South African coal and iron ore exporters are set to sign significant investment agreements with state-owned logistics company Transnet, aimed at repairing vital rail lines and enhancing shipment capabilities.
The deals, which involve representatives from companies like Glencore and a unit of Anglo American, are expected to address critical issues caused by poor maintenance and theft, which have led to a sharp decline in freight rail services. The decline has impacted coal exports, which hit a 30-year low of 48 million tonnes in 2023, as well as iron ore shipments, which also fell to a decade-low.
While coal railings saw a modest increase to 52.1 million tonnes in 2023, the total remains well below the target of 60 million tonnes and represents just over half of the rail capacity of 91 million tonnes. To boost export capacity, the government has agreed to allow private operators to run trains on the lines starting in April. This move aims to attract private capital and expertise to support Transnet’s efforts in restoring the infrastructure. The cost of repairing the coal and iron ore lines is estimated at R12.9 billion ($700 million) and R9 billion, respectively, while restoring all rail tracks across the country could total R64.5 billion over five years.
Transnet has confirmed that agreements with clients are progressing, with a focus on restoring rail lines to near-maximum operational capacity. The company hopes the investments will help improve volumes and restore export potential for coal and iron ore, which are among South Africa’s largest exports. Despite ongoing challenges, including anticipated lower revenue from third-party tariffs, the repairs are viewed as crucial for the country’s export economy. Further studies on additional rail routes are also planned to address other transportation issues.