S. Africa Coal, Iron Volumes Fall From Record, Transnet Says

  • Markets for commodities shipped by Transnet are `depressed'
  • Company has shifted investment strategy amid price lull

Coal and iron-ore shipments from South African mines have dropped from record highs as lower commodity prices led to a decline in output, the head of the country’s rail and ports operator said.

Transnet SOC Ltd. railed 76.4 million metric tons of coal to the Richards Bay Coal Terminal on its east coast and 60 million tons of iron ore to the Saldanha port on the west coast in the year through March 2015. The company didn’t match that peak during the most recent financial year, Chief Executive Officer Siyabonga Gama said in an interview on Wednesday at the World Economic Forum on Africa in Kigali, Rwanda’s capital. The figures are yet to be released.

South Africa is the world’s biggest manganese producer and the continent’s largest of iron ore and coal. Iron-ore prices have dropped 46 percent in the past two years, while the price of coal at Richards Bay on South Africa’s Indian Ocean coast has declined 36 percent. The markets for the commodities that Transnet rails “are all pretty depressed” and miners are choosing to defer investments that no longer look profitable at current prices, Gama said.

Transnet has delayed a planned expansion of its iron-ore line capacity and said in November it extended its capital-expenditure program to as much as 380 billion rand ($25 billion) over 10 years, from an earlier plan of 336 billion rand over seven years.

Manganese Terminal

The project aims to reduce bottlenecks and shift freight from roads to rail in the country where Anglo American Plc, Glencore Plc and South32 Ltd. have operations.

Transnet is moving ahead with developing a manganese terminal at the southern port of Ngqura, next to Port Elizabeth. It will begin operations around 2019 and the company expects the market could support exports of about 16 million tons a year by the time it begins operations, Gama said.

Transnet also ships lower-grade magnetite, a type of iron ore. Exports of the material have been “on and off,” Gama said. While the company had previously targeted annual volumes of as much as 15 million tons, “at the moment what we are talking about is around half of that, maybe 8 or 7 million tons of magnetite,” Gama said. “It’s very different.”

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