Business Maverick


Transnet Freight Rail’s performance still off-track, despite decline in security incidents

Transnet Freight Rail’s performance still off-track, despite decline in security incidents
Jacobus van der Merwe, a train driver, passes a locomotive operated by Transnet SOC Ltd at the company's rail depot in Ermelo, South Africa, on 10 March 2014. (Photo: Dean Hutton / Bloomberg via Getty Images)

Transnet Freight Rail has seen a decline in security incidents such as cable theft which have hobbled its operations, but its overall performance on crucial lines remains well off-track. A coal and energy conference in Johannesburg on Tuesday heard that Chinese locomotives may yet provide some light at the end of this tunnel.

Transnet’s woes have been a gaping pothole in South Africa’s road to economic recovery, costing the mining industry tens of billions of rand a year in lost exports. Union sources have told Daily Maverick that coal producers have signalled they may need to make job cuts if the problems persist.  

In a presentation to the Coal & Energy Transition Day conference in Johannesburg on Tuesday, organised by Resources4Africa, Transnet Freight Rail’s chief executive, Sizakele Mzimela, highlighted the main constraints. It is basically a breakdown of the state-owned enterprise’s rail woes.  

To wit, in the 53 weeks to 25 March 2023, the presentation said a shortage of locomotives was the main factor hampering coal exports, to the tune of 18.5 million tonnes. Locomotive service failures accounted for a loss of almost 3.9 million tonnes. 

“Infrastructure failures” cut 5.9 million tonnes, security incidents from theft and vandalism 4.4 million tonnes, derailments 3.7 million tonnes and industrial action — read strikes — about 2.2 million tonnes.  

That’s a total loss of about 38.6 million tonnes and in the 2022/23 financial year, Transnet managed to move 48.7 million tonnes to Richards Bay Coal Terminal (RBCT) by rail, according to the presentation. If the losses outlined were added to what was moved, that would be more than 87 million tonnes and the RBCT has capacity for 91 million tonnes. 

But such a perfect-world scenario is not Transnet’s aim. It hopes to get to 71 to 81 million tonnes by 2025/26, depending on whether or not it can get spare parts from a Chinese locomotive supplier, CRRC E-Loco Supply. That hit a brick wall in January when CRRC refused to open its books to the South African Reserve Bank and the South African Revenue Service.  

One positive trend outlined in the presentation was a decline in security incidents, which are mostly related to copper cable theft — an illicit industry estimated to cost SA’s economy R40-billion per year — and vandalism.  

They have fallen from an average of 30 a week in 2021/22 to 19 a week, in large part thanks to cooperation with coal companies on the security front, including the deployment of drones.  

Speaking to journalists after the presentation, Mzimela said there were 194 Chinese locomotives that required repairs and getting them back on the rails was critical.  

“We have agreed all the commercial terms between Transnet and the Chinese and the most important one is to return the long-standing locomotives to service. We have 194 of those parked. If we go with the Chinese we can do that relatively quickly,” she said, referring to the CRRC logjam.  

“If we do not find a solution with the Chinese it does not mean that we are not looking for alternatives. But alternatives would take a bit longer. In addition, the Chinese still have to deliver 99 outstanding locomotives.”  

What remains outstanding is the dispute between the revenue service and the central bank, and the CRRC, she said.  

Public Enterprises Minister Pravin Gordhan visited China in March in an unsuccessful bid to resolve the dispute. The original deal came under withering scrutiny by the Zondo Commission, which found that the price tag of purchasing 1,064 new locomotives from the CRRC and other suppliers had escalated by almost R16-billion from the “all-inclusive” R38.6-billion originally agreed upon. The R16-billion escalation was created to facilitate kickbacks to Gupta-linked firms, Zondo Commission reports dealing with State Capture at Transnet found. 

Read more in Daily Maverick: Why Gordhan’s diplomatic visit to China is a make-or-break moment for Transnet 

So, the spectre of State Capture still haunts South Africa’s ailing rail network, which means its costs to the economy are still mounting. But at least the drones are having some success in derailing the copper cable syndicates. DM


Comments - Please in order to comment.

  • Dee Bee says:

    So one of our top ministers can’t get a Chinese company to deliver what they’re supposed to, but we still consider China to be a great friend and supporter? And we casually toss aside billions in revenues for government and potentially thousands of jobs to not rock the boat? Once again, the ANC puts it’s political toadying above the welfare of ordinary South Africans. We simply have to get rid of this unashamedly immoral party next year.

  • Robert Pegg says:

    I deal with Chinese suppliers on a daily basis and have been to China on business. Chinese companies are very clear in how they do business, including payment terms. I don’t believe blame can be put on the locomotive supplier, but rather on the dodgy deals done by the SA government.

  • Chris Taylor says:

    So SARS and SARB went to China and demanded to examine CRRC’s books? Were they mad? The only thing to do, and we’ve done it often enough already, is to abandon the claim and start from scratch. Please Mr Chinaman, sell us the parts and deliver the 99 locos. We will forget the recent foolishness and never speak of it again.

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