Transnet rail reforms do not go far enough, says Minerals Council

The Minerals Council SA wants to see Transnet establish an independent rail network operator, similar to Eskom’s new independent transmission company, that would own SA’s railway lines and could raise its own capital and open up the market to private players.

Minister in the presidency Khumbudzo Ntshavheni said earlier this week Transnet was working to establish a separate infrastructure manager within Transnet Freight Rail, which will enable third-party access to the core rail network — and that this would be in place by the end of October 2023.

Transnet in 2022 offered slots to private operators on some of its general freight lines, but elicited only limited applications and ended with just one successful bidder because the conditions it specified were so unattractive.

The council’s outgoing CEO, Roger Baxter, said on Wednesday that setting up an infrastructure manager at Transnet was a step in the right direction, but he indicated the reforms did not go far enough.

The council, whose members account for more than 90% of SA’s mining output, in 2022 called for Trasnent’s CEO to be fired as SA lost more than R60bn in mining exports because of the catastrophic state of its rail network. It has now set up a recovery board with Transnet, which includes Minerals Council president Nolitha Fakude and Transnet chair Popo Molefe, as well as Transnet executives and mining industry CEOs.

Its focus in the short term is to stabilise rail services on Transnet’s four mining lines, in coal, iron ore, manganese and chrome. In 2022 the coal line to Richards Bay transported just 50-million tonnes, compared to the 72-million it used to carry, with a further 10-million tonnes of coal going by road to the Richards Bay coal terminal. Baxter said the tempo on the coal line was still below 50-million. Some progress had been made on the manganese line.

In an update to journalists after its AGM on Wednesday, the council also reported that exploration and expansion in SA’s mining sector is still being held back by the large backlog in issuing mining and exploration licences.

This has hardly shifted since August, when the department of mineral resources & energy said it had managed to reduce the backlog to below 2,750 licences.

Data presented to parliament recently showed, however, that the number was hardly changed, with the Mpumalanga provincial office apparently struggling to process a large number of coal exploration permit and mining licence applications.

Adding mining permits to the exploration and mining licences took the backlog closer to the 5,000 mark, the department’s recent figures showed.

The Minerals Council said an efficient and transparent online cadastral system would ease the licensing process, but the department had made only slow progress in this. However mineral resources & energy minister Gwede Mantashe told the council’s AGM on Wednesday that the department had now shortlisted five companies after it issued a request for proposals for a new cadastral system.

This came after Mantashe announced in February that it would go out to tender for an offthe-shelf cadastral system.

This was in contrast to the previous tender for what market players had said was an overly complex system that appeared to be designed to favour particular bidders.

SA now accounts for less than 1% of global exploration spending at a time when other mining jurisdictions are incentivising miners to prospect particularly for the critical minerals needed for the energy transition.

Baxter also said the specialised police unit that was supposed to be established in September to tackle the syndicated crime hitting the mining industry had yet to be established. However the council had been having a lot of engagements with the SA Police Service and there was collaboration on addressing theft of copper cables, diesel and other essential items.

The coal sector was spending R20m a month on securing rail lines in the northern corridor.