South Africa’s coal exports have suffered a major setback after a train collision disrupted the rail line that connects the mines to the port of Richards Bay, the largest coal terminal in the world.
The accident occurred on Thursday outside Richards Bay, on the country’s east coast, when two trains carrying coal collided and derailed, according to state logistics company Transnet SOC Ltd. No serious injuries were reported and the cause of the collision is under investigation.
Transnet said it was working to clear the trains and restore the rail operations as soon as possible, but did not give a timeline for the recovery. The company said it was also exploring alternative routes and modes of transport to minimize the impact on its customers.
The rail disruption is a blow to South Africa’s coal industry, which relies heavily on exports to generate revenue and support jobs. Coal is the country’s most valuable mineral export, accounting for about 25% of the total in 2023, according to government data.
South Africa exported 66.7 million tons of coal in 2023, down from 70.2 million tons in 2022, due to lower demand from Asia and the European Union, as well as operational challenges at Transnet. The rail company has been struggling to improve its performance and efficiency amid aging infrastructure, frequent breakdowns, and security issues.
The train collision also adds to the woes of the Richards Bay Coal Terminal, which saw its coal exports drop to the lowest level in three decades in 2023. The terminal, which has a capacity of 91 million tons per year, shipped 63.4 million tons of coal last year, down from 72.2 million tons in 2022.
The terminal’s chief executive officer, Alan Waller, said the decline was mainly due to lower demand from India, China, and Pakistan, as well as the impact of the Covid-19 pandemic on global trade and logistics. He said the terminal expected a modest recovery in 2024, but warned that the outlook remained uncertain and challenging.
South Africa’s coal sector is also facing increasing pressure from environmental and social activists, who are calling for a transition to cleaner and renewable sources of energy. The country is one of the world’s biggest emitters of greenhouse gases, mainly due to its reliance on coal for electricity generation.
However, some industry players and analysts argue that coal still has a role to play in South Africa’s energy mix, as well as in the region and beyond, especially for countries that lack access to affordable and reliable power. They say that coal can be used more efficiently and responsibly, with the help of new technologies and standards.
The South African government has pledged to reduce its carbon emissions and diversify its energy sources but has also acknowledged the need to balance its environmental and economic goals. The government has said it will support the coal industry to ensure a just and orderly transition that does not leave anyone behind.
Source: Bloomberg
