African Rainbow Minerals (ARM) chairman Patrice Motsepe has warned that despite efforts to improve Transnet’s performance, the country does not have time to wait for results.
Motsepe was speaking at the presentation of ARM’s financial results for the 2023 financial year.
The mining company experienced a sharp fall in profits, partly due to logistics constraints from Transnet’s deteriorating performance.
ARM’s revenue decreased from R18.41 billion in 2022 to R16.10 billion in 2023, while profit for the year fell from R14.36 billion to R9.32 billion – an over 30% decrease compared to the prior year.
The company’s headline earnings decreased by 21% to R8.98 billion or R45.81 per share.
Motsepe said he and ARM’s management team are encouraged by their engagements with Transnet to collaborate with the private sector to improve the utility’s performance.
Earlier this year, President Cyril Ramaphosa created the National Logistics Crisis Committee, joint steering committees and other initiatives to facilitate these engagements.
“That is an excellent beginning,” Motsepe said. “But, we do not have time now. What we need is results, results, results. We need the partnership to deliver.”
“We can’t be experimenting. There’s no time to be playing around and fidgeting.”
Employing the best people for the job is “absolutely non-negotiable”, Motsepe said. “The best people in any industry are the ones who have grown up in the business and understand the business.”
Transnet’s rail and port woes cost bulk commodity miners billions in lost revenue. Bloomberg recently reported that Richards Bay Coal Terminal only shipped 50 million tonnes of coal last year – the lowest amount in three decades – due to rail constraints.
This has had a knock-on effect on other industries, such as steel and power generation.
The Minerals Council of South Africa estimated that poorly run ports and freight-rail lines may have cost the country R150 billion in exports last year.
The GAIN Group estimated that Transnet’s collapse is set to cost the country R1 billion a day in economic output, equivalent to 4.9% of annual GDP or R353 billion in 2023.
The figure of R353 billion for 2023 is actually less than the R411 billion GAIN estimated Transnet cost the South African economy last year.
Director at GAIN Professor Jan Havenga expected the utility’s performance to improve markedly this year due to cooperation between Transnet and mining companies.
However, this improvement did not materialise as the total freight transported by Transnet declined in 2023.
According to GAIN, South Africa’s economic growth of 0.5% for 2023 could have been over ten times higher at 5.4% if Transnet operated at full capacity.