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Transnet stands by its 75Mtpa coal target

Johannesburg, South Africa — 12 July 2012 – South African transport and  logistics giant Transnet has insisted that it will achieve its target of railing 75Mtpa of coal to Richards Bay for export from the country’s coalfields, despite having to average monthly deliveries at levels not achieved since 2005.

“We have a target of 7.7Mt for July, so it’s not a linear progression,” said Siyabonga Gama, CEO of Transnet Freight Rail (TFR) – the freight rail division that is the largest contributor to Transnet profits.

Miningmx reports that Transnet posted a marginal 1.5% decline in net profit for the year of R4.18 billion. At R49.5 billion, revenue was the highest ever, which group CEO, Brian Molefe, said boded well for the company’s growth strategy, known as its ‘Market Demand Strategy’ (MDS).

In February, President Jacob Zuma sanctioned a R300bn boost in capital spending by Transnet as part of an initiative to stimulate industry and create employment. The major part of this expenditure – about R205 billion – was allocated to rail projects, of which about R50 billion was to build out Transnet’s coal, manganese and iron ore infrastructure.

The MDS has targeted coal freighting growth of 75Mt along the Ermelo to Richards Bay line this year, increasing to 97.5Mt, in increments, by the group’s 2018/19 financial year.

In its financial year-to-date, TFR has railed a total of 15.03Mt along the coal line, equal to an average or tempo of 5.01Mtpm. According to a report by Macquarie Securities, TFR needs to reach an average of 6.6Mtpm for the remainder of the year, which has nine months to go.

The last time TFR managed to crest 70Mtpa in coal deliveries to Richards Bay was in 2005, although it managed 67.7Mt last year as the first signs of MDS kicked in. “There were also cancellations by mining companies totaling 2.5Mt to 3Mt last year which, if they hadn’t occurred, would mean we would have reached 70Mt,” said Molefe in an interview with Miningmx.

Gama is forecasting deliveries of between 73 and 75Mtpa. “This is likely to be achieved,” he said. TFR had not seen any dampening down of coal deliveries to Richards Bay despite a near 20% climb down in export coal prices this year.

Source: Miningmx. For more information, click here.