Minerals Council forecasts mineral export revenue loss of R50bn as unions promise to intensify strike

SOUTH Africa’s bulk mineral exporters had lost R6.5bn in revenue as a result of an eight day strike by rail and port unions, underway since October 6.

This is based on Minerals Council estimates today of R815m in daily revenue losses which equates to some 357,000 tons in iron ore, coal, chrome, ferrochrome and manganese shipments that are unable to be made as a result of the strike.

Unions today rejected an improved pay offer by state-owned freight and logistics firm Transnet and said they would intensify the strike. Transnet offered up to 5.3% in improved pay but Carestone Damons, a member of the United National Transport Union’s bargaining team, told Bloomberg News that employees would only consider an increase of at least 7%.

“The Minerals Council is deeply concerned that the labour action at Transnet will compound the losses our bulk mineral exporting members are already experiencing because of Transnet struggling to meet targeted annual tonnages on its rail network and throughput at ports,” the council said in a statement.

Earlier this year Transnet issued a force majeure to the country’s coal producers owing to the impact of theft of copper cable, rail route sabotage and parts availability. A new force majeure was declared on Monday as a result of the strike.

The damage caused by the strike is not just the immediate impact but the longer-term consequences of having to catch up on delayed exports and imports, which will have a ripple effect on business and broader society, said the council. “The long-term reputational damage to South Africa as a reliable supplier to global markets must be considered by all parties,” it added.

It calculated that the strike, and Transnet logjams, had contributed towards annualised revenue losses of R50bn this year, 43% more than R35bn last year. This covers losses on revenue of iron ore, coal, chrome, ferrochrome and manganese exports.

“The Minerals Council South Africa urges a speedy resolution to the strike affecting Transnet’s rail and port network which is costing the country, businesses, and the mining sector billions of rands in lost trade, taxes and economic activity, damaging an already fragile economy,” it said.

On average, South Africa exports about 476,000 tons of bulk minerals a day worth R1.06bn. “We estimate that just 120,000 tons of minerals worth R261m are being exported daily. Major mineral export harbours are operating at between 12% and 30% of their daily averages.

“In contrast, R151bn could be gained in additional exports, with the concomitant benefits of employment in mining increasing by 40,000 jobs to 500,000, the fiscus benefiting from improved tax revenue and higher revenues for Transnet if all rail and ports systems were optimally and efficiently run at design capacity,” the council said.

BusinessLive reported on Wednesday that certain companies had offered to pay an additional level on containers that could help bridge the disparity between pay demand increases and employer Transnet’s offer.

Citing industry publication Cargo Movement Report, BusinessLive said today an additional levy of R148 per container had been offered to Transnet’s terminal handling charges.

Transnet did not say whether it accepted or rejected the offer submitted by companies. “Transnet is considering a number of options and offers from industry in order to avert a protracted strike. These will be communicated with the relevant stakeholders upon finalisation,” it said.