South African coal production fell 3.5pc on the year to 19.3mn t in June, government data show, as the coal sector experienced longstanding issues with state-owned rail and power operators. But the country's coal production in the first half of the year faired better at 114mn t, against 111mn t in the same period last year.
Production in June was capped by soft domestic demand from state-owned power utility Eskom. South African mining firm Exxaro, which serves as one of the key suppliers to Eskom's coal-fired power fleet, reported lower offtake by Eskom from its Grootegeluk mine in its half-year financial results.
Eskom told Argus its lower offtake from Exxaro was on the back of operational issues at the 3.9GW Matimba and 800MW Medupi coal-fired power stations. But the utility plans to recover the under-offtake in the second half of the year.
Mining firms also pointed fingers at state-owned rail operator Transnet Freight Rail (TFR) for its inability to allocate rail wagons and successfully rail coal to export terminals because of frequent derailments and cable theft. This hindered the firms' ability to offer prompt tonnes.
South African coal producer Thungela in its first-half results said its railings to the Richards Bay Coal Terminal (RBCT) fell to 5.8mn t, down 6.5pc on the year, attributable to TFR's performance. Given TFR's unreliability, miners also chose to truck coal to alternate ports for exports, which increased the cost of operations for miners.
In line with lower production in June, coal exports from RBCT also decreased 11pc on the year to 5.32mn t. To that effect, RBCT's chief executive Allan Waller said at a conference in July that Transnet's performance in the first half of the year had been poor so far because it set a budget target of 50mn t of coal exports for this year. From January to July, exports were level pegged at last year's annualised rate of 47mn t.
Looking ahead
Both Transnet and Eskom have recoded improved performance in the past weeks, but it is yet to be observed whether this can be sustained.
TFR has increased the number of trains delivering coal to the Port of Richards Bay from 24 per week previously to 28 now. By 30 September, this will be ramped up to 32 trains a week.
Coal shipments by rail to RBCT rose to 1.2mn t in the week ending 25 August, the highest since the first week of July, terminal data show. TFR supplied 220,879t more coal on the week, above the 913,143t weekly average so far this year.
On the other hand, Eskom's summer outlook also indicated a positive trend with better management of the coal fleet.
