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Richards Bay coal exports soar as Transnet’s recovery plan bears fruit

Logistical and infrastructure upgrades, as well as healthy demand from Asia, played a key role in coal exports from South Africa’s Richards Bay Coal Terminal rising for the first time in nearly a decade, as operator Transnet’s turnaround strategy starts yielding results, market participants said this week.

The Richards Bay Coal Terminal exported 52.1 million mt in 2024, up from 47.2 million mt a year ago and the highest since 58.7 million mt in 2021, according to the latest presentation by the terminal.

Additionally, RBCT expects coal volumes to reach 55 million mt in 2025 at a budgeted rate and 60 million mt at a contracted rate.

“Positive developments, including upgrades to railway lines, the increase in rail capacity and revenue growth, reassure us that Transnet’s situation is gradually improving,” Vuslat Bayoglu, managing director of South African mining company Menar, said.

Moreover, an increase in demand from the Asian thermal coal market driven by an uptick in imports from India amid falling exports to Europe and lower prices supported the rise in export volume through RBCT in 2024.

“South Africa’s exports to India have risen from 25.4 million mt in 2023 to an estimated 29.5 million mt in 2024, around 15% of India’s total thermal imports at 192 million mt,” according to analysts at S&P Global Commodity Insights.

“China and India’s thermal import demand plays a crucial role in the mid- to low-calorific value seaborne thermal coal market, where South Africa actively participates,” the analysts added.

A South Africa-based producer said, “Vietnam bought a lot of South African coal last year. Moreover, there was increased buying from South Korea as well, so a lot of cargoes [were] sold to these regions.”

According to the company’s presentation, Asia accounted for roughly 44 million mt, or 84.5%, of the total coal exported from RBCT in 2024. India was the largest consumer of South African thermal coal at 25.8 million mt. Europe, Africa and the Middle East comprised the remaining share of the total coal exports.

Platts-assessed FOB Richards Bay 5,500 kcal/kg NAR coal prices averaged $88.40/mt in 2024 compared to $99.65/mt the previous year, as price-sensitive buyers in Asia drove heavy bargains amid material availability from other origins at competitive prices. Platts is part of Commodity Insights.

The price of FOB Richards Bay 5,500 kcal/kg NAR coal briefly jumped above $100/mt at the beginning of June following a major train derailment at the end of May.

‘Turnaround strategy’
The rise in exports follows a recovery plan announced in August 2023 by Transnet after the then minister of public enterprises, Pravin Gordhan, announced changes to the board in a bid to address the falling exports.

The new board at Transnet had announced it was developing a “turnaround strategy” that would prioritize increasing locomotive availability and reducing incidents involving cable theft going forward.

As the first step, the company began implementing outcome-based security solutions, which were expected to lower the number of cable theft incidents.

The company then came out with several other measures, including increasing the number of locomotives, establishing a Transnet Rail Infrastructure Manager function to oversee rail network quality and reliability and boosting the ports’ volumes by increasing the number of containers.

The government also supported Transnet’s reform policies, responding by framing a draft proposal that envisages the need for private investments in the country’s ailing logistics system.

“Such critical reforms can only be achieved through government and private sector collaborations. Transnet’s management has made considerable efforts to involve business stakeholders in the reform process. This has contributed to some of the improvements we see today,” Menar’s managing director said.

As a result of the efforts undertaken to improve logistics, the volume of material railed to RBCT increased to 51.9 million mt in 2024 compared to 47.9 million mt in 2023, the presentation showed.

Moreover, the number of major disruptions was either limited or the turnaround to resume services was much faster than it had been in previous years, market participants said.

Transnet continues to experience marginal improvements in the operating environment, particularly the increase in revenue and improved volumes in the rail business owing to the implementation of the recovery plan, the company said in its interim results released Dec. 31.

“Transnet’s board and management should ensure that the momentum [built in the last couple of years] is not broken. Their key focus should be optimizing their procurement systems, investing in infrastructure and tackling the massive debt that has crippled the freight rail company,” Bayoglu said.

Some way to go
While there has been an improvement in logistics, there is still a long way to go for Transnet before South African thermal coal exports return to their glory days, considering the current volumes are not making the most of the installed infrastructure capacity.

“There’s still work to be done as Transnet can enhance its ability to handle exports, making South African businesses more competitive in the global market by investing in modernizing its infrastructure and improving efficiency,” a South Africa-based trader said.

The installed infrastructure at the RBCT can receive 91 million mt, or 32 trains per day, of coal through rail on an annual basis, and it can export 84 vessels per month throughout the year, the company presentation showed.

In its presentation, RBCT highlighted that some challenges remain, such as volume recovery through locomotive availability, network reliability and cable theft, spare availability, Transnet freight rail derailments and security on the main line.

“Commodity Insights forecasts South African exports at 63 million mt in 2025, fairly flat to 2024 as the specter of oversupply looms large, further intensifying competition within the Pacific Basin and across global thermal coal supplies,” the analysts said.
Source: Platts

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