Embattled parastatal Transnet yesterday outlined its progress to fix its rail and logistics lines for the mining industry and said it has increased its transport of commodities despite unprecedented disruptions related to natural disasters.
Recently, a host of companies in the mining industry, and other sectors blamed it for their financial losses due to its inefficiencies in supply chain infrastructure, railway network, cargo trains, and ports.
Transnet said the main impediments to rail capacity were the rampant theft and vandalism of infrastructure and equipment, a shortage of locomotives due to the refusal of original equipment manufacturers (OEM) to sell spares to Transnet over the last two years, deteriorating infrastructure, and reduced income as a direct result of lower production.
“The costs of repairing Transnet Freight Rail (TFR) infrastructure damaged by theft and vandalism now consumes almost a third of the funds allocated for sustaining maintenance annually,” the group said.
Speaking at the Joburg Indaba, Transnet CEO Portia Derby said the company is not receiving any grants from the government for infrastructure maintenance.
“We have to fund this directly ourselves from our balance sheet. If I was in Germany, I would be getting €63 billion over a 10-year period. All of it going to maintenance. There is no such grant (in South Africa), we have to fund it directly. We’ve started talking to the government about this because it’s not sustainable for Transnet. But most importantly, you can’t say that you want to be a manufacturing sector, a manufacturing economy that exports, and you are not finding ways and means of ensuring that there’s an effective support for the manufacturing system,” she said.
On the security front, the collaborations between Transnet, customers, and law enforcement structures have helped to significantly reduce the number of security incidents in the 12 months since October 2021, Transnet said.
“However, although 35% lower, the number of security incidents per week remains more than double the number of incidents before the Covid-19 pandemic. This is despite Transnet more than doubling its security capacity and customers supplementing Transnet’s increased capacity by allocating additional resources at their own cost,” it said.
Transnet said now it can hire police offers and it has arresting powers.
Transnet said in the year ending March 2022, the Ore Corridor transported 3 million tons (mt), 5%, more than it did in the year ending March 2021, of which export iron ore was 2.4mt (5%) more than the previous year.
“Notwithstanding unprecedented disruptions related to natural disasters including extreme weather; floods, heat waves and windstorms, and locust plagues,” it said.
According to the parastatal, TFR’s operations disruptions including derailments, while they did occur, were not proportionally out of the ordinary compared to similar railway operations globally.
“In fact, the Ore Corridor is an internationally acclaimed heavy haul railway operation. The North Corridor, which the export coal operation is a part of, remains TFR’s Corridor that is most impacted by the locomotives OEM’s refusal to sell spares that Transnet requires to maintain its locomotives fleet,” it said.
Transnet said there were more than 300 Transnet locomotives that were currently not in operation because of outstanding maintenance.
“In the last two months, Transnet has made significant progress toward reaching settlements with the OEMs that will unlock the availability of spares and enable locomotive maintenance. Transnet remains confident it will deliver the 60mt that it has committed for the period ending March 31, 2023,” it said.
According to Transnet, the productivity rates for iron ore and manganese in the Ore Corridor have seen steady performance over the past three years.
“The ship loading rate for iron ore has increased by 5% from 2019/20 to 2022/23 year to date. The ship loading rate for manganese has increased by 25% over the same period.
“The ship loading rate for manganese in Port Elizabeth has declined by approximately 20% from 2019/20 to 2022/23. However, this is due to an increase in the proportion of cargo handled via skip operation. This has been necessitated by the phase-out of the PE Bulk Terminal, which will be fully decommissioned in the next five years,” it said.
Transnet said the export chrome in Richards Bay had seen a decline over the years as a result of rail and port challenges, however, the port will consolidate the commodities in the Dry Bulk (DBT) and Multi-Purpose Terminals (MPT) to unlock productivity and regain the volume lost given its competitive price.
“The ship loading rate for chrome in Richards Bay has declined by approximately 17%, primarily due to equipment reliability challenges. The short-term priority is to complete the Richards Bay Rebuild programme to fix conveyor belts, implement the equipment contracts that will assist to improve the productivity of the terminals in terms of equipment availability and reliability,” Transnet said.
It said the medium to long-term plan is to complete the mechanisation of Richards Bay DBT by acquiring the required reclaimers and ship loaders in tandem with the restoration of rail capacity these will result in productivity and volume increases.
BUSINESS REPORT