There’s a crisis brewing right under the noses of the government that is patting itself of the back for its first faltering steps in long-overdue structural reform.
Transnet Freight Rail (TFR) is preventing SA’s miners from reaching their full export potential of bulk commodities, depriving the country of vitally needed taxes at a time when it needs every cent it can find.
The list is by no means exhaustive, but Kumba Iron Ore, Exxaro Resources and Tharisa have all complained about the rail operator’s inherent inability to move their commodities to the port.
Exxaro is a major coal exporter and on Monday it said it had lowered its coal sales forecasts because of problems with TFR.
The state-owned rail operator, which has so far resisted all efforts for private operators to get onto its network, has blamed theft and vandalism of overhead power cables, signals and rails. The problem worsened during the 2020 economic lockdown and remains a difficulty TFR is unable to stop.
Analysts have lowered their expectations of Exxaro’s 2021 coal exports by 2.5-million tonnes. Using the May coal price of R1,431/tonne, that converts to R3.6bn of revenue Exxaro stands to forfeit and the fiscus will lose a percentage of that in taxes and royalties.
Kumba was unable to take advantage of high iron ore prices in the first quarter and when its interim financial results come out later in July it will be possible to calculate the opportunity loss of TFR’s excuses of locusts and rain disrupting its trains.
If President Cyril Ramaphosa is serious about structural reforms he might want to light a fire of urgency under the collective backsides of the department of public enterprises and Transnet to get private operators onto the network, radically overhaul security of the country’s vital infrastructure and hold Transnet to account for any failures to deliver the very best service.
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