[miningmx.com] – TRANSNET insisted its target of railing 75 million
tonnes (Mt) of coal to Richards Bay from South Africa’s coalfields was possible,
despite having to average monthly deliveries at levels not achieved since 2005.
“We have a target of 7.7Mt this month [July], so it’s not a linear progression,’ said
Siyabonga Gama, CEO of Transnet Freight Rail (TFR), the freight rail division that is
the largest contributor to Transnet profits.
Transnet posted a marginal 1.5% decline in net profit for the year of R4.18bn. At
R49.5bn, revenue was the highest ever, which group CEO, Brian Molefe, said boded
well for the company’s growth strategy, termed ‘Market Demand Strategy’ (MDS).
In February, President Jacob Zuma sanctioned a R200bn boost in capital spending by
Transnet as part of an initiative to stimulate industry and create employment. Part
of this expenditure – about R205bn – was allocated to rail projects, of which about
R50bn was to build out Transnet’s coal, manganese and iron ore infrastructure.
The MDS has targeted coal freighting growth along the Ermelo (Mpumalanga
province) to Richards Bay line of 75Mt this year, increasing to 97.5Mt, in
increments, by the group’s 2018/19 financial year.
However, in its financial year-to-date, TFR has railed a total of 15.03Mt along the
coal line, equal to an average or tempo of 5.01Mt. According to a report by
Macquarie Securities, TFR needs to reach an average of 6.6Mt for the remainder of
the year, which has nine months to run.
The last time TFR managed to crest 70Mt in coal deliveries to Richards Bay was in
2005, although it managed 67.7Mt last year as the first signs of MDS kicked in.
“There were also cancellations by mining companies totaling 2.5Mt to 3Mt last year
which, if they hadn’t occurred, would mean we’d have reached 70Mt,’ said Molefe in
an interview with Miningmx.
Responding to questions by media following the year-end results presentation,
Molefe earlier said: “The coal industry was caught off guard. They will catch their
breath and we think we’ll do more’.
Gama went a step further forecasting deliveries of between 73Mt to 75Mt. “This is
likely to be achieved,’ he said. TFR had not seen any dampening down of coal
deliveries to Richards Bay despite a near 20% climb down in export coal prices this
year.
POLICY MATTERS
Molefe said it was possible Transnet could become involved in the debate regarding a
proposal to declare coal a strategic mineral – a development that would see lower-
cost coal supply to Eskom prioritised, possibly over exports.
As a result, this would run counter to Transnet’s MDS which, when launched in April
this year, stated it wanted to place South Africa at the forefront of the
internationally traded seaborne thermal coal market.
Molefe fought shy of suggestions that coal as a strategic asset ran counter to MDS in
respect of lifting coal exports. “We are not policymakers,’ he said. “We think South
Africa will be able to consume all the coal it produces.’
Following a meeting between Public Enterprises Minister Malusi Gigaba and Mineral
Resources Minister, Susan Shabangu, the respective departments of both ministries
were set to conduct a cost-benefit analysis of declaring coal strategic.
