South Africa needs coal and iron-ore rail lines to become competitive without delay
Worsening logistics constraints and rising electricity supply shortages have made South Africa a very difficult place in which to do business.
While electricity supply gets the big headlines, the railways also need huge attention. A good decision taken by Transnet was to concession the Johannesburg to Durban freight line and the National Treasury’s requirement for Eskom to do the same with some of the power stations so that the private sector can become involved.
To avoid the country losing hand-over-fist again in the future, the coal and iron-ore lines need to be concessioned as well. Trucking coal to foreign ports is absolute lunacy when the country has the award-winning and private-sector-owned Richards Bay Coal Terminal being forced to perform way below capacity because the State-owned Transnet is unable to deliver.
The options of trucking coal to alternative ports were neither sufficient nor optimal to make up for the loss in rail capacity. In addition, the alternative export channels came at a high cost, which companies were only able to withstand because coal export prices were high. But those days have already passed and the approach to arriving at a solution should be that they may never return.
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