Thungela, Transnet conclude deed of amendment to long-term rail agreement

18th August 2022

By: Creamer Media Reporter


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Coal miner Thungela Resources and State-owned Transnet have agreed to amendments to an earlier long-term coal transportation agreement.

This follows after Transnet, through its Transnet Freight Rail (TFR) subsidiary, in April informed coal export parties (CEPs), including Thungela, that a number of circumstances beyond its reasonable control would continue to detract from its ability to perform at its contracted rail capacity for at least six months.

At the time, Transnet explained that the challenges facing TFR included ongoing legal proceedings relating to irregular locomotive acquisition and maintenance contracts, as well as rife vandalism on its coal line.

Transnet said TFR was under force majeure and that it, thus, had the right to terminate the existing long-term agreement (LTA) with the CEPs.

Thungela and other CEPs rejected Transnet's view that it was entitled to terminate the LTA but committed to engage in negotiations with Transnet to negotiate a deed of amendment to the LTA for the balance of the tenure of the LTA, which expires on March 31, 2024.

Under the terms of the deed of amendment agreed to by Thungela and Transnet this week, Transnet has declared a minimum contractual rail capacity of 60-million tonnes for its financial year ending on March 31, 2023.

Transnet will review the minimum contractual rail capacity every six months, with a view to potentially increasing this.

Further, the parties also agreed on the rail tariff escalation to be applied from April 1 this year and for the balance of the tenure of the LTA.

Take or pay penalties, in revised form, will also continue to be applied.

"Thungela's management is appreciative of Transnet's constructive engagement in the negotiations, during which time bulk coal rail services and export sales continued. The conclusion of the deed of amendment, and the spirit of collaboration between Transnet and Thungela in achieving this, is encouraging," the coal miner comments.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online


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