Job losses loom as Transnet’s infrastructure crumbles

Mining companies have warned trade unions of possible job losses as they cannot get their commodities to market due to Transnet’s deteriorating rail infrastructure. 

National Union of Mineworkers representative Thapelo Malekutu told Newzroom Afrika that unions have already been informed about retrenchment processes from mining companies. 

Despite the best efforts of unions, job losses are unavoidable as Transnet’s decline is accelerating and showing no signs of recovery. 

Malekutu acknowledged that miners could not get their commodities to market in a cost-effective manner. 

He noted that Richards Bay Coal Terminal is operating at around 50% of its capacity of 91 million tonnes. The volume exported is expected to be below 50 million tonnes in 2023.

More broadly, freight transported on South African railways has decreased from 230 million tonnes in 2017 to 179 million tonnes in 2022. 

Mining companies estimated that they lost R150 billion in revenue last year from Transnet’s inefficiencies. 

In the past, mining companies have been able to cope with Transnet’s poor performance as commodity prices were high enough to turn a profit despite exporting less. 

However, the price of commodities, particularly coal, has decreased markedly in the last year, making the situation unsustainable for mining companies. 

Malekutu complained about the lack of urgency the matter was receiving from the government and especially Transnet. 

“They always have plans for everything, but implementation and urgency are always a problem.”

Mxolisi Mgojo, a Business Unity South Africa (BUSA) member and former CEO of Exxaro Resources, said businesses are stepping in to tackle the issue and working with the government to solve transport inefficiencies.  

For example, mining companies have hired private security companies to assist Transnet and law enforcement agencies in protecting rail infrastructure. 

Mgojo told Newzroom Afrika that the government recognises that it must partner with the private sector to tackle these issues. 

However, he also bemoaned the lack of implementation of plans. Currently, there is a National Freight Logistics Roadmap which is due to be presented to the public soon, laying out the plan to turn Transnet around. 

There are fears that this roadmap may end up like the National Rail Policy (NRP), which has been pending implementation for 14 years. 

The NRP outlines the process for allowing private sector use of Transnet’s railways through a third-party access mechanism. 

Mgojo said things would be different this time as there is a partnership between the government and the private sector. 

This structure is based upon the one used during Covid-19, where businesses partnered with the state to tackle the pandemic. 

Mgojo said this structure ensures companies can hold the government accountable, increasing the roadmap’s chances for success. 

The joint committee has to report to President Ramaphosa and the Cabinet every six weeks to detail its plans and the progress that is being made.