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CEO of South African Freight Monopoly Quits as Firm Founders

CEO of South African Freight Monopoly Quits as Firm Founders
Portia Derby, chief executive officer of Transnet SOC Ltd., during an interview on the sidelines on the opening day of the Investing in African Mining Indaba in Cape Town, South Africa, on Monday, Feb. 6, 2023. South Africa’s state-owned logistics company Transnet plans to shrink the 20,000-kilometer (12,427-mile) freight rail network it operates by at least 35% as it focuses on delivering more profitable cargo loads. (Photo: Dwayne Senior / Bloomberg via Getty Images)

Two top executives at South Africa’s beleaguered state ports and rail operator quit after facing criticism by mining companies over their failure to arrest its decline.

Transnet SOC Ltd. Chief Executive Officer Portia Derby will step down at the end of October, while Chief Financial Officer Nonkululeko Dlamini will leave a month earlier, the company said in a statement on Friday. The board appointed Michelle Phillips, chief executive of Transnet Pipelines, as acting group CEO with effect from Nov. 1.

Inefficiencies at Transnet may have cost the country 150 billion rand ($8 billion) in exports last year, according to the Minerals Council. Volumes of iron ore and coal shipped through Transnet’s freight rail network for export have dropped because of issues including vandalism, idle locomotives and cable theft. Miners and labor unions have called for a turnaround at the company as the slowdown of shipments limits profit and threaten jobs.

Glencore Plc and Seriti Resources Holdings Ltd. over the past two weeks have started talks to cut hundreds of jobs in South Africa as their ability to export coal is stymied by inefficiencies at the freight company.

Transnet Rail Volumes Declining | Operational issues from vandalism to locomotive availability cut shipments

South African Public Enterprises Minister Pravin Gordhan pledged on Sept. 1 to implement a “radical plan” for Transnet and stem the deterioration of its operational and financial performance. The government revamped its board in July and appointed a former mining executive as its new chairman.

Transnet’s rail operations were also affected by a strike last year, along with floods and power supply disruptions caused by state-owned utility Eskom Holdings SOC Ltd.’s inability to meet demand, it said in its latest results.

Derby was appointed as CEO in 2020 with a mandate to rebuild Transnet’s reputation. The company had been a central target during a period of rampant state corruption under former President Jacob Zuma. A government probe identified irregular contracts worth a total of 41.2 billion rand over a period of almost decade.

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Trouble continued for the company with trains derailed by groups seeking the contracts to fix them and locomotives being left idle because of spare-parts shortages. Derby changed the company’s security strategy and proposed other measures including shrinking its 20,000-kilometer freight rail network and using more diesel-powered trains to bypass electricity issues.

Shipments on Transnet’s dedicated coal line still failed to pick up pace, leading to calls for Derby to resign.

Acting CEO Phillips first began working at Transnet in 2001, it said in a separate statement. Her experience prior to joining the company includes working as a legal representative at South Africa’s Special Investigating Unit.

Hlengiwe Makhathini will act as group CFO while a permanent replacement is sought, Transnet said.

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  • Miles Japhet says:

    Time to drop race based appointments – SA cannot afford any more social engineering

  • Heinrich Holt says:

    Great. One step in the right direction. The pharmacist now to follow. Don’t know Ms Phillips though. Legal background. We need hands on logistical management experience now. Let pharmacists read scripts and let lawyers write clauses. The locos must run.

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