South Africa's coal exports exemplify the profound repercussions of logistical inefficiencies within the supply chain, serving as a vivid illustration of how operational challenges can significantly disrupt the f low of goods and affect global trade dynamics.In 2022, the country hit its lowest level of coal exports from the Richards Bay Coal Terminal (RBCT) since 1993, moving only 50.35 million tonnes. This was attributed to the lack of trains to carry coal from mines to port. The terminal, which can only accept coal via train, has been operating below capacity for years now as logistics continues to hamper operations considering it has a 91-million-tonnes-per-annum capability.Few anticipated a further decline in volumes, let alone the establishment of a new record low, but in January this year RBCT announced it had exported only 47.21 million tonnes of coal in 2023, down 6.2% year-on-year (y-o-y). Hopes are high that the terminal will at least hit the 50-million-ton mark again in 2024.This comes as the country’s freight rail crisis continues to throttle mineral shipments. Transnet Freight Rail (TFR) has struggled due to the shortage of locomotives and spares, while cable theft and vandalism of its infrastructure continue to hamper its efficiency.Several companies have gone on record to state they have been forced to curb output to match Transnet’s constrained capacity – and it can be seen in the figures. Total estimated coal sales of R192.2 billion were 22% lower y-o-y, and total production was f lat at 228.5 million tonnes.While Transnet has indicated it is working hard to restore capacity and address the numerous challenges it faces, the private sector has remained less optimistic saying a logistics turnaround will take time.It’s time the country can ill afford. At around 250 million tonnes per annum, the coal industry is the largest component of South African mining in terms of production volume. The economy continues to rely heavily on the commodity as a primary input source of energy for electricity. While only around a third of the country’s coal is sold internationally, the inability to move more coal to the ports remains a major concern. In 2023, coal companies took shared responsibility for safeguarding the 600-kilometre rail line to Richards Bay to counteract the effects of cable theft and vandalism.According to the Minerals Council, while this initiative is positive, the sudden decline in the coal price means the cost of continuing is simply too high.“The inadequate supply of locomotives and inefficient rail and port challenges continue to harm coal exports,” said the council’s economist Hugo Pienaar. Compounding the issue, South Africa's contingency plan to resort to road transport when other options fail is not viable. “Prevailing coal prices no longer justify the additional cost of road transportation of export coal,” said Pienaar. The window for export of coal is also closing fast, with global sentiments against the use of the commodity negatively affecting long-term investment in the industry. While the demand for coal in the short term is expected to remain steady, the long-term outlook is far less positive.According to Mining Council estimates, around 26 million tonnes of coal had to be transported via truck for export in 2023, the highest level of road transport yet recorded. This, as Pienaar pointed out, was plainly unsustainable, all factors considered.Transnet executives speaking on various forums at the annual Mining Indaba in Cape Town highlighted the ongoing efforts to stabilise the South African coal supply chain. According to TFR, the mutual cooperation agreement it signed with RBCT was paying off and in February the state-owned rail operator took delivery of seven full sets of batteries procured by RBCT, saying the delivery of the critical spares would improve the reliability of the available locomotive f leet.The first delivery of 50 compressors is expected in March with final delivery set for June, while the remainder of the full sets of batteries will be delivered by the end of April. A total number of 100 have been procured.
