Struggling Transnet gets help

Lisa Steyn - The Transnet board and Minerals Council SA have joined forces to tackle persistent issues hampering South Africa's logistics channels, which have frustrated commodity exports that are crucial to the economy.

The state-owned entity's board and the council will establish collaborative structures to ensure that "all possible actions are taken to stabilise and improve the throughput of South Africa's rail and ports systems to enable inclusive growth and maximise the movement of commodities in the national interest", the two entities said in a statement.

Poor railing performance and port congestion have limited the mining industry's ability to take advantage of strong commodity prices, particularly for bulk commodities such as coal, iron ore, manganese and chrome.

On the coal line – traditionally Transnet's most lucrative operation - major customers like Exxaro Resources and Thungela Resources have lost billions of rands worth of potential exports owing to continued security and operational troubles.

"Recognising the integrated nature of the mining industry as part of the logistics system, the Transnet Board and Minerals Council Office Bearers have agreed to work together with a mutually agreed focus on helping to stabilise the whole system's performance which entails responsibilities on both sides," the statement said.

"Both parties agree that stabilisation and then recovery are in the interest of all parties in the value chain."

OVERSIGHT PANEL

Transnet's board and the council's principals have agreed to establish an oversight panel, a recovery steering committee and channel optimisation teams for major commodities.

"We are determined to find practical solutions to our rail and port challenges and ensure that all producers, big and small, share in the inclusive growth that comes from improved operational performance," said Nolitha Fakude, president of the Minerals Council.

Transnet chair, Popo Molefe, said: "We look forward to an equally open and constructive relationship with the Minerals Council and key Transnet customers to stabilise the performance on the channels for the benefit of the country."

UNDER PRESSURE

In a recent pre-close briefing, Thungela Resources, South Arica's largest producer of export coal, said pressure was mounting on Transnet to improve performance, with more political players involved and the Transnet board opening channels of communication directly with the industry.

Thungela chief financial officer Deon Smith, however, said "the key ingredient for a step-change is that industry will need to play a role" to help improve Transnet's performance.

The oversight panel, made up of the principals and office bearers of the Minerals Council and the Transnet board, will be jointly chaired by the Minerals Council president and the chair of the Transnet board. It will guide the work of the recovery steering committee, and spearhead the rebuilding of good ongoing relations between their respective teams.

The five-a-side recovery steering committee, will be made up of Transnet board members, the Minerals Council CEO and CEO representatives of the bulk commodities and will drive solutions that are cross-cutting to the rail and ports and will continue to seek priority practical solutions to improve flows across the system organised across corridors. – Fin24