Coal exports on South Africa's north corridor export line will make a "significant improvement" in the coming financial year, rail operator Transnet Freight Rail's (TFR) chief executive, Sizakele Mzimela, told Argus in an interview.
The operator has implemented a range of measures to improve performance on the line, which has been hit by a lack of locomotive capacity and cable theft.
The amount of coal transported weekly by rail to the Richards Bay Coal Terminal (RBCT) slumped to around 58mn t in 2021, a drop of 17pc on the year and the lowest annual rail volume since 1996, according to data aggregated by South African mining firm Thungela.
But TFR is optimistic of a rebound in the 2022-23 financial year ending 31 March 2023. Mzimela said the operator has set a target of 74mn t to be railed to Richards Bay for export over the period, and an even more ambitious target of 81mn t in the medium term, after which point "considerable new investment" would be needed to facilitate further improvement.
Key to TFR's bullish targets has been its decision to move 40 locomotives to the coal export line. The locomotives have been fitted with electronically controlled pneumatic (ECP) braking systems, which allow for all the brakes throughout a train to be applied simultaneously, enabling shorter stopping distances and reducing the probability of derailments, among other benefits.
Derailments have been among the numerous issues faced by TFR, and have on occasion led to significant disruption to coal deliveries. A derailment at the eDumbe Bypass on 6 March led coal railings to RBCT slumping by 29pc on the week to 0.88mn t in the seven days to 13 March, data seen by Argus showed.
"We had some 22e [locomotives] that were operating on other flows on other corridors which we took the decision to try and move... across to the export coal line. However, we then had to wait for the ECP kits and technology to be installed on these locomotives before we could utilise them," Mzimela said.
"I am happy to report... we now have fully installed the ECP kits and technology on 40 additional locomotives that will... be operating on the export coal [line]," she said, adding that the benefits will start to show most prominently in the coming financial year commencing 1 April rather than in the current financial year.
TFR's decision to add the new locomotives to the line was "the single most important measure" the operator has taken to address the line's declining performance, Thungela chief financial officer Deon Smith said in an earnings call on 22 March.
TFR is also hopeful that it will be able to significantly reduce coal export cycle times on the north corridor. It said that in the past six weeks it has reduced cycle times from 77 hours on average to 70 hours, and is targeting a further reduction to 63 hours, in line with system design.
New security measures
A major challenge faced by TFR has been an escalation in security issues on the network, whereby cable theft has led to significant delays and had a negative impact on delivered volumes.
"No-one would ever have anticipated that we would be dealing with such high levels of theft and vandalism," Mzimela said. "Even the type of theft and vandalism that we're experiencing is changing in nature as well, in that it is no longer what previously we would call a ‘bread and butter' type issue, where people are stealing a bit of copper in order to put bread on the table. It seems now a lot more organised. Clearly that requires a different kind of response to that type of challenge."
A recently formed collaboration with coal industry customers to combat cable theft has already led to some improvement in addressing the issue, Mzimela said. The collaboration only covers part of the north corridor coal export line at present, but there is a plan to extend the partnership to the full line, pending further engagement with customers.
"The customers and ourselves engage on a weekly basis. They engage on a weekly basis because they have to be continuously changing their deployment strategy. We're trying to stay ahead of the criminals," Mzimela said, adding that a key benefit of the collaboration has been the fact that the industry partners have been able to substantially increase the number of drones on the line.
Technologies
TFR is deploying and considering an array of new technologies to improve security on the line to minimise the impact of theft and vandalism.
Among the approaches being considered is a plan to deploy ‘in-cab' signalling systems that would make the movement of trains less reliant on external signalling infrastructure, which has been subject to theft.
A recent rise in overhead cable theft, meanwhile, has created an additional issue whereby if the train drivers are unable to see the hanging wire in time it can hook up to the locomotives, causing significant damage.
TFR's engineers have developed a cat-eye like technology to help the drivers see the broken cables in time to stop the train.
"This is the technology we want to put on all our cables a few meters apart so that it's like a reflector... so that if the line is cut, or the cable is cut, it gives the driver sufficient time to stop," Mzimela said.
TFR is also considering replacing copper-based cables on the network with lower-value tiger wire to discourage theft.
"We want to use material that becomes less and less attractive as opposed to the copper. That's why we're looking at the use of tiger wire. But that's not going to be a solution on its own, without actually implementing the holistic solution to security," Mzimela said.
Mzimela said that any impact of the switch would be likely to be delayed by the fact that it could take some time for criminals to establish the low value of the tiger wire, adding that it is likely to take a long time to convert the existing copper cables on the network.
Demand outlook firms
TFR's efforts will be key to whether South Africa can boost its exports in response to high global demand and prices in the short term.
The Russia-Ukraine conflict has reportedly led some European buyers to look to new markets to plug the gap left by Russian coal, including to some off-specification South African product.
Even with the relatively poor performance of TFR's coal line, Thungela, which demerged from UK-Australian firm Anglo American in June, reported full-year profits of 6.9bn rand ($467mn) in 2021, compared with a loss of R362mn in 2020, spurred by a massive increase in realised prices.
Should TFR's various initiatives to address security and locomotive capacity concerns on the coal export line have the desired effect, they could present a significant opportunity for the country's mining firms to capitalise in the months ahead.
