Transnet is undertaking a number of projects aimed at expanding its freight logistics rail infrastructure network to meet customer demand.
The company is also looking at accelerating capacity creation to ensure additional rail access for mining commodities going forward. CHANTELLE KOTZE writes.
This article first appeared in Mining Review Africa Issue 3, 2019
While investing in its future, the state-owned enterprise is at the same time contending with operational and governance challenges which it must confront if it hopes to put this chapter behind it and take advantage of the willingness of the country’s mining sector in doing business with it.
Critical in Transnet’s future success is fixing its foundation and building a solid operating model on which to build, says acting group CEOTau Morwe.
“Core to improving our operating model is improving our operational discipline while reducing our infrastructure and rolling stock maintenance backlog, fully utilising already deployed technology and standardising train lengths and axle loads,” he says.
Speaking at the Investing in African Mining Indaba in February, Morwe explained that Transnet is currently working on a revised “fit for purpose” operational model by focusing on efficiencies and a more redefined focus on customers.
Transnet also believes that the adoption of new technology such as automation, artificial intelligence, robotics, internet of things, data analytic and predictive operation will take its heavy haul service offering “from good to great.”
With this technology deployment we will be able to improve operational efficiency, customer experience, safety and energy efficiency while also lower the logistics cost, says Morwe.
Growing its heavy haul system
In addition to the adoption of technology as a means to grow its business, Transnet understands the need to increase the capacity of its heavy haul system to satisfy current and future customer demand.
“Within the next 10 -15 years, the South African heavy haul system has the potential to grow by 111% – from 2 103 km to 4 438 km. The expansion projects will unlock the Waterberg and Botswana coal reserves, and promote manganese export,” says Morwe.
In doing so, Transnet is underway with a number of capacity creation projects for manganese and coal.
Transnet has embarked on a programme to sustain and create rail infrastructure capacity to unlock the Waterberg, Limpopo and Mpumalanga coal reserves for Eskom power stations, domestic and industrial users and export markets.
The coal programme comprises the following key projects:
- Export coal line expansion and upgrade to 81 Mtpa.
- Waterberg heavy haul project to supply long term rail network capacity from the Waterberg area to Richards Bay, Maputo and various in land destinations (currently in pre-feasibility stage.
- Botswana rail link (about 110 km) from Botswana for export through Richards Bay to unlock Botswana’s coal reserves (prefeasibility to begin shortly once the MOU has been signed between the two governments).
- eSwatini Railways link – a Greenfields rail link of about 150 km between Lothair in Mpumalanga and Sidvokodvo in eSwatini for export through Richards Bay and Maputo (currently seeking funding for main construction).
- Doubling of the Overvaal Tunnel system which entails the construction of a second tunnel next to the existing single tunnel at Overvaal, south of Ermelo in Mpumalanga as a means to mitigate the operational risk created by the single line tunnel (currently preparing to go out on tender for its construction).
- Clewer inland terminal is a future project aimed at facilitating the supply of coal from Matimba in Limpopo to Kusile and Kendal power stations near Clewer.
The South African manganese industry is experiencing strong export demand – currently in excess of 17 Mtpa, and its productive capacity is forecast at over 24 Mtpa by 2024/25.
Given the quality of reserves, South Africa’s manganese industry is positioned to capitalise on the projected growth in the manganese sector if the current logistics constraints are addressed.
As a means to help customers capitalise on projected growth, Transnet is creating 16 Mtpa of additional export capacity in line with the growing industry demand and is also increasing rail capacity by 1 Mtpa by running longer 375-wagon manganese trains (compared with current 312-wagon trains) from Sishen to Saldanha. The first 375-wagon train is expected to run in March 2019.
Transnet is also in the feasibility stage of installing a third tippler in Saldanha. The strategic objective of this is the creation of replacement throughput capacity.
Saldanha needs to maintain its current capacity level of 60 Mtpa and two functional tipplers are essential for this purpose.
The capacity created from the implementation of a third tippler will enable the terminal to execute much-needed refurbishment of Tippler 2 (expected to be complete in 2020).
Furthermore, this will mitigate the risk associated with the end of life of Tippler 1. All of the above will mitigate the potential adverse impact on operational performance.
Over the past 10 years, there has been growth of just over 1% on the coal heavy haul line while the iron-ore heavy haul line has grown by just under 6% there.
Despite this growth, there has been no growth from the general freight business (GFB), namely coal and magnetite, says Morwe, which has prompted Transnet to apply the already proven successes of the heavy haul industry in non-heavy haul operations, such as Transnet’s GFB operations as a means to unlock future growth.
Addressing operational challenges
Speaking to Morwe on the sidelines of the Investing in African Mining Indaba conference, he said that Transnet has spent over R42 billion on its rail infrastructure over the past decade, but the condition of the network is worse now than it was 10 years ago.
When asked how Transnet will overcome this moving forward, Morwe said that it has relooked its operation model and is implementing a new, fit-for-purpose operating model aimed at ensuring Transnet’s sustainability and looking after customer needs, as a key first step to ensure that it can overcome its operational and financial difficulties. Relooking the skills sets of its current employees, he said, is also a critical first step in addressing these operational constraints and delivering on customer requirements – which all currently require additional capacity.
Transnet’s chief customer officer, Mike Fanucchi said that the need for increased capacity from customers was encouraging, as this has not always been the narrative.
“Our biggest challenge at the moment is delivering on our customer’s weekly demands. This is an area of focus and an area of opportunity for us,” said Fanucchi.