Supply of Imported Iron Ore Tightened due to the Strike at South Africa’s Port and Freight-Rail

SHANGHAI, Oct 11 (SMM) - 

The strike at South Africa’s port and freight-rail operator that’s curbing mineral exports has worsened as members of more labour unions join the protest.  

The strike jointly organized by the majority labour group at state-owned Transnet SOC Ltd., and the United National Transport Union began on Oct. 6. The South African Transport and Allied Workers Union, the second-biggest employee group, and other smaller unions will also halt work from Monday, Cobus van Vuuren, Untu’s general secretary, said Sunday in an interview.  

Transnet, which operates the nation's industrial ports, freight rail network and fuel pipelines, has declared force majeure on goods due to the labour action.  

"Today, all ports and freight railways are not expected to be operational," Busi Mavuso,  the chief executive officer of lobby group Business Leadership South Africa, said in a report on Monday. This is catastrophic not only for the obvious sectors linked to direct imports like the medical sector, and exports, like the mining sector, but to the entire, interconnected economy.  

Protesters marched near Transnet’s facilities at the Cape Town port as police observed from a distance. Cranes appeared to be at a standstill at the container terminal while few trucks entered or exited the vicinity.  

Kumba Iron Ore Ltd. said the disruption will affect its 120,000 tons a day of export sales. The company's output will be reduced by 50,000 tons a day for the first week of the strike and jump to 90,000 tons after that, according to a company statement.  

Thungela Resources Ltd., South Africa’s biggest shipper of thermal coal, also said a prolonged two-week strike would reduce export production by as much as 300,000 tons. The exports of chrome, manganese and other bulk commodities will also be impacted.  

According to SMM data, the average weekly shipments of iron ore from South African in 2022 are about 1.07 million mt, of which 600,000 mt per week or about 86,000 mt per day is sent to China. Recently, overseas iron ore shipments have shrunk slightly, and the strike in South Africa may cause the supply of imported iron ore to tighten again. However, the blast furnaces of some steel mills have recently been overhauled due to production restriction and losses. In addition, the upcoming important meeting in October may affect the production of some steel mills. Therefore, the demand for iron ore will be restricted again. SMM believes that both supply and demand of iron ore may decline in the short term. The strike in South Africa has little impact on iron ore supply and prices as there are certain iron ore inventories in major domestic ports. SMM will continue to track the subsequent impact of the strike.