Thungela Resources, a major South African coal exporter, is optimistic about a resurgence in the country’s coal shipments.
CEO July Ndlovu expressed confidence on Monday that the industry will recover from a three-decade low experienced in 2023.
The decline in coal exports can be attributed to significant challenges faced by state-owned rail and port company Transnet.
A shortage of locomotives, spare parts, and rampant infrastructure vandalism severely hampered the transportation of coal to ports.
As a result, annual coal shipments plummeted to around 47 million tons last year.
However, Ndlovu believes that the worst is behind the industry. He anticipates a gradual improvement in rail operations, which could boost coal exports to over 50 million tons per year by 2025.
This figure is still below the peak of 76.47 million tons achieved in 2017.
The rail crisis has had a devastating impact on coal producers like Thungela, Exxaro Resources, and Glencore.
To mitigate the effects of the rail disruptions, these companies have resorted to costly alternatives such as road transportation and utilizing ports in neighboring Mozambique.
The combined challenges of reduced rail capacity and softening coal prices have taken a toll on the industry’s profitability.
Thungela’s profit for the first half of the year plummeted by 61% to 1.2 billion rand.
Despite these headwinds, the company remains hopeful for a turnaround and aims to increase its own coal shipments to over 12.5 million tons next year if rail conditions improve.
Exxaro CEO Nombasa Tsengwa echoed the sentiment of a potential recovery, stating that the rail crisis may have reached its lowest point.
