Transnet will significantly boost rail capacity to transport an additional six million tons (Mt) this year, according to Sikhulekile Duma, a director in the Project Management Office in the Presidency.

When asked by Business Report how the additional six Mt would be allocated among bulk exports of coal, iron ore, and manganese ore, Duma was unable to provide specifics.

Duma, speaking at the 20th McCloskey Southern African Coal Conference held in Cape Town last week said that economic reforms initiated in October 2020 under Operation Vulindlela (OV) were beginning to yield tangible results, with one of the most notable achievements being Eskom on the whole keeping the lights on since March 2024.

Duma highlighted that the foundation of OV was the National Treasury Growth Paper published in 2019, underscoring the vital role of private sector participation in the success of ongoing reforms. This was particularly evident in the contributions of the National Energy Crisis Committee (NECOM) and the National Logistics Crisis Committee (NLCC).

In 2024, bulk exports increased by 2.9 Mt from 2023, reaching 158.3 Mt. However, this figure remains well below the 173.4 Mt exported in 2019. Duma also presented a projection indicating that economic growth could reach 3.5% by 2029. The baseline growth rate was estimated at 1.3%, with increased household consumption potentially adding 1.6% and higher fixed investment contributing another 2.4%. However, a negative net trade impact could reduce overall growth by 1.8%, ultimately settling at 3.5%—a level that could generate one million jobs.

Michelle Phillips, Transnet’s Group CEO, said, “While we are seeing green shoots of (growth), substantial challenges remain in the areas of locomotives, security, and infrastructure,” Phillips noted.

She pointed out that Transnet’s volume losses since the 2017/18 financial year stemmed from several challenges, including locomotive shortages, mechanical failures, and rail security incidents.

Transnet is targeting an 11% increase in coal transported to Richards Bay, aiming to reach 53.9 Mt in the 2024/25 financial year. The long-term goal is to restore coal rail volumes to the 75 Mt level.

James Stevenson from the McCloskey Research Team in a presentation around the volatility of global thermal coal markets, questioning whether the world was "turning upside down." He noted a significant shift between the 2015–2019 and 2020–2024 periods. Contrary to previous expectations that coal demand peaked in 2019, 2024 saw record levels of production, consumption, and trade.

“In the years since the pandemic, coal plant retirements in the USA have almost dried up. And this has been a global trend, as reliability concerns have sustained (but not expanded) coal usage,” Stevenson said.

He presented data showing that global coal demand is now expected to continue growing until 2030 before gradually declining. This means annual coal demand will be approximately 150 Mt higher, at 1.1 billion tons, rather than the previously projected 950 Mt before the Russian invasion of Ukraine in February 2022.

Stevenson also warned that meteorologists are delaying predictions of a return to a La Niña weather system, which would bring heavy rainfall to coal-producing regions in Australia and Indonesia. Such weather conditions could potentially reduce coal production by 70 Mt in these areas, opening opportunities for South Africa to expand its coal exports.

BUSINESS REPORT