MBOBMELA – The Palabora Mining Company’s (PMC) cancellation of contracts with transport and logistic companies because of magnetite’s low market price could have a potentially major impact on the economy.
Last week Lowvelder reported that PMC had stopped producing magnetite and had cancelled about 650 contracts of various truck drivers and owners.
Metreta, the logistic company which was contracted to monitor the transportation of magnetite, is currently taking the issue to court. This is according to Ms Moya Lesia, business development director at Metreta.
According to Mr Hulisani Nemaxwi, media representative of Palabora Mining Company, the global commodity price has dwindled significantly. This is mainly due to the economies in Europe and Asia, with China in particular not doing well.
“Palabora Copper transported magnetite from here to Maputo at a significant loss due to the logistical structure of the roads-transportation model. We therefore decided to stop trucking magnetite via road transport and intensify our engagements with Transnet Freight Rail to get more trains, as rail is much cheaper.” According to a source at one of the bulk freight-carrier companies, notice was given to Metreta, which it then gave the transport companies to discontinue loading and transporting magnetite.
“The contact was stopped two weeks ago for the transportation of magnetite. It will also not be reinstated in the new year.” Most transport companies and cargo carriers will now focus on Steelpoort and Burgersfort’s chrome mines where they are currently contracted.
“There are still about 100 000 tons worth of magnetite that can still be transported from the site. The cancellation of contracts does not only affect the transport companies but also other beneficiaries,” he added.
“The community of Phalaborwa will suffer the most. What about the people who ordered massive amounts of diesel for the trucks beforehand? All of this has to go to waste,” he mentioned.
One of the major concerns is that bulk freight carriers will now be left unused as the mining company has stated its intention to export all magnetite via rail by 2019.
According to Nemaxwi, the company will focus on rail until the global economy recovers.
Interestingly, Palabora Copper has tried to establish a solution to the problem of the damaged R40 through its corporate citizenship programmes.
“We have offered R40 million to government to rehabilitate the R40. However, we are still waiting for the formal agreement with Sanral which has indicated that it will take about 18 months to get the funding from National Treasury,” Nemaxwi stated.
He said the deterioration of the road was not due to the heavy loads of transport trucks but rather because of the lack of continuous maintenance on it.
“A study showed that the road has deteriorated as a result of continuous neglect or lack of maintenance over the years and not because of the heavy trucks. Only when the trucks came onto the road, and due to heavy rains early this year, the situation worsened,” he said.
