HomeCoalHow infrastructure constraints impact Thungela's operations

How infrastructure constraints impact Thungela’s operations

Following an initial recovery in the performance of Transnet Freight Rail (TFR) subsequent to the annual maintenance shutdown in July 2021, rail performance has continued to deteriorate in the second half of 2021.

Thungela consequently implemented actions to mitigate the impact on its business. In particular, the third-party sales, which utilise the rail entitlement of Thungela, have been reduced from 926 kt in the first half of 2021 (H1,2021) to an anticipated 25 kt in H2,2021. The Group has also optimised its export equity sales mix, prioritising the railing of higher margin products, at lower volumes, recognising continued rail constraints.

Furthermore, the coal industry has assisted TFR to implement improved security measures which are expected to contribute to an improvement in rail performance. This follows several instances of cable theft and related rail interruptions as widely reported in the media. The coal industry continues to engage TFR on opportunities for further improvement.

Notwithstanding the actions already taken by Thungela and TFR, given the current and expected rail performance levels, some of its operations may become constrained as a result of reaching stockpile capacities from November 2021.

Thungela continues to monitor rail performance and its potential impact on our operations, and to explore further actions that could be required to mitigate such impacts.

Full year 2021 export saleable production guidance is accordingly moderated to 14.8 Mt – 15.2 Mt, from 15 Mt – 16 Mt as previously guided. Unless there is an improvement in rail performance, Thungela is expected to build additional export inventory stock levels of approximately 1.3 Mt during H2,2021.

Thungela continues to work together with the South African coal industry and TFR to improve the levels of infrastructure availability and performance.