Transnet, Minerals Council join forces to tackle port and rail bottlenecks

Transnet and the Minerals Council South Africa have announced a collaboration to improve rail and port throughputs that have cost producers billions in sales this year.

It is reckoned that SA lost upwards of R50 billion in 2022 and R35 billion in 2021 because the state-owned rail, port and pipeline company was unable to meet targeted export volumes.

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The announcement on Monday says the two groups “have agreed to work together with a mutually agreed focus on helping to stabilise the whole system’s performance which entails responsibilities on both sides”.

Oversight panel

Both parties have agreed to establish an oversight panel, a recovery steering committee and channel optimisation teams for each of the major commodities: coal, iron ore, manganese and chrome.

A recovery steering committee – comprising Transnet board members, the Minerals Council CEO and CEO representatives of bulk commodity producers – will come up with solutions cutting across rail and port.

Says president of the Minerals Council Nolitha Fakude: “We are determined to find practical solutions to our rail and port challenges and ensure that all producers, big and small, share in the inclusive growth that comes from improved operational performance.”

PwC’s Mine Report 2022, based on a survey of nearly 30 of the country’s largest miners, pointed to some of the logistics bottlenecks facing the sector, among them Transnet’s diminished rail capacity and ports rated by the World Bank as among the worst performing in the world.

Durban, Cape Town and Ngqura (East London) were rated in the bottom 10 of 370 ports worldwide, according to the World Bank Container Port Performance Index for 2021.

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Earlier this year, the Minerals Council said R151 billion could be gained in additional exports, creating an additional 40 000 jobs, if all rail and ports systems were run at design capacity. This does not count the benefit to the fiscus from additional commodity sales.

Minerals Council members account for more than 80% of Transnet’s rail business and 50% of its income, though this has yet to return to pre-Covid levels.

Transnet workers’ 11-day strike in October this year put a further crimp on exports.

On average, South Africa exports about 476 000 tonnes of bulk minerals a day, worth R1.06 billion. This figure dropped to less than a third during the strike.

The Minerals Council said in a statement at the time that major mineral export harbours were operating at between 12% and 30% of their daily averages.

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“We look forward to an equally open and constructive relationship with the Minerals Council and key Transnet customers to stabilise the performance on the channels for the benefit of the country,” said Transnet chair Popo Molefe in a statement on Monday.

This article originally appeared on Moneyweb and was republished with permission.
Read the original article here.