Transnet’s crucial for the mining sector.
Tuesday, October 29th, 2019
.The rail and ports aspects of South African Transnet’s competitiveness is crucial for the mining sector. The commitments regarding the coal sector, as detailed in the recent Transnet annual report, are commendable. The company plans to improve its Wagon Cycle Time for coal from the current 64. 2 hours to 63.8 hours. It is being realistic after it missed the 2019 target of 58 hours.
The service to the coal sector as well as other bulk minerals is critical to Transnet Freight Rail, the company’s biggest division that accounts for 59% of Transnet’s R74.1 billion revenue. There is a mutually beneficial relationship between the coal producers and Transnet. South Africa’s coal economy is dependent on Transnet Freight Rail, which employs over 31000
It is encouraging to read Transnet management’s comments in the annual report that the company is committed to generating strong cash flow, maintaining affordable levels of debt without government support, and reporting year-on-year improvement in financial performance. This provides comfort that the industry sectors supported by Transnet will continue to get required service as its governance challenges are being tackled. Transnet has an opportunity to bring credibility to the idea that the state has the ability to run a complex logistics company in the interest of the economy as a whole.