South Africa robbed of billions

The South African Reserve Bank (SARB) said inefficiencies at South Africa’s ports and deteriorating rail infrastructure “robbed the country of billions in export receipts” in 2022. 

This was contained in the SARB’s Monetary Policy Review, released on 25 April. 

In the report, the SARB noted that coal exports through Richards Bay Coal Terminal (RBCT) plunged to 50 million tonnes in 2022. 

This was the port’s worst performance since 1993 when 51 million tonnes of coal were exported through it. 

RBCT is one of the key coal export terminals globally and by far the most important in South Africa, processing nearly 70% of all coal exports from the country. 

The poor performance of RBCT came at the worst time for coal miners and the country, as coal prices rose 400% from 2021 to 2022. 

This resulted in the country being “robbed of billions in export receipts”, with estimates placing the losses to coal miners from RBCT alone at R30 billion. 

Over the last five years, South Africa’s coal exports have declined by 20%, from 80 million tonnes in 2017 to 64 million in 2021. 

RBCT is privately owned by a consortium of coal miners, including Sasol, Thungela, and Exxaro. However, it relies on Transnet’s rail system to get the coal from inland mines to the port. 

The Minerals Council’s board has approached Transnet to find solutions to the problems inhibiting its rail infrastructure’s efficient performance. 

According to RBCT, the main problems are cable theft and the low availability of locomotives that disrupt rail transport to Richards Bay.

RBCT’s performance in 2022 was also affected by a train derailment in November and a workers’ strike in October. 

The strike alone was estimated to cost R63.5 billion of total exports across Transnet’s operations. 

Miners looking for alternatives

South African miners are looking for alternative ports to export their raw materials. 

Many have turned to trucks to transport their produce to Maputo in Mozambique to avoid using Transnet’s rail infrastructure and delays at South African ports. 

However, this has a severe impact on the profitability of their operations. 

For example, transporting coal to RBCT via rail costs around $11 per ton, while trucking costs companies roughly $70 per ton. 

Miners can absorb this additional cost for now. However, if commodities’ prices decrease, trucking will not be viable for many companies. 

This may result in some companies closing their mines as they cannot get their product to market via Transnet’s rail and ports.

RBCT expects its performance to improve in 2023 with a target of 60 million tonnes for export.

However, in February, Transnet called on logistics companies to cease transports to the terminal for 48 hours for the SANDF to hold its Armed Forces Day.