Rail underperformance demands urgent intervention

South Africa’s mining sector is showing the benefits of higher prices for certain commodities, along with record chrome and manganese exports. The continued absence of load-shedding and a slight improvement in logistics contributed to improved performance, but the lack of rail solutions continues to negatively impact the mining sector at large. While it seems that the slow recovery of Transnet’s rail performance will see the freight operator moving close to 170 million tonnes of freight this year, progress is still too slow. According to Mzila Mthenjane, CEO of the Minerals Council South Africa, there have been definite improvements compared to Transnet’s low performance in 2022 when it only moved 149 million tonnes. “We are anticipating about 168 million tonnes in the current financial year to end- March,” he said. “The 77 million plunge in railed tonnages that we saw in five years to 149 million tonnes was quite rightly categorised as a crisis.” He said coal deliveries to Richards Bay Coal Terminal (RBCT) had fallen to only 48.7 million tonnes from 77 million tonnes in 2017 and are now at 57.7 million tonnes as joint interventions start to deliver results. Iron ore exports on rail also fell to 51 million tonnes in the same period from 58.5 million tonnes. Despite ongoing efforts, deliveries for the next two years remain at between 50 and 51 million tonnes. “While the improvements in rail services are encouraging, Transnet is simply not meeting its own targets and it is a long way from achieving the 226 million tonnes it railed in 2017,” said Mthenjane. “It could, however, reach its 250 million tonnes target by 2030 with private sector participation.” Initial steps to open the freight corridors to private train operators are encouraging, but most experts agree the process has to speed up. Nosipho Siwisa- Damasane, chairperson of RBCT, said the terminal did not have the luxury of trucks and was completely reliant on rail. “We are highly dependent on Transnet’s logistics. While we are seeing volumes pick up again with growth of around 10% per annum year on year, we need to do more,” she said. “Coal exporters are working very closely with Transnet to see how we can bring private sector money into government and assist with some of the challenges that need to be addressed, like infrastructure upgrades and maintenance.” Of the 11 potential PSPs approved, about four are expected to be in place by the end of this year. “It is imperative that Transnet finds a mechanism to invest in the rail network to deliver optimal operating conditions,” said Mthenjane. “The process of bringing private sector operators on board has to be an urgent one. We cannot afford any deviation from the timelines.” He said the country remained globally uncompetitive with regard to electricity prices, constrained rail and port operations, and significant shortcomings in other infrastructure such as water. “Ongoing reform of our logistics and electricity sectors is of utmost importance.” LV