South Africa can boost coal shipments to ports after last year's record decline if it secures locomotives that were idled following a dispute with a key Chinese supplier, South Africa's state-owned rail and ports operator said on Tuesday.
Transnet Freight Rail CEO Sizakele Mzimela said resolving an impasse with China's CRRC E-Loco could help it ramp up shipments to about 81 million metric tons of the fuel to ports.
South Africa's shipments fell to about 50 million metric tons last year, the lowest on record, as a workers' strike, floods, cable thefts and vandalism of vital infrastructure plagued Transnet's operations.
The lack of locomotives means Transnet is failing to move 18.5 million metric tons of coal per year, Mzimela said.
This has forced producers such as Thungela Resources (TGAJ.J), the nation's largest shipper of thermal coal, and Exxaro Resources (EXXJ.J) to stockpile the fuel at their mines.
"If we're able to find a solution with CRRC, we know that they have the ability to bring back those locomotives as quickly as possible," Mzimela said at a mining conference in Johannesburg.
Transnet aims to rail about 60 million metric tons this year and could raise capacity to 74 million metric tons by March 2024 and ultimately 81 million metric tons in 2026 if the Chinese locomotive deal is restored.
An agreement with CRRC could help Transnet secure 159 locomotives that are currently being idled within six months, she said.
Transnet clashed with CRRC after the South African company canceled supply of 1,064 locomotives from four suppliers, including CRRC, saying the 54.4 billion rand ($3.04 billion) contract was unlawful.
CRRC hit back by withholding locomotives and spare parts, hobbling Transnet's capacity to haul bulk commodities to ports.
Transnet and CRRC have since agreed to resolve their dispute, but the Chinese company need to reach agreement with South Africa's central bank and tax authorities to be able to operate in the country, Mzimela said.
($1 = 17.9025 rand)
