South Africa: Exports, Imports and Its Place

South Africa:

Exports, Imports and its Place in its Region and World

South Africa is one of Africa's most industrialized nations. However, it faces many challenges stemming from its exorbitantly large HIV / AIDS rates and its long history of apartheid.

Energy is key to South Africa's economy, and coal is one of its most important exports. Although only one-third of coal produced in South Africa is exported, primarily to the European Union (EU) and also to East Asia, and in fact, South Africa was the world's third largest net coal exporter (73.7 mmst) in 2002.

Most of the South African coal exports pass through the aforementioned Richards Bay Coal Terminal (RBCT). With the capacity to export an amazing 79.4 mmst annually, RBCT is the easily world's largest coal export facility. Currently, only shareholders of the RBCT Company-- including Ingwe, Anglo, XCSA, Total South Africa, Sasol, Kangra and Eyesizwe, and JCI/Lonrho/Duiker. Ingwe, Anglo and XCSA-- are permitted to use the RBCT export facility. Ingwe, Anglo, and XCSA combined own 86% of the RBCT.

Although the sister South Dunes Coal Terminal (SDCT) opened in 2000 to facilitate the participation of empowerment corporations in the coal export sector, RBCT exporters and the SDCT partners agreed in June 2001 to expand the RBCT facility as well. Because no brand new rail infrastructure is needed, RBCT's expansion is considered the most cost-effective method of increasing South Africa's coal export capability to the world at large. In fact, RBCT's expansion will increase its South Africa's export capacity by 11 mmst. SDCT firms will be permitted to export up to 7.2 mmst per year from this newer terminal. In March 2002, SDCT firms secured $41 million of the proposed expansion's $52 million total estimated cost. The last $11 million is to be financed by RBCT shareholders. The first shipment of coal by an empowerment entrant was loaded at the RBCT in October 2003. The RBCT's fully planned expansion is expected to be completed in 2005.

On another plane, Kumba and the Iron and Steel Corporation of South Africa (ISCOR) exports its coal through the Durban Coal Terminal (DCT), whereas Gold Fields Corp. utilizes the Matola Coal Terminal (MCT), both of which terminals are located in Maputo, in Mozambique. Although only 1.4 mmst of the South African coal supply was exported through MCT in the year 2001, $13.8 million worth of improvements planned for the South Africa-Maputo railway and the planned dredging of the famous Port of Maputo to allow larger vessels' access may encourage increased exports. MCT management anticipates that this facility will be able to export 5.5 mmst of coal by the year 2006; however, increased rail tariffs and other fees may slow South African exports in general. On the bright side, Spoornet, South Africa's state-owned rail company, announced plans in 2003 to increase freight charges to the MCT and DCT by 30% on average over three years.

Indeed, that is one of the challenges that the South African population is facing on a daily basis. Infrastructure is simply lacking to put forth many of the initiatives necessary to improve the country's imports and exports.

On the regional front, the United States is one of South Africa's key trade partners. The relationship between the two nations has been deepening steadily since 1994 and the end of apartheid. This is evidenced in the fact that the Rand value of South African exports to the U.S. has increased markedly. In 2001 and 2002, South African manufactured exports to the North America Free Trade Agreement (NAFTA) grew by a whopping 16.6%. Furthermore, South Africa recorded a trade surplus (this is unheard of in its region) of approximately R3.4 billion in 2000, following a number of years during which South Africa persistently ran a large deficit. However, the structure of trade between the two countries remains incredibly similar. The United States tends to export higher value-added products to South Africa while South African exports to the U.S. consist largely of unprocessed and semi-processed materials such as steel. Nevertheless, export opportunities for South African products do exist in the fields of auto components, shoes and leather, wine, machinery, chemicals, jewelry and cut flowers.