- Thungela says the performance of Transnet Freight Rail has deteriorated in the second half of 2021.
- Thungela relies on the rail service provided by the company for the transportation of coal to the harbour.
- It says it has prioritised the railing of higher margin products at lower volumes.
Thungela Resources has bemoaned the "deteriorating' performance of Transnet Freight Rail (TFR) which is used by the company and the industry to ferry coal to the Richards Bay Coal Terminal for export.
The line, which is operated by Transnet, has been hit by operational challenges caused by cable theft, resulting in delays that affect the coal supply value chain. The company noted that the performance of the rail operator has "continued to deteriorate in the second half of 2021" following an initial recovery from the annual maintenance shutdown in July.
Thungela, which was spun off from Anglo American this year, says its third-party sales, which utilise the rail service, are expected to be to be reduced to 25 kilotons in the second half of 2021, from 926 kilotons in the first half of 2021.
As a result, the company says it has "optimised its export equity sales mix, prioritising the railing of higher margin products, at lower volumes, recognising continued rail constraints" - as part of efforts to mitigate impact to the business.
However, it warned that operations may be constrained if stockpile capacities are reached by November.
"Notwithstanding the actions already taken by Thungela and TFR, given the current and expected rail performance levels, some of our operations may become constrained as a result of reaching stockpile capacities from November 2021."
Thungela's full-year 2021 export saleable production guidance is expected to moderate to 14.8 million – 15.2 million tons, down from 15 million tons – 16 million tons, in line with the previous guidance.
"Unless there is an improvement in rail performance, Thungela is expected to build additional export inventory stock levels of approximately 1.3 million tons during H2 2021."
It also stated that the coal industry continues to work with TFR on finding solutions to the rail challenges.
On Friday Transnet declared a force majeure at its Port Terminals division, following a fire that broke out in the Dry Bulk Terminal on Wednesday evening. It was not clear when the facilities would return to operation.