EXXARO Resources said yesterday that logistical constraints at Transnet Freight Rail (TFR) would result in a 31 percent decrease in export sales volumes in the six months to the end of June.
Exxaro said in its pre-close statement for the six months to the end of June that TFR’s alarmingly low performance was because of poor locomotive availability, increased incidences of cable theft and increased vandalism of rail infrastructure.
“This matter has been extensively discussed with TFR by both Exxaro and the Coal Industry Forum through the Minerals Council South Africa.”
TFR railed 24.3Mt to Richards Bay Coal Terminal from January to the end of May, which was equivalent to an annualised tempo of 58 million tons, said Exxaro.
The group said the performance from Grootegeluk dropped from an average of 6.9 trains per week last year to 5.1 trains per week.
“The Mpumalanga export rail performance dropped from 25.3 trains per week in 2020 to 14.9 for the period January to the end of May 2021,” said Exxaro.
Exxaro said in addition to TFR’s logistical constraints, the impact of the Covid-19 pandemic and some adverse weather conditions would also contribute to lower coal production and sales volumes.
Coal production, excluding buy-ins, and sales volumes were expected to decline by 11 percent and 9 percent, respectively.
During a conference call, Exxaro’s general manager for marketing and logistics, Sakkie Swanepoel, said there had been a consistent low level of performance by TFR at the Waterberg.
“We have seen low-level performance constantly, and we are battling to get to the higher level. We do not yet see an uptick in that performance. That is a major focus area for us still,” said Swanepoel.
Swanepoel said there had been an equally poor performance on the Mpumalanga side, where Exxaro had its other export mines.
“We have seen a very poor performance in quarter one. We had two shut-downs on the coal lines. During the period of the shut-downs, Transnet had a lot of damage in terms of cable theft, as well as vandalism of equipment,” said Swanepoel.
He said the vandalism and cable theft were in addition to the general problem on the coal line of the poor availability and maintenance of locomotives for the export market.
Last month, state-owned TFR said between December 2020 and April it had experienced 244 incidents of theft and vandalism of its infrastructure.
Exxaro said it expected thermal coal production from Waterberg to fall 6 percent, mainly because of increased rainfall, compulsory Covid-19 testing following the December holiday break, and poor performance by TFR.
“Production at the Mpumalanga commercial mines is expected to be 20 percent lower due to Leeuwpan having been impacted by market constraints and poor TFR performance, and at Belfast due to logistical constraints linked to TFR performance,” said Exxaro.
The group said its Exxaro Coal Central Complex experienced geological challenges, and Mafube was impacted by the pandemic and equipment challenges.
Exxaro said metallurgical coal production would likely decline by 13 percent because of increased rainfall and lower performance by TFR, impacting on stockpile levels.
BUSINESS REPORT