INDUSTRY INSIGHT TRANSNET working to address constraints affecting TFR and TPT

Transnet has been receiving a lot of negative publicity following a series of events. These include bottlenecks affecting rail and ports, strike action and, recently, allegations that the Minerals Council South Africa called for the resignation of group chief executive Portia Derby.

By Dineo Phoshoko

Despite significant, mostly negative media attention, behind the scenes, Transnet is working on measures to effectively address constraints affecting Transnet Freight Rail (TFR) and Transnet Port Terminals (TPT).

Speaking at the recent Mining Indaba, Derby delivered a keynote address that focused on Transnet’s plan to support the mining industry’s growth and inclusion. “One of the things we are pushing hard on is inclusion because it is time we included black miners into our system, black farmers and black manufacturers,” she said. She also highlighted inequalities in terms of the allocated rail capacity between major miners and emerging miners. Resolving this issue would require equity in Transnet’s capacity allocation and enablement processes.

TFR and TPT have been faced with major capacity constraints, which have affected many sectors including the mining sector. In her address, Derby discussed

Transnet’s plans to deal with capacity constraints. She mentioned that Transnet had arrived at a deal with major locomotive producer China Railway Rolling Stock Corporation (CRRC). “We have arrived at a deal with BTE Alstom, CRRC who have the majority of our locomotives.” She added that although TFR had reached an agreement with CNR, they would no longer be taking locomotives from the manufacturer. Derby explained that the agreements would resolve the issue of longstanding locomotives. “We should be able to bring all of those back into the system over the next 12-18 months or so.”

Derby highlighted that one of the major challenges with obtaining locomotives for TFR was due to the Covid-19 pandemic, which resulted in the closing of some Chinabased locomotive factories. This then has an impact on long lead times. The situation is further exacerbated by continued restrictions on movement in China also due to Covid-19. “One of the things we’ve also done as part of the agreements: we’ve reached arrangements around master service agreements ensuring that there’s consignments stock that’s also available in South Africa, so that it takes a much shorter time to repair and to get certain componentry.”

In addition, Derby explained that Transnet has managed to rebuild a manufacturing sector, mainly responsible for manufacturing and maintenance in the rail sector. National Treasury has also granted Transnet an exemption, allowing the company complete control in terms of direct procurement at board level.

Another significant agreement was reached with the Department of Trade, Industry and Competition regarding localisation. “We localise to the extent that it makes sense. A manufacturer must be competitive and must be able to export.” Derby also highlighted that

Transnet would now be able to enter into long-term contracts of between five and seven years with strategic suppliers – a move that would make doing business slightly easier.

Cable theft and rail infrastructure maintenance

Addressing increased incidents of cable theft, Derby mentioned that together with the South African Police Service task force, Transnet was also working closely with municipalities. Furthermore, Transnet can now hire peace officers, which gives them the authority to arrest. “That means that the processing of the people that we apprehend becomes entirely within our control,” explained Derby.

Looking at network maintenance, Derby mentioned a rail policy introducing an economic regulator. “We’re going to finally have a separation in the cost of infrastructure. Unfortunately, we’re in a situation where we have to fund everything directly ourselves – there’s no cash fill from the state. We are going to fill cost recovery.” She also added that the Rail Safety Regulator sets the standard at which the track should be maintained, and Transnet will have to meet the requirements.

Network capacity plan

Derby also stated that Transnet was pursuing a network capacity creation plan, which aimed to ramp up the capacity in certain commodities. Between 2022 and 2031, Transnet’s planned ramp-up capacity target is approximately 42.35 million tonnes per annum.

Manganese, iron ore, coal, magnetite and chrome are the commodities identified in the capacity creation plan.

On the port side, initiatives have been undertaken by TPT and Transnet National Ports Authority to improve operations at the Port of Richards Bay to adequately support the mining sector. Some of the initiatives include:

• TPT restoring conveyor belts that were damaged by two fire incidents in October 2021

• implementing a truck management system to minimise truck congestion

• creating an additional truck staging area within port limits

• upgrade the roads within port limits to accommodate current volumes and future anticipated volumes.

To achieve success in the abovementioned initiatives, Transnet is working closely with key partners such as RBT Grindrod Terminals, ArcelorMittal South Africa, Foskor, City of uMhlathuze and the KwaZulu-Natal Department of Transport. Derby also mentioned other planned projects to improve efficiencies and export capacities at the ports of Saldanha and Ngqura. She concluded by highlighting that the container, auto and grain sectors had the highest impact on the country’s economy in terms of jobs and economic value. The same could not be said for commodities in the mining sector, largely due to challenges in the rail and ports sector. By improving rail and port efficiencies, the country’s GDP stands to benefit from opportunities in mineral commodities exports.