Thungela flags its Transnet woes in financial 2023 pre-close statement as coal exports set to hit new lows

Thungela made the announcement on Wednesday in a pre-close statement for its 2023 financial year, in which it flagged not just its mounting woes but those of the export coal sector.  

“The inconsistent and poor Transnet rail performance continued to weigh heavily on the South African coal mining industry and indeed on the Group’s results in the second half of the year,” the statement said.  

It went on to say that because of these challenges — which worsened in the second half of the year — the export coal delivery run rate to the RBCT for the industry in the year to date was 47 million tonnes, below the 30-year low of 50.3 million tonnes sent by rail in 2022. Thungela itself cut production this year by 7.6%. 

“The deterioration in the second half of the year has been primarily attributable to an increase in security-related issues as well as locomotive failures. The coal industry, including Thungela, continues to work closely with Transnet to remedy the security situation and has been supporting Transnet through additional security coverage since November 2023,” the company said.  

This means that the industry itself is providing security for Transnet’s operations, filling a gaping hole of state failure.  

“A sustainable solution is dependent on the procurement of spares for the locomotives supplied by the Chinese locomotive supplier CRRC, either directly from CRRC or from alternative suppliers,” Thungela said.  

“Thungela and the coal industry recognise the need for urgent intervention and RBCT (on behalf of the industry) has placed orders with alternative suppliers for critical locomotive spares. Transnet is also in the process of procuring locomotive spares from alternative equipment manufacturers.” 

The CRRC spares have been held up by a long-standing dispute between the Chinese company and the South African Revenue Service and the South African Reserve Bank. News24 reported in October that coal producers had been asked to cough up hundreds of millions of rands to settle the dispute.  

To break the logjam, coal producers through the RBCT are now placing orders for spares themselves.  

The Cabinet last week approved a plan that seeks to break Transnet’s monopoly in South Africa’s logistics system and promote competition by increasing the private sector’s participation in the running of the country’s rail network and ports.

Read more in Daily Maverick: Cabinet approves plan to break Transnet’s monopoly and promote competition in SA’s logistics network 

The private sector, in desperation, is already stepping up to the plate. DM