Mining jobs under threat as rail crisis persists

Mining unions and experts are warning of possible job cuts as Transnet's failing rail infrastructure chokes the movement of commodities to the ports. 

Thapelo Malekutu, the National Union of Mineworkers' acting regional secretary for the Mpumalanga highveld, said the union had already received warnings from three coal mining companies of retrenchments if the situation does not improve. Malekutu declined to reveal the companies' names to avoid sowing panic among workers. 

“We have already been informed by mining companies about the situation on rail. Any time from now, we are waiting for formal processes where they want to consult about Section 189 [retrenchments]. Mining companies are complaining that they cannot move coal to the ports and that the coal price has dropped. 

“In the past, even if they were transporting less, the price of coal was good but now it has dropped and they cannot transport enough,” Malekutu said.

He said the mining companies informed the union about possible retrenchments at a meeting last month.

“Normally the companies don’t just send out letters to the unions about the issue. They try to make you aware before they formally communicate so that you are not in shock.”  

Malekutu said trucks cannot move coal to the Richards Bay port quickly enough as they face problems such as road accidents, strikes and breakdowns. 

The Minerals Council has said coal, iron ore and chrome miners are facing enormous difficulties transporting their commodities to the port by rail.

Bonginkosi Mabaso, chief commercial officer at Transnet Freight Rail (TFR), said the country's rail capacity has been constrained by underinvestment, rising incidents of theft, and vandalism.

Incidents have included damage to the rail network by so-called business forums as well as cable theft.

We were supposed to sign a five-year wage agreement just as Anglo Platinum signed a five-year deal. But they said no, they cannot enter into such a deal. They said they have done some forecasting and found that there is too much uncertainty

—  Gideon du Plessis, general secretary of Solidarity

Mabaso said in 2017/18, TFR moved 226-million tons with 2,215 locomotives, while in 2022/23, it has 1,589 locomotives available with 364 standing idle as that the end of May.

Gideon du Plessis, general secretary of Solidarity trade union, said the problems with Transnet's rail network came up during their wage negotiations with Kumba Iron Ore. 

“We were supposed to sign a five-year wage agreement just as Anglo Platinum signed a five-year deal. But they said no, they cannot enter into such a deal. They said they have done some forecasting and found that there is too much uncertainty.

“They can only predict what is going to happen next year. They said the uncertainty around exports and the impact of Transnet Freight Rail makes it difficult for them. The company cannot sign a five-year deal because of those uncertainties,” he said. 

“We are busy with negotiations with Kumba. We’ve been negotiating for two months. The Transnet issue was raised as a major issue on the transportation of iron and there is uncertainty as to when this problem will be fixed.”

The Sunday Times understands that large stockpiles of minerals, which cannot be transported to the ports, are impacting the operations of coal, iron ore and chrome miners.

Minerals Council spokesperson Allan Seccombe said the matter was raised with the government and the Presidency had set up the National Logistics Crisis Committee, which involves business. 

He said that last year the mining industry lost out on exports worth R50bn because of TFR's inefficiency. In 2021 it was R35bn. 

“You can see the deterioration. We estimate that if Transnet were to operate its rail at full capacity, the country could generate R151bn extra in mineral exports. It is a big issue, not only for us but for the country. Of that R151bn, about R27bn to R30bn would go to the fiscus,” Seccombe said. 

He said the industry has not yet shed jobs but the situation in coal was bad. 

“The industry grew by about 15,000 jobs last year. We had tremendous commodity prices. At the moment, coal has come down from that. You cannot move it by train, you have to move it by road. At the prevailing price, they are not going to make any profits on that.

“The industry is going to battle and ultimately there will be consequences for jobs if coal mines cannot export,” Seccombe said.

Commodities rescued the government during the Covid pandemic as they provided much-needed tax due to higher prices. 

Mining expert Henk Langenhoven said the coal price had more than halved in the past 12 months. 

“It was $300 a ton now it is $100. That is the big issue. The companies are not getting prices that they got before. At that price, it cannot be transported by road. It is too expensive.” 

Langenhoven said the sector employed 5,000 more people in the last quarter. 

“As you say there are stocks building up at the mines but they can't get it out. Eventually, you have to slow down production, which sometimes means people,” he said. 

Mabaso said TFR had “implemented a transformation strategy to stabilise rail operations and grow the volumes across all corridors including that of the export coal, manganese and ore lines”.

The plan involves partnerships with the private sector to tackle infrastructure investment, vandalism and security concerns “for the benefit of the economy”. It also involves “bringing back the fleet that is out of service”.

Mabaso said TFR has also adopted an outcome-based security contract. 

“Contractor performance management includes penalties for substandard performance and incentives if the agreed performance targets are met and or exceeded. The coal customer collaboration initiative includes the funding of security which comprises an additional 86 security task teams and 35 drones,” he said.

“Since the deployment of coal customer-funded security interventions, there has been a 34% reduction in security-related incidents per week on the coal line. However, it must be borne in mind that the coal line continues to be challenged by cable theft at critical bypasses and this impacts train movements,” Mabaso said.