ANGLO American-controlled Kumba Iron Ore said today exports of the steel-making ingredient would be disrupted after receiving a force majeure from Transnet, the state-owned freight and logistics company.
This followed a strike called by unions last week which coal producer Thungela Resources said would hit hard were it sustained for two weeks or more.
Kumba said today the initial impact on production would be about 50,000 tons a day for the first seven days, increasing to 90,000 tons daily thereafter. Export sales would be hit to the tune of 120,000 tons a day.
Transnet issued the force majeure on October 7.
The strike, called by United National Transport Union (Untu) and the South African Transport and Allied Workers’ Union (Satawu), was heavily criticised by the South African Iron and Steel Association last week which said it would have “devastating” consequences.
“Compounded by the ongoing energy crisis in South Africa, [it] is likely to have devastating consequences for all sectors of the South African economy, at a time when the country is trying to rebuild following the significant impact of the Covid-19 pandemic,” it said.
Kumba said it would “… continue to monitor the situation closely and provide further updates, as appropriate”. A third quarter production and sales update was scheduled for publication on October 27.
Thungela said last week that its operations were able to run without rail for a further seven days without experiencing a significant impact on production, but it added “in the event of a protracted strike extending to two weeks we would be forced to further curtail production with the potential resultant impact being a reduction of up to 300,000 tons of export saleable production.”
According to Thungela, it had already built up “relatively high stockpile levels” on its operations because of rail constraints over recent months.
Thungela pointed out that the Richards Bay Coal Terminal operated independently of Transnet “should be able to continue to load vessels subject to Transnet continuing to provide a number of services required for the berthing and unberthing of vessels such as pilots and tugboats”.
Thungela concluded that “given RBCT’s ability to load vessels and Thungela’s ability to draw down on healthy stock levels at port, we currently expect the impact on sales for quarter four 2022 to be limited”.