SOUTH African iron ore and manganese producers have warned that continuing rail constraints are forcing mines to operate below capacity and threatening future investment, despite progress in stabilising Transnet’s performance.
Maryke Burger, CEO of ARM Ferrous, African Rainbow Minerals’ iron ore and manganese business, said the group’s iron ore and manganese operations had both been “severely affected” by capacity constraints and inefficiencies in the rail and port system.
This had forced operations to reduce production below installed capacity, which has impacted employment, surrounding communities and future investment.
“Bulk commodity mining can only be successful if you’ve got reliable rail logistics services and port,” Burger told the Joburg Indaba conference during a panel on whether logistics reform could unlock mining growth.
“If we can increase production to capacity it will have a huge positive effect on our communities, and also it will increase tax revenue," she said.
Ore corridor delays
Burger was particularly critical of the pace of reform on the Ore Export Corridor, which links Northern Cape producers with the port of Saldanha Bay.
The industry had wanted the request for qualification for private sector participation on the corridor to be issued during 2026, but this now appeared unlikely, she said.
“There are extensive, extensive backlogs on the Ore Export Corridor, and it’s material, and it requires urgent attention through funding, as well as precise procurement processes, and then clear, clear execution plans.”
Unless the problem received priority, “the situation that we’re in currently is even going to get worse”, she added.
Burger said most of the required policy was already in place and the focus should now be on efficient implementation, with the process accelerated through private sector participation.
She also warned that Northern Cape iron ore resources had a finite life.
Until sufficient rail and port capacity and efficiency were restored, South Africa risked “missing out on a significant opportunity on value creation through its mineral resource, she said.
Kumba 'forced to resize'
Kumba Iron Ore CEO Mpumi Zikalala echoed the concern, saying the company had already had to resize its operations around lower logistics capacity.
“We had to reconfigure our business for a lower base because we couldn’t continue running our business for a certain volume of tonnage,” she said.
“But we don’t want to be where we are because in order to be competitive as a business, we actually need to up our volumes.”
For bulk commodity producers, she said, competitiveness depended heavily on volume and cost.
Zikalala acknowledged that the partnership between government, Transnet and business had produced greater stability in logistics performance, but described the improvement as “stability with marginal gains”.
“There’s still a lot that needs to be done because if you look at where we come from and where we are, albeit that there’s stability, there’s still a huge gap,” she said.
The next stage of the government-business partnership would have to accelerate private sector participation because there was “only so much that can happen” without it, she added.
Transnet’s maintenance backlog could also no longer be deferred.
“It requires capital, it requires skills, and it requires speed,” Zikalala said.
Reform pace
Transnet group CEO Michelle Phillips acknowledged that the freight utility remained under financial and operational pressure despite having returned to profitability.
She said Transnet needed to move “well beyond 180 million tons” a year for the business to “wash its own face”, while the rail network continued to require significant work.
“I don’t have another asset to sell this year,” Phillips said, referring to Transnet’s sale of a 49% stake in the Durban container terminal operation as part of efforts to improve its financial position.
Phillips rejected criticism that Transnet should not partner with private investors when it lacked sufficient capital of its own.
“If I was a business making a lot of money, I would probably be acquiring and merging with other businesses,” she said. “So I’m not understanding this view that when you don’t make money, that you should not be partnering with those who have money.”
“Can we do this without the private sector? No, we cannot do it without the private sector,” Phillips said.
She nevertheless pushed back against complaints that logistics reform was progressing too slowly, arguing that comparable rail reforms internationally had taken years.
She said Transnet’s focus was on ensuring transactions delivered quality and value rather than simply moving quickly.
Pulane Kingston, CEO of rail supplier voestalpine VAE SA, said industry did not yet have sufficient clarity on Transnet’s infrastructure rehabilitation plans.
“We have not understood that. We do not understand what the strategy is to date,” she said.
Kingston called for independent technical assessments of the main freight corridors and proposed two “war rooms” – one focusing on rail infrastructure and another on operations – because of the urgency of rehabilitating the network.
“That is how urgent this matter is,” she said.