South African coal mine workers struggle to take advantage of Russian sanctions

Rising demand for coal should benefit South African miners, but the volatile state infrastructure makes many unable to take advantage of Europe’s quest to find alternatives to Russian fuel. ..

South Africa’s benchmark export-grade coal prices have doubled since the beginning of the year as European countries purchased alternative coal sources before the EU banned Russia’s imports later this year as part of Ukraine’s war sanctions. became. The EU will also allow more fossil fuels to replace Russia’s oil and gas in the coming years.

However, the massive theft of copper cables and the shortage of trains due to corruption under former President Jacob Zuma, who resigned under the cloud of scandals in 2018, has caused problems for state freight operator Transnet. Caused. “We cannot meet our contractual obligations regarding the amount of coal. [miners] Transnet CEO Portia Derby told the Financial Times.

“It’s happening all over the world — the supply chain is growing,” said Bevan Jones, CEO of the African source market. However, South Africa “has scored some own goals thanks to the transnet and railroad lines.”

South African coal is a good alternative to Russian coal, according to Jones, but last month the country exported only 2.9 million tonnes to Europe. Xavier Prévost, a coal analyst at XMP Consulting, states that at that rate, the annual total cannot exceed 40 million tonnes. South Africa exported 58 million tonnes from Richards Bay’s coal terminal last year. This is the lowest since the 1990s and well below production capacity. The railroad from the mining town of Ermelo to Richards Bay can carry 77 million tonnes, and the port can carry 91 million tonnes.

The South African Minerals Council says it lost more than R35 billion or $ 2 billion in revenue last year because mining companies were unable to transport bulk cargo such as coal for which they had a sales contract. Mesela Nhlapo, Chief Executive Officer of the African Railway Industry Association, said of Transnet:

Transnet says it is doing everything it can to restore operation. “About 80% of our revenue comes from the mining industry, of which most of our profitability comes from coal. Therefore, it is in our interest to move coal. “Derby said.

Freight carriers also lacked coal trains, a direct legacy of the systematic plunder of government resources known as “state capture” under Zuma, before being expelled by Cyril Ramaphosa and replaced by president. There is.

During President Zuma’s term, Transnet agreed to pay R44 billion for more than 1,000 locomotives from Chinese and Western manufacturers. According to a judicial inquiry, the transaction is expensive and full of kickbacks, and almost 10 years later, only about half of the trains are delivered. “Basically, coal is the most affected,” Derby said, due to the need for special vehicles and the shortage of these trains.

South African miners such as Exxaro and Thungela, spin-offs of Anglo American’s former local coal business, have rejected Transnet’s force majeure declaration. They are discussing with the operator to find a solution.

There are few alternative means of transportation for exporters. “It’s a problem trying to find a truck everywhere right now. They’re like chicken teeth for now. It’s crazy,” Jones said.

European sanctions on Russia could help other African coal-producing countries. This week, the port of Mozambique received coal from Botswana, a landlocked country for Europe, according to terminal operator Grindrod. This is a milestone for new export routes. Coal from Botswana is also being trucked to the port of Namibia, according to analysts.

Despite the need to replace Russian coal in the short term, Europe is still shifting away from fossil fuels in the long term. South Africa’s coal buying rush this year is short-lived and its exports are in Asia, Jones said. But the surge emphasizes that decarbonization is not easy in Europe or Africa.

Last year, European countries joined the United States and the United Kingdom and promised to fund South Africa’s renewable energy with $ 8.5 billion in return for accelerating coal phase abolition plans. The war in Ukraine complicated the transition. “It’s European hyperhypocrisy that we want your coal, but you should decarbonize,” Jones said.

South African coal mine workers struggle to take advantage of Russian sanctions

Source link South African coal mine workers struggle to take advantage of Russian sanctions

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