Glencore’s coal production from South Africa fell by 7% in 2024 due to constrained export rail capacity under Transnet, although the company on Thursday said it would ramp up output once capacity was restored.
Logistics constraints in South Africa have been forcing some bulk commodity miners to lower down production as stock piles up at the mines due to inefficient export rail and port capacity.
For Glencore, energy coal production from South Africa in 2024 was lower by 1.2 million tons compared to the previous year.
“Production of 16.6 million tons was 1.2 million tons (7%) lower than 2023, mainly reflecting measures implemented in 2023-24 to reduce coal production due to export rail capacity constraints,” said Glencore on Thursday.
It added: “Should additional rail capacity be restored, production rates could be increased.”
The lower productivity from South African unit contributed to Glencore’s overall 6% output decline for energy coal in 2024 to 99.6 million tons.
The company attributed this to the “impact of scheduled mine closures, longwall moves in Australia” last year, “export rail constraints in South Africa and a combination of permit delays, community blockades and unusually heavy rain at Cerrejón,” in Colombia.
Glencore CEO, Gary Nagle, said that despite the overall decline for the year, energy coal volumes for the company had increased by 5.2 million tons in the second half of the year “in line with operational and logistical improvements in Australia and South Africa”, while steelmaking coal added 13.1 million tons in the second half.
Glencore’s attributable production from the ferrochrome joint venture with Merafe Resources marginally was in line with 2023 production at 1.166 million tons. Glencore’s attributable share of the South Africa ferrochrome joint venture stands at 79.5%
Merafe and Glencore were planning to produce ferrochrome at all of their venture’s smelters “given the conclusion of the Negotiated Pricing Agreement” with Eskom.
Merafe Resources recently said that its share of production from the joint venture with Glencore only marginally grew in 2024, despite a dip in output for the quarter to end December, at a time analysts said that projected expansion of the stainless-steel industry will drive growth of the ferrochrome market in the outlook.
Despite the upbeat outlook for ferrochrome, South African producers of the commodity have been facing operational and production hurdles.
Merafe Resources CEO, Zanele Matlala, said last year that the company, together with Glencore, was looking at ways to mitigate power supply, energy costs and logistical constraints impacting mining companies in the country.
Merafe mainly derives its revenues and operating income from the Glencore-Merafe Chrome Venture which produces ferrochrome at a total installed capacity of 2.3 million tons per year.
It shares about 20.5% of the earnings before interest, taxation, depreciation and amortisation (Ebitda) from the South African ferrochrome joint venture project.
BUSINESS REPORT