The CEO of logistics and fleet solutions company Supergroup says the company is seeing huge volumes of coal being trucked to Maputo as its strategic location makes it a cheaper option than coal by road to Richards Bay.
Peter Mountford said on Tuesday the company is upbeat about growth opportunities to keep growing commodity exports in cross-border operations due to high demand for coal, chrome and other resources.
“We are seeing a huge movement of volumes to Maputo. Coal as a commodity cannot really afford long distances on the road, and it’s too expensive. For us to haul coal from the Middelburg, Witbank region to Richards Bay is about 1,063km, so it’s just too expensive to run a cheap commodity like coal — it has to get on rail and we need to be operating between mines and rail,” Mountford said.
“So, with regards to coal, undoubtedly the corridor is Maputo.”
He warned that the Richards Bay line would have to be rejuvenated and protected to ensure local companies can competitively move their products in and out of the country.
“I don’t have a week that doesn’t go by without the coal producers saying ,‘Can we not get you to run to Richards Bay’ and we can do it but here is the rate and can you afford the rate at these coal levels, the answer is probably no,” Mountford said.
“I think we need to manage our environment socially and politically to the best of our abilities and that obviously depends on highly effective and quite firm policing. You just wonder if there’s not the time to deploy protection to strategic assets like the Richards Bay mineral line,” he said.
The Maputo port has increasingly become the preferred harbour to transport goods out of SA for many companies amid inefficiencies at the Durban port and Richards Bay.
The Richards Bay Coal Terminal — a coal-handling facility owned by 13 mining companies — has capacity for 90-million tonnes transported by rail per year, but it now handles just more than 50-million tonnes, with half transported by road.
This is after a fire that broke out in October 2021 damaged 11 conveyor belts, forcing more harbour-bound industries to transport their cargo via road.
In its results for the year to end-June, Super Group hiked its dividend by more than a quarter year on year to 80c per share as profit rose by a similar margin to R2.1bn for the period.
Headline earnings per share (HEPS), a common profit measure in SA that excludes certain items, rose 23.3% to 469.4c. This was as the group bagged new client wins in the consumer and convenience markets, contract renewals and market share gains.
It gave credit to its investment in technology and fit-for-purpose assets as also unlocking efficiencies and creating capacity for growth, with integration across operating companies reducing costs and creating shared value-creation opportunities.
The company, valued at about R12.3bn on the JSE, said strong volume increases were experienced in the SA and African logistics consumer and commodity transport businesses.
Its Supply Chain Africa segment increased operating profit 48.7% to R1.26bn, with further expansion of the Fleet Africa business’ fleet lease presence in East Africa also a priority.
To offset the effect of global economic uncertainty, fluctuating demand and possible supply chain disruptions, the group has over the years set out to diversify with its operations now encompassing multiple industries and markets.
As a result, more than half of its revenue and operating profit is now generated outside SA. The company, which has supply chain, fleet and dealership operations in Southern Africa, Europe, the UK and Australasia, operates in 21 countries in total.
Mountford said the company is well positioned geographically and diversified enough to take advantage of the growing demand for commodities worldwide, including coal and battery minerals.
“The demand for coal is still excellent in India, and that’s where most of our coal is going,” he said, adding that countries further afield such as China are also top buyers.
Group revenue jumped 30.6% to R61.9bn, core earnings (earnings before interest, taxes, depreciation and amortisation) grew a fifth to R8.49bn and operating profit by a similar margin to R4bn.
Super Group’s shares were down 2.49% to R34.50 on Tuesday after rising more than 30% since the start of the year.
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