Thungela Coal: Managing the impact of continued poor rail performance
The inconsistent and poor Transnet rail performance continued to weigh heavily on the South African coal mining industry and indeed on the Group’s results in the second half of the year. The annualised industry run rate dropped from 48.0Mtpa in H1 2023 to 45.9Mtpa in the second half of the year through to the end of November 2023. This results in an annualised run rate of 47.0Mtpa for the year to date, below the 50.3Mt railed in 2022.
The deterioration in the second half of the year has been primarily attributable to an increase in security related issues as well as locomotive failures. The coal industry, including Thungela, continues to work closely with Transnet to remedy the security situation and has been supporting Transnet through additional security coverage since November 2023.
A sustainable solution is dependent on the procurement of spares for the locomotives supplied by the Chinese locomotive supplier CRRC, either directly from CRRC, or from alternative suppliers.
Thungela and the coal industry recognises the need for urgent intervention and RBCT (on behalf of the industry) has placed orders with alternative suppliers for critical locomotive spares. Transnet is also in the process of procuring locomotive spares from alternative equipment manufacturers.
In response to the continued rail underperformance, Thungela curtailed production at three underground sections earlier this year and instituted free-on-truck sales in order to better manage stockpile capacity at our operations.
Thungela continued to truck coal from its operations to nearby sidings, allowing for further rail loading options and reducing the risk of train cancellations. The wider distribution pattern and its rapid load-out terminals are physical infrastructure advantages which allow it to benefit from additional trains when TFR experiences problems on certain sections elsewhere on the line. As a result, the Group expects to rail 12.0Mt in 2023.
