Protecting the future of South African rail network requires private participation

Zawya

08-07-2025

South Africa's freight rail network is under strain, yet it remains one of the country's greatest opportunities for economic renewal and industrial growth. For investors, freight users, and logistics specialists, this is a chance to help rebuild a critical national asset while unlocking long-term value in a sector essential to the country's recovery.
Source: jplenio1 via Freepik
On the Northern Corridor alone, the coal artery to Richards Bay, Transnet estimates R13bn is needed for critical maintenance. That's 10% of its entire debt book. And in just the next fiscal year, R2bn is required to restore even basic functionality.
Transnet cannot fund this rehabilitation. Its five-year capital requirement is estimated at around R65bn, money it doesn't have.
To support this, the government in May approved a R51bn guarantee facility: R41 billion to meet Transnet's funding needs over the next two years, and R10bn for liquidity support. This comes barely 18 months after a previous R47bn guarantee, underscoring how desperate the situation is.
With Transnet struggling and the government under pressure, it was clear that something needed to change. Transnet and the Department of Transport have finally acknowledged that they cannot fix the system alone, and are calling for co-investment and co-operation. This is a major shift.
Opening the doors to private sector participation not only aims to revitalise the rail network, restoring export capacity, but also provides the opportunity to revive mining communities, attract investment, and enhance national competitiveness.
Private sector participation
In March 2025, Transnet issued a Request for Information (RFI) to gauge private sector interest in freight rail and port logistics. Three priority corridors are up for revival:
• Coal to Richards Bay
• Iron ore to Saldanha
• Container traffic to Durban
An accompanying Request for Proposal (RFP) is due later this year with additional RFIs, including for manganese and passenger rail corridors, on the horizon.
For the mining sector and freight operators, the imperative to engage is both strategic and financial. Involvement in the rail network and operations isn't just about moving goods. It's about de-risking operations, ensuring cost efficiency, and unlocking long-term returns through access to mission-critical infrastructure.
The government has made clear that while the state will retain ownership of the rail network, operational control and financial input can be shared. To do so, there are various participation models, from track upgrades and terminal development to end-to-end corridor management.
While the private sector could participate piecemeal in select parts of the rail network, we believe infrastructure rehabilitation must be approached as a whole. Fragmented efforts won't deliver the operational continuity, safety, and efficiency required; only a corridor-wide view can. Some stakeholders may choose to invest; others may wish to operate.
What matters is alignment. Alignment of participants who can bring capital, capability and/or execution strengths to the table.
No single entity can take on this scale of work alone, but the potential is already clear. During the RFI portal's open period, between 24 March and 9 May, the site drew 11,000 visits and generated 163 official responses to the RFI, the transport ministry revealed.
The most effective influence will come from consortiums, blending the resources of miners, funders, original equipment manufacturers (OEMs), and logistics experts. Each must contribute more than just money. Deep expertise and delivery capacity will be critical. This all has to be collaborative.
This is echoed by the industry players, who have made it clear that if they are to participate, there needs to be a fundamental mindset change. They want a say in how the railway line is funded, managed, and maintained. Without this level of system-wide influence, private players lack the investment security they desire, making participation far less attractive.
The mining industry is not primarily motivated by financial gain from logistics operations; it wants predictability, efficiency, and transparency, which are all qualities currently in short supply. For freight users, the prize is a network that works: one that moves product efficiently to port, reduces reliance on road freight, and supports long-term growth.
This is not just about trains. It's about national recovery. Decisions made over the next year will determine whether South Africa can restore lost export volumes, revive its mining heartlands, and reassert its economic potential.
The forthcoming RFP is more than a procurement exercise; it's an opportunity to shape the future. The mining industry, investors and operators need to prepare now: understand the policy environment, assess the corridors, and consider where their strategic interests align.
For the private sector, the moment to step in is now. Not to take over, but to build together.
All rights reserved. © 2022. Bizcommunity.com Provided by SyndiGate Media Inc. (Syndigate.info).