A little over a week ago thousands of trucks blocked both sides of the N2 at Richards Bay as Transnet port operators battled to process the backlog of trucks queuing to offload coal cargoes at the coal terminal.
City manager Nkosenye Zulu said there had been a “huge upswing” in the number of heavy vehicles, leading to disruptive congestion on local roads.
The stockpile of coal next to a BMW dealership in Richards Bay must have looked similar to the unfolding story a few thousand kilometres north, where thousands of tonnes of battery minerals (cobalt and copper) ready for export are stuck in the Democratic Republic of Congo (DRC) awaiting the outcome of negotiations between a Chinese exporter and a state-owned mining company.
What makes the stockpiles uncannily similar is not that both are headed for export, which is self-evident. Nor that both sets of products are exported through KwaZulu-Natal. Rather, it is the implications of price expectations on the interests of a range of economic actors. This is alongside the ability of the ports, rail infrastructure and local roads to process a surge in exports in response to expectations of favourable prices.
According to SA Revenue Service data, the average rand price of export coal headed to France from Richards Bay was R908.2 a metric ton in 2020, growing more than fourfold to R3,918.9/tonne in 2022 before coming down to R2,173/tonne in the first two months of this year. In the case of cobalt, the price has moved from $82,000 (R1.47m)/tonne this time last year to about $35,000 (R630,000) in February this year.
On volumes the story has been mixed. Coal exports to India via Richards Bay across three main tariff lines (including anthracite and bituminous coal) fell from 43.4-million tonnes in 2019 to 19.3-million tonnes in 2022. But exports out of Richards Bay to France rose from 120,000 tons in 2019 to 1.15-million tonnes. Exports to Germany stood at 1.6-million tonnes in 2022 from nothing in 2019.
The concern for SA’s export potential would be if these European exports remain at the same crisis level and recovering Asian demand comes online, placing further strain on the few running trains and prompting yet more use of the roads.
As the path of the green transition incrementally narrows the markets for coal, so too are cobalt miners in the DRC observing, with great interest, the emergence of noncobalt alternatives in battery technology, and new producers such as Indonesia.
“End users — companies like Tesla or Volvo or BMW — [are] looking for other ways to produce batteries or other elements to use in batteries,” says Michael Kavanagh, a DRC-based correspondent for Bloomberg.
But until such alternatives are found Congolese cobalt remains an indispensable component in most lithium-ion batteries. The same applies to SA coal, which until the resolution of the conflict in Ukraine or energy self-sufficiency (whichever comes first) will serve as a stopgap measure taming even the most ambitious of greening plans in Europe.
For now, it seems all want in on the action. “When the price is high the people just dig underground,” Kavanagh explains. “They’ll dig right through their living rooms, find veins of copper and cobalt and try to strike it rich.”
Meanwhile, a “solution” to the congestion in Richards Bay was provided by a local “business forum”, which threatened the drivers of queuing trucks at gunpoint and directed them to an unused airfield. There has also been an impromptu but generous offer by the local authorities to offer land alongside the port as a “depot”.
The long trucking queues will move or be stuck, influenced by the European conflict, the return of demand for coal from Asia and the greening ambitions of developed nations. It seems the uncertainties that come with all of these geopolitical shifts may be a recurring feature, with even more bizarre and unsettling scenes.
• Cawe is chief commissioner at the International Trade Administration Commission. He writes in his personal capacity.
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