[miningmx.com] — TRANSNET Freight Rail (TFR) has increased railage tariffs to be paid by coal exporters using the ports of Richards Bay and Maputo over the next 12 months at rates way in excess of ruling South African inflation.
According to coal industry sources, the increases – which take effect from April 1 – are 30% on average for the exporters using the Richards Bay Coal Terminal (RBCT) and 17% for those using the much smaller Matola terminal in the Mozambican port of Maputo.
South Africa’s annual inflation rate was reported at just 3.7% as of the end of February.
TFR spokesperson Mboniso Sigonyela initially confirmed the increases but declined to confirm the specific hikes, stating “tariffs are agreed with customers on an individual and confidential basis and, as such, it would be inappropriate to provide further detail in this regard’.
But on Thursday, Reuters reported that TFR spokesperson Sandile Simelane in an emailed response to questions had said: “The export rail tariffs will be raised by between 26%-30%.’
According to coal industry sources, the current average tariff paid on the Richards Bay line is between R90 per tonne and R100/t, meaning the 30% increase will push this to between R117/t and R130/t.
The cost of using the Matola line is considerably higher and currently sits at around R160/t, according to the sources. The 17% increase will push this rate to nearly R190/t.
Asked to justify the level of increases given the much lower level of general South African inflation, Sigonyela said: “Transnet has approved significant capital expenditure for the expansion of rail capacity between the mines and the RBCT from 65mt/year to 81mt/year over the next four years.
“The capital cost and ongoing capital expenditure that is needed to maintain the capacity at that level is shared with industry, and the tariffs are based on the need for Transnet to justify this level of expenditure.’
According to one coal company executive, “Basically, they told us to take it or leave it and that if you did not accept the new tariffs, you would not get any trains.’
The new rates are being levied through the interim tariff arrangements that have been in force since April 2005, when the last long-term railage agreement expired.
TFR and the coal exporters have been arguing ever since then over the terms for a new long-term contract, in which TFR is demanding that the exporters accept “take or pay’ penalty clauses.
These mean that the exporters must pay for tonnages of coal they forecast would be railed to the RBCT, even if they do not produce it.
The mines from their side want TFR to agree to similar penalty conditions, should TFR fail to provide trains as agreed.
Coal exports through the RBCT are currently running at levels similar to those achieved a decade ago – in large part because of operating problems at TFR.
The RBCT exported 63.4mt in 2010 and had targeted 70mt for this year, but that has already been scaled back to 68mt, given the slow start to the year with exports running at an annualised rate of just 53.4mt as of end-February.
