Transnet Freight Rail's deteriorating performance threatens Thungela operations

play article
Subscribers can listen to this article
Thungela Resources says the Transnet Freight Rail challenges are deteriorating.
Thungela Resources says the Transnet Freight Rail challenges are deteriorating.
  • 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.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Show Comments ()
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders