Chemicals and energy business Sasol and Transnet Freight Rail (TFR) announced a “first of its kind” partnership on Wednesday, which will see Sasol funding the maintenance and repair programme for a fleet of ammonia tankers.
Under the five-year agreement, Transnet will deliver ammonia from Sasol’s Secunda and Sasolburg facilities to the company’s customers through a dedicated fleet of 128 ammonia tankers.
In a joint response to questions from Business Day, Sasol and TFR said they could not disclose the value of the contract as it was confidential.
TFR and Sasol said no new wagons would be purchased through the partnership. “The focus will be on refurbishing the existing assets ... this will enable full utilisation of assets that exist, thus minimising the need for significant capital investment,” they said.
Sasol’s vice-president for base chemicals, David Mokomela, said in a statement that this investment in SA’s rail infrastructure would “improve service to our customers and give us the transport capacity and reliability we need to respond to growing market demand”.
TFR said it expected the partnership to result in additional revenue generation for the company from increased haul volume and the Sasol-funded maintenance and repair work.
“We appreciate Sasol’s support of this deal. It is a significant step towards addressing the industry’s current capacity challenges and protecting the ammonia rail supply,” acting TFR CEO Russell Baatjies said.
Sasol and TFR said they started engaging on this solution after noticing a trend of open fleet ammonia wagons “being carded off and not returning to service”.
“During the engagements, it emerged that ammonia rail tankers were not returning to service due to onerous budget requirements to maintain them,” TFR and Sasol said.
The partnership was a “win-win approach” to address supply chain constraints facing Sasol, which were posing a material risk to its Secunda facility and to supplying its customers.
Sasol Chemicals produces and sells more than 540,000 tonnes of ammonia annually. It is used to make fertilisers and industrial chemicals for the agriculture, mining, textile and metalworking industries.
Typically, more than 25% of the volume of ammonia produced by Sasol is transported by rail to customers, and with partnerships of this nature, it hopes to increase this number considerably.
Update: February 28 2024
This story has been updated with new information.
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