South Africa: RBCT rail coal inflows recover post-derailment

Coal transportation by rail to the Richards Bay Coal Terminal (RBCT), South Africa's largest coal export terminal, has substantially rebounded after a recent railway derailment incident.

As of the week ending 14 April 2024, state-owned freight rail operator Transnet shipped 946,000 tonnes (t) of coal to RBCT through its North Corridor, marking a significant increase from the previous week's low of 463,000 t due to the derailment accident.

The derailment occurred on 2 April 2024, causing suspensions on three railway lines leading to RBCT. Line 1 resumed operations on 4 April 2024, followed by Lines 2 and 3 on the evening of 5 April 2024. The cause of the accident has not been disclosed by Transnet.

This incident is the second coal train derailment in South Africa since 2024, highlighting the vulnerability of local coal-related infrastructure. On 14 January 2024, a collision between two trains occurred on a major railway line from a coal mine to RBCT.

In February 2024, the average weekly coal exports from RBCT surged to approximately 1 million tonnes (mnt), surpassing last year's figure of 800,000 t during the same period.

Coal shipments through the North Corridor reached 1.18 mnt in the week ending 25 March 2024, marking the highest weekly shipping quantity in the last two years. Following the derailment accident in early April, weekly terminal-bound coal shipments dropped rapidly to around 460,000 t. Coal inventory at the port decreased by 10% in the week ending 14 April 2024.

As of 15 April 2024, coal stocks declined to 2.4 mnt compared to the average weekly inventory of 2.7 mnt recorded since the beginning of the year. However, minimal impact on exports was expected. Total coal exports from RBCT from 8 April-14 April 2024 amounted to 709,000 t, increasing by 144,000 t compared to the previous week.

Approximately 400,000 t of coal were exported to India, as South African coal is commonly used to meet the demand in India's sponge iron sector. Additionally, anticipated warmer-than-usual temperatures during April-June in India are expected to drive further coal imports from South Africa.

Several local miners planned to reduce sales following the incident. This, coupled with increased European coal prices and the overall impact on the seaborne high-CV coal market due to the US bridge collapse, led to a rise in South African high-CV coal prices.

Transnet has released a draft maintenance plan for the North Corridor to support future coal exports, as it handles a majority of RBCT's coal export volumes. The corridor is scheduled to undergo annual maintenance from 9 July- 18 July this year, potentially reducing coal shipments to RBCT. During the overhaul periods in 2022 and 2023, the average rail coal inflows to the terminal were 262,000 t and 70,000 t, respectively.