HomeAfrica-NewsTransnet declares sixth force majeure in 18 months

Transnet declares sixth force majeure in 18 months


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A file photo of freight trains delivering coal to the Richards Bay Coal Terminal (RBCT) in KwaZulu-Natal.

  • Transnet has declared force majeure for this week’s derailment.
  • It has previously declared force majeure for floods, a fire, riots, a cyber attack and a strike.
  • The company hopes to avoid the payment of fines to users if it does not comply with the delivery of the minimum contracted amounts.
  • For more stories, go to News24 Business cover.

Transnet has declared its sixth force majeure in 18 months, this time on the coal export line to Richards Bay, which experienced a massive derailment on Tuesday.

Force majeure is a clause that is included in contracts when one of the parties cannot fulfill its obligations due to an unforeseeable and unavoidable catastrophe. Usually these are “acts of God” like extreme weather.

However, Transnet broadly defines force majeure, including events that are “beyond its reasonable control.” It has declared force majeure six times since July 2021 for parts of the business due to a cyber attack, riots, a fire, floods, a strike and now the derailment.

READ | Transnet declares force majeure in ports due to strike

The derailment occurred in rural KwaZulu-Natal near Ulundi and included 97 of 100 railcars, forcing the closure of both coal lines. A large part of the track was also damaged. In a statement earlier this week, Transnet said it was investigating the cause of the crash, but sabotage was suspected as it had received threats from the surrounding community, demanding business opportunities.

Under the agreements Transnet has with users of the export coal line, Transnet is required to transport a minimum tonnage of contracted coal or face financial penalties.

Following the derailment, Transnet notified the Coal Export Parties and advised them that it was prevented or may be delayed in meeting any of its obligations under its agreement. In a letter to users, he said:

Clause 1.2.42 of the agreement provides that in the event that either party is unable to perform any of its obligations under the agreement as a result of force majeure, such party shall be released from all liability that such delay or inability would normally cause under the contract, for the period of the delay or inability, provided that, if a party is delayed or unable to perform its obligations by virtue of an event of force majeure, it must immediately perform the corresponding obligation as soon as it is able to do so. so.

Under the contracted agreements, Transnet Freight Rail has committed to deliver 60 million tonnes during fiscal year 2022/23 and is falling behind to meet this target. The company has yet to say how long it will take to clear the derailment and restart operations.

The company is under financial pressure as revenue has fallen every year since 2018 as it struggles to deliver sufficient volumes. In October it received 5.9 billion rand in support from the Treasury to repair and buy more locomotives and repair flood damage.


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