Transnet, Minerals Council join forces to tackle bottlenecks

Transnet and the Minerals Council of South Africa have announced a partnership to improve rail and port yields that have cost producers billions in sales this year.

SA is estimated to have lost more than R50bn in 2022 and R35bn in 2021 as the state-owned rail, ports and pipeline company failed to meet target export volumes.

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Monday’s announcement said the two groups “have agreed to work together with an agreed approach to help stabilize system-wide performance that carries responsibilities on both sides.”

Monitoring panel

Both parties have agreed to establish a monitoring panel, recovery steering committee and channel optimization teams for each of the major commodities: coal, iron ore, manganese and chromium.

A recovery steering committee, made up of Transnet board members, the CEO of the Minerals Council and the CEO representatives of bulk commodity producers, will propose solutions for rail and ports.

Minerals Council President Nolitha Fakude says: “We are determined to find practical solutions to our rail and port challenges and ensure that all producers, large and small, share in the inclusive growth that comes from improved operational performance.”

PwC’s Mine Report 2022, based on a survey of nearly 30 of the country’s largest miners, highlighted some of the logistical bottlenecks facing the sector, including declining rail capacity from Transnet and the ports classified by the World Bank as the worst performing in the world. . .

Durban, Cape Town and Ngqura (East London) were ranked in the bottom 10 out of 370 ports in the world, according to the World Bank’s Container Port Performance Index 2021.

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Earlier this year, the Minerals Council said R151 billion could be earned in additional exports, creating an additional 40,000 jobs, if all rail and port systems were operated at design capacity. This does not count the benefit to the tax authorities of additional sales of commodities.

Minerals Council members account for more than 80% of Transnet’s rail business and 50% of its revenue, although they have not yet returned to pre-Covid levels.

The 11-day strike by Transnet workers in October this year led to a further restriction on exports.

On average, South Africa exports about 476,000 tonnes of bulk minerals per day, worth R1.06 billion. That number dropped to less than a third during the strike.

The Minerals Council said in a statement at the time that major mineral export ports were operating between 12% and 30% of their daily average.

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“We look forward to an equally open and constructive relationship with the Minerals Council and key customers of Transnet to stabilize the performance of the channels for the benefit of the country,” Transnet chairman Popo Molefe said in a statement on Monday.

This article originally appeared on Moneyweb and has been republished with permission.
Read the original article here.

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