SOUTH AFRICA’S TRANSNET IMPROVES LOGISTICS, DELIVERING MORE COAL TO RBCT

By Gavin du Venage, South African-based Editor

A vessel takes on a load at the Richards Bay Coal Terminal; operators of the facility say Transnet has failed to provide adequate logistical infrastructure. (Photo credit: Pierre Crocquet)

After years of pleading, South Africa’s coal industry is finally about to get its way — a much needed upgrade to the coal line that connects the interior to the main export terminal on the coast. Unfortunately, it may be too late.

South African state-owned logistics firm Transnet opted to name its mighty coal haul line the Songololo, the Zulu word for a “long black centipede.” The description is apt, as the Songololo coal line is perhaps the world’s longest Slinky, hauling 200 wagons through an area known since ancient times as “Valley of a Thousand Hills.” The track stretches 360 miles between the coalfields in Mpumalanga province to the port of Richards Bay, from where the product is shipped to clients around the world.

Impressive, though, as the line is, clients of the service have been far from happy. The Richards Bay Coal Terminal (RBCT) is the largest of its kind in the world, with a nameplate capacity of 91 million metric tons per year (mtpy). It has never come close to that. Last year, Transnet’s freight division managed around 70 million mt, one of its best years ever.

According to coal advisory firm XMP Consulting senior analyst Xavier Prevost, lack of capacity meant some of South Africa’s biggest customers were forced to look elsewhere to meet their requirements. By 2006, the European Union (EU) accounted for almost 90% of South Africa’s exports, but by last year only 27% of the country’s production was headed for Europe.

“We lost our main market and Colombia took it,” said Prevost. “Although, at the same time, we did start exporting more to the Pacific Rim, the loss of the EU market made a big impact in revenue to the industry. We could say the good standing our coal exports enjoyed — quality and reliability — went with it.”

A spokesman for Transnet declined to comment, citing mandatory corporate reporting rules that prohibit public statements during the closed period in a run-up to announcing annual results.

RBCT is privately held by a consortium of South Africa’s biggest coal producers, including Anglo American, BHP Billiton and Exxaro. They have argued that Transnet has not kept up with potential demand, while at the same time using its government-granted monopoly to keep private players out of the long-haul rail logistics market.

A driver boards a locomotive at Vryheid rail yard, where the Songololo coal line begins its journey to the coast. (Photo credit: Pierre Crocquet)
A driver boards a locomotive at Vryheid rail yard, where the Songololo coal line begins its journey to the coast. (Photo credit: Pierre Crocquet)

“The reality is that Transnet Freight Rail’s rail capacity does not even match the current port capacity of 91 million mtpy,” BHP Billiton said in a statement earlier this year.

After years of often acrimonious exchanges between the coal companies and the rail operator, Transnet appears ready to move and has committed $20 billion to an overhaul of its freight operations. Already, it appears to be paying off.

Last July, Transnet introduced Class 19E locomotives — part of a 110-loco order — that can run on both alternating current and direct current overhead power lines. A quirk of the line is that the first