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Open rail network to personal operators or miss out on product boom


May 12, 2022

Miners remained in great spirits at the Mining Indaba in Cape Town today, their state of mind lofted by near record product costs and a chance to fulfill their associates personally for the very first time in more than 2 years.

A wave of outstanding mining outcomes has actually pressed mining from the periphery to the centre of the nation’s financial hopes. However those hopes rest on getting products from mine to port, and therein lies the issue.

Check Out:
Mining Indaba: For SA it has to do with the traffic jams strangling development
SA’s freight rail sector poised to bring in ‘billions of rands’

Among SA’s biggest endowments is a 36 000km rail network that would cost R1.5 trillion to change at existing market expenses. This represents about 80% of Africa’s overall rail network.

Rail has actually constantly been a government-operated monopoly, a circumstance that has actually stayed basically the same for more than 100 years.

” Rail’s colonial heritage of low axle load, low speed, brief trains, little car profile and monolithic organisational structure set it up for problems in later years,” according to the National Rail Policy white paper released in 2017.

Check Out: Transnet Freight Rail force majeure: Thungela sees no ‘product effect’ for FY2022

Rail needed to be statutorily secured versus roadway from the 1930s till 1988. Its naturally uncompetitive narrow gauge innovation was not able to adjust in a decontrolled market.

” Failure to restore devices led to normally obsoleted, low efficiency, operationally ineffective, underutilised properties, which are not able to keep domestic traffic or assistance exports,” states the white paper.

Losses …

Towns that counted on passing rail traffic withered and passed away, and big areas of the rail network rusted or were vandalised.

The De Villiers Report of 1986 promoted versus brand-new rail financial investments, and for the sweating existing properties which, in addition to deregulation of the roadway sector in 1988, pressed big parts of the rail market into severe decrease.

Of the network still in usage, some 70% is underutilised, according to the African Rail Market Association (Aria) CEO Mesela Nhlapo. The Minerals Council approximates SA lost R35 billion since it might not get enough volumes to the ports.

Exxaro and Glencore both reported reduced sales in 2015 since of rail capability deficiencies.

” The mining market, the fiscus and the rail and port operator will once again pass up any gain from product costs by not exporting minerals to South Africa’s complete capacity,” states Nhlapo, whose organisation, Aria, represents a variety of economic sector rail operators and providers, consisting of Traxtion, Surtees Train Products, SA Freight Logistics (Saflog) and Grindrod Rail.

Check Out:
Worth of SA mining production breaks through R1trn mark
Transnet opens freight rail network to personal operators

The chart below, from a discussion by Aria, reveals yearly tonnage carried by rail going back to levels last seen in the 1970s.

Roadways have actually ended up being the favored methods of transferring freight, which has actually produced difficulties of its own in regards to roadway deterioration and backlogged upkeep.

Source: African Rail Market Association

Now compare SA’s coal and iron ore volumes moved by rail with that of Australia. The Sishen-Saldanha rail link connecting the iron ore mines of the Northern Cape with the port of Saldanha is one line that is well preserved and effectively run, in big part since of close cooperation in between rail operator Transnet and mines seriously based on this link, especially Kumba Iron Ore.

Listen to Moneyweb editor Ryk van Niekerk’s interview with Traxtion CEO James Holley (or check out the records here):

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