Rail cripples Richards Bay coal exports

The announcement earlier in the year that the long-delayed South Dunes Coal Terminal (SDCT) had found “common ground” with Richards Bay Coal Terminal (RBCT) on the issue of SDCT becoming an exporter of coal in its own right, was a welcome development after years of indecision and stalling. SDCT represents a consortium of emerging coal miners anxious to gain access to global export markets – something that has been stymied in the past by objections from RBCT foot-dragging by Transnet. Originally conceived as a terminal in its own right on land within the Port of Richards Bay that that would have given it the right to develop as a separate export terminal, SDCT is now the largest component of RBCT’s R1.2 billion Phase V expansion project, with an allocation of 6 million tonnes a year. All of the Phase V capacity has been allocated to new empowered entrants, increasing RBCT’s annual export capacity from 71mt to 91mt annually. The increased capacity is timeous and necessary, even though many logistical problems remain to be solved. India has become an increasingly interested net importer of coal from South Africa, and China is showing strong interest. South African coal exporters previously relied mainly on European and Turkish markets. “We are delighted to welcome SDCT as a valued coal exporter from RBCT,” said RBCT chief executive Raymond Chirwa, who added that South Dunes would provide that much needed additional tonnage in reaching RBCT’s target of 91mt a year. How well the terminal needs export input from South Dunes and other shareholders is patently clear. Last year RBCT exported a mere 61.14mt, a far cry from the heady days of 69mt and optimistic targets of 72mt. A succession of problems, including mammoth derailments along the Richards Bay coal line, as well as problems at the mine face where exporters simply didn’t produce sufficient coal to enable the port to reach its targets, has retarded progress at RBCT. Maria Ramos, in her time as head of Transnet, was quoted as saying that on occasion when Transnet trains arrived at the mines to collect coal, there was none available. In May 2007 she said Spoornet, as it was then called, was being forced to redirect trains from the coal line to other businesses because there was no product to rail. More recently Tau Morwe, former CEO of Transnet Port Terminals and now acting CEO of Transnet Freight Rail, the man who has the challenging job of putting things right with the railway, told journalists that some of the mines lacked the proper equipment to connect with TFR’s block train requirement. But returning to SDCT, Trevor McGiddy, its chief executive, made it clear that neither party was particularly happy with what he described as a “compromise on the part of both parties”. No doubt part of that unhappiness is that SDCT has become a junior partner in the RBCT consortium, and holds a limiting allocation of just 6mt a year. Nevertheless, he said that SDCT was satisfied that the agreement reached was the best option from a business perspective. The result is the most practical and realistic, said McGiddy. “The shareholders of RBCT, including the new entrants, can now concentrate on working constructively with TFR to increase the rail capacity to RBCT and enable South African exporters, especially the new empowered exporters, to participate more fully in the growing global coal market.’ Therein lies the real challenge facing the new RBCT. In the aftermath of the recent Transnet strike Raymond Chirwa conceded that the strike had ensured that RBCT would not reach its target of 65mt this year. He said that on average RBCT received between 1.3 and 1.4mt of coal each week, which meant RBCT had probably lost about 4mt during the 18 days of no rail activity. “It would be very difficult to catch up for the year,” he said.