Thungela Resources, one of South Africa’s biggest coal exporters, is still in talks with Transnet. (Image: Isibonelo Colliery by Philip Mostert. ©Anglo American 2019)
South African state-owned logistics firm Transnet has issued a veiled threat to coal exporters after failing to agree to changes to transportation contracts, following its declaration of force majeure in April.
In a statement on Tuesday, Transnet announced it had lifted force majeure on nine coal exporting parties (CEPs) that had agreed to amend transportation contracts, but voiced frustration at not being able to reach a deal with other miners.
“Transnet has fulfilled its commitment to continue providing transportation services to the CEPs during the good-faith negotiations, but is now obliged to consider its options,” Transnet said, without saying what action it could take.
Transnet declared force majeure in April, saying a lack of locomotives, large-scale theft of copper cables and vandalism of infrastructure had crippled the company’s freight rail network used by coal and iron ore miners to transport their minerals to port.
The provision frees both parties of contractual obligations because of exceptional circumstances.
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South Africa’s Minerals Council has said that limited rail capacity cost bulk commodity exporters at least 35 billion rand ($2.08 billion) last year in lost revenue. Some exporters have resorted to trucking minerals to port, at a significantly higher financial and environmental cost.
The rail utility did not name the nine coal exporters that had agreed to contract amendments and did not respond to Reuters’ request for additional information.
Thungela Resources, one of South Africa’s biggest coal exporters, said it was among those still negotiating the proposed contract amendment with Transnet.
“The company remains confident that the amendment will be finalised in the immediate future,” Thungela said in an emailed response to Reuters.
Glencore, another major coal exporter from South Africa, declined to comment. Exxaro Resources said it was unable to comment because it is in a closed period ahead of results.
Analyst Xavier Prevost of XMP Consulting said Transnet could not afford to withdraw services from the big coal exporters.
“It makes very little sense because 80 to 90% of coal that is exported from the country is from Thungela, Exxaro, and of course Glencore. That’s where the exports come from,” Prevost said.
($1 = 16.7886 rand)
(By Anait Miridzhanian and Nelson Banya; Editing by Barbara Lewis and Leslie Adler)