Kumba Iron Ore says it has developed a blueprint for the private sector to operate the ore export corridor, with the national administration amenable to having the private sector play a more pronounced role in the network industries.
The company, which is Africa’s largest iron ore producer, said in its 2024 annual report published on Friday that it is in discussion with the government over concessioning the corridor.
A focus this year has been on developing a potential industry-driven concessionaire model under which private sector parties will have operational and maintenance responsibilities for the ore export corridor for a defined period, the company said.
“Kumba’s executive has presented this model to various government departments, where feedback has been positive. A working team has been established to refine the proposal and to engage with the government,” Kumba said.
“While valuable progress has been made there are significant challenges associated both with the complexity of such transactions and with the potential affect on the Transnet workforce,” it said.
The corridor needs R16bn to be refurbished. The government has already made great strides in collaborating with the private sector to ensure the country’s rail network and ports get back into shape.
The roadmap for the freight logistics system states that rail lines and ports will remain in public ownership.
Last month, transport minister Barbara Creecy launched a request for information to “develop an enabling environment for private sector participation and enhanced investment in rail and port infrastructure and operations”.
The request for information is not a formal procurement process but a mechanism to understand and source information from the market, with the government intending to publish requests for proposals in August.
One of the corridors the request for information focuses on is the Northern Cape to Saldanha bulk minerals corridor primarily for iron ore and manganese exports. The iron ore line is one of the two main heavy-haul lines in SA, together with the coal line. It stretches for 861km from Sishen in the Northern Cape to Saldanha Bay on the West Coast.
Full potential
Kumba said Transnet’s rail and port performance, specifically in the ore export corridor, operated at about 80% of its contractual volumes in 2024.
Mpumi Zikalala, CEO of Kumba, said in her letter to shareholders that the company’s ability to unlock its full potential is contingent on restoring the ore export corridor’s performance to its nameplate capacity.
“With Transnet’s rail volumes this year at 80% against contract, there is heightened urgency in our work with Transnet and other parties to address the underlying technical and strategic issues impacting rail and port performance,” she said.
“We have been encouraged by Transnet’s network statement, issued in December 2024, and we are continuing to engage actively with Transnet and the government to explore opportunities for a private sector participation concessionaire model,” Zikalala said.
“While there are positive signs of progress, significant work remains to deliver a high-performance rail and port system in the country.”
The network statement released by Creecy in December kick-started the process to allow third-party access to SA’s vast rail network.
Transnet operates the country’s 21,323km of rail infrastructure and needs about R14bn a year over five years of investment in its six corridors, which have been plagued by theft, vandalism and outdated systems.
Kumba said while the network statement represents an important step forward by facilitating third-party access, “there are concerns relating to the proposed rail access fees”.
The recently established Transnet Rail Infrastructure Manager is gearing up for the allocation of the first route slots to private trains after the landmark decision to allow third-party access to the country’s rail network.
Transnet is aiming to raise rail freight volumes to 250-million tonnes by 2030 from 150-million last year.
With Jacob Webster
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