Thungela cuts coal production over freight rail crisis

Thermal coal exporter Thungela Resources on Wednesday said it expects a 7.6% decline in production from its South African operations after curbing output due to persistent freight rail problems.

Thungela said in an update it expects its South African coal production to be 12.1-million tonnes in the full year to December 31, 1-million tonnes lower than its 2022 output.

The miner said it reduced production because of the disruption of state-owned freight rail monopoly Transnet's services due to “an increase in security-related issues as well as locomotive failures”.

The rail crisis, blamed on a lack of locomotives and spares as well as cable theft and vandalism, has forced other South African bulk mineral exporters such as Kumba Iron Ore to cut production because of constrained capacity to transport commodities via rail to port.

Transnet is on course to rail only 47-million tonnes of coal to port this year, lower than the 50.3-million tonnes railed last year and the lowest in three decades.

“In response to the continued rail underperformance, we curtailed production at three underground sections earlier this year,” Thungela said.

By June 30, Thungela had 2.7-million tonnes of coal, nearly a quarter of its export sales, stockpiled at its mines as it struggles to haul them to port.

The Johannesburg-based miner expects its export sales to be flat at 12.1-million tonnes this year, compared with 12.2-million tonnes in 2022.

Production from Thungela's 85%-owned Ensham mine in Australia, acquired during 2023 to diversify away from South Africa where infrastructure challenges continue to dent exports, is expected to be 2.9-million tonnes, higher than the initial forecast of 2.7-million tonnes.

Reuters