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South African coal and iron-ore exporters aim to sign agreements with state-owned logistics company Transnet next month that could pave the way for them to spend billions of rand to help fix crucial rail lines and boost shipments.
Organisations representing firms including Glencore and a unit of Anglo American are negotiating the terms of the pacts with Transnet, said Ian Bird, head of transport and logistics for B4SA, a business group that’s partnering with the government to revive South Africa’s sub-standard transport and energy infrastructure and operations.
The collapse of freight-rail lines due to poor maintenance and theft of equipment saw coal exports plunge to a 30-year low of 48-million tonnes in 2023. Iron-ore railings slumped to the lowest in a decade. The government has agreed to allow private operators to run trains on the lines from about April to boost export income.
“We are now at a point where something has to be done,” Bird said in an interview. The state of the lines has an “impact on both Transnet Freight Rail and third-party operators,” he said.
The parties haven’t publicly disclosed the likely terms of the agreements, which should facilitate an infusion of private capital and expertise. Transnet, in a response to Bloomberg queries, put the cost of repairing the coal line over three years, at about R12.9 billion and the iron-ore line at about R9-billion.
Repairing all Transnet’s tracks, including those used to transport containers and manganese, would require 64.5 billion rand over five years, Transnet said last year.
“The conclusion of the agreements with the customers is on track,” Transnet said. “The investment is required to get these lines back up to a standard at which we can move more volumes.” — Bloomberg.
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