South Africa's ongoing rail bottlenecks pose a threat to coal deliveries to its primary export hub for the sixth consecutive year, warns Exxaro Resources Ltd., one of the nation's largest coal producers.

The company states that coal shipments from mines in Mpumalanga province to the Richards Bay Coal Terminal (RBCT), facilitated by state-owned Transnet SOC Ltd., are projected to reach 47.4 million tonnes this year.

This falls short of Transnet's target and marks the lowest level in at least three decades.

Despite the coal export industry's support to Transnet's freight rail division, the amount of coal transported via rail has not improved, Exxaro added.

Transnet has implemented a turnaround plan to enhance the performance of rail network to operated ports, requesting funding from the government to achieve higher shipping targets of 60 million tonnes of coal to Richards Bay this year.

Weak demand in Europe and Northeast Asia led to sustained pressure on seaborne thermal coal prices for most of the year, Exxaro said. Both thermal coal and gas prices have decreased substantially hit by ample stocks and stronger renewables availability in Europe.

Sources from Exxaro said the API4 coal export price index is expected to average $122/t, while the iron-ore fines price is likely to average $119/t.

Despite uncertainty surrounding the severity of Europe's winter and natural gas availability and prices, Exxaro expects strong Chinese thermal coal demand and winter restocking in Europe to support prices in the first quarter of next year. Increased economic growth in China and India would also shore up the prices.

Seaborne coal prices are predicted to be steady on the back of sufficient supply from Australia and Indonesia due to dry weather.

(Writing by Riley Liang  Editing by Harry Huo)
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