Transnet under fire

South Africa pledged to end the underperformance of its state-owned port and rail operator that’s crimped mining companies’ profits.

Transnet on Friday reported a R5.7 billion loss for the year ending March 31, compared with a 5 billion rand profit in 2022. The volumes delivered by its freight rail business dropped 13.6% during the period.

“The deterioration in its operational and financial performance will be stopped,” Public Enterprises Minister Pravin Gordhan said in a statement.

“Nothing will be allowed to get in the way of the effective implementation of a radical plan.”

Volumes of iron ore and coal transported through Transnet’s freight rail network for export have dropped because of issues including poor management, idle locomotives and cable theft.

That’s led to companies such as Glencore Plc, Sasol Ltd., Thungela Resources Ltd. and Exxaro Resources Ltd. having to transport their minerals by road.

The Minerals Council, a lobby group representing most mining companies operating in the country, estimates poorly run ports and freight-rail lines may have cost the country 150 billion rand in exports last year.

In July, the government announced an overhaul of Transnet’s board to effect a turnaround, it’s also working with business to arrest the decline of its rail and port services.

Last month, the company said it had hired security firms in an effort to reduce chronic theft and vandalism at its rail operations.

Transnet’s rail operations were also affected by a strike last year, floods and power supply disruptions caused by state-owned utility Eskom’s inability to meet demand, it said in its results.