded before Transnet’s maintenance period. Thermal coal stock levels at RBCT were estimated at 3.56 mt last week, up from 3.36 mt in the previous week.
Exports for July are expected to be around 3.4 mt, down from just over 4.0 mt in June.