Zimbabwe opens rail network to SA's Grindrod after freight collapse

Zimbabwe's state-owned railway operator has opened its network up to private players, including a unit of South Africa's Grindrod, as it seeks to boost freight volumes that had collapsed after decades of underinvestment, an official said.

National Railways of Zimbabwe (NRZ) hauled 12 million tonnes of cargo annually at its 1990s peak, but now manages less than three million tonnes owing to a lack of locomotives and poor maintenance of its rail infrastructure.

The collapse also followed a sharp decline in agricultural and mineral output, triggered by the violent seizure of white-owned farms championed by Zimbabwe's former leader Robert Mugabe in 2000. However, mineral output is on the rebound, mainly driven by chrome and lithium demand from China.

Chinese companies such as Tsingshan Holdings, Sinosteel, Sinomine, Zhejiang Huayou Cobalt and Chengxin Lithium have in recent years established iron ore, steel, chrome and lithium operations in Zimbabwe.

They export the minerals to China through Mozambique's ports, and the growing commodity export volumes exceed NRZ's current capacity. The state-owned group is now looking to restore its capacity with the aid of private companies.

"Last year we uplifted 2.8 million tonnes against available business of three million tonnes," NRZ spokesperson Andrew Kunambura told Reuters in an interview on Wednesday.

"So these private companies are coming in with their locomotives and wagons to augment what we have."

Grindrod, through its Zimbabwean subsidiary Beitbridge Bulawayo Railway, has deployed three locomotives and 150 wagons since March as part of the arrangement. The South African logistics company is positioning itself for freight rail partnerships in southern Africa as under-funded state-owned operators open up their creaking networks to private investors.

The mineral-rich region holds some of the world's biggest deposits of copper and lithium, needed for cleaner energy, and is seeing growth in new mining projects which require expanded rail capacity.

Grindrod has restructured its rail business to take advantage of emerging market opportunities in the region, CEO Xolani Mbambo told analysts last week.

The company has recently agreed a partnership with the Democratic Republic of the Congo's inland railway company and said it is ready to partner South Africa's Transnet, which also plans to open up its network to private players.