South Africa’s Transnet to invest $26bn in rail infrastructure by 2019

11 April 2012 (Last Updated April 11th, 2012 18:30)

South African company Transnet is planning to invest R205bn ($25.66bn) into rail projects by 2019, in order to triple revenues and support increasing mineral exports.

South African company Transnet is planning to invest R205bn ($25.66bn) into rail projects by 2019, in order to triple revenues and support increasing mineral exports.

Around R50bn ($6bn) will be invested on Richards Bay coal corridor and R25.9bn ($3.2bn) will be invested in South Corridor, linking the harbours at East London, Ngqura and Port Elizabeth to the interior of the country.

Transnet, through its market demand strategy (MDS) programme, aims to invest a total of R300bn ($37.58bn) to expand South Africa's rail, port and pipelines infrastructure, to generate an increase in freight volumes.

According to the company, overall rail freight volumes are expected to increase from 200 million tonnes to 350 million tonnes by 2019. In addition to growth in mineral traffic, Transnet Freight Rail (TFR) will increase its market share of intermodal traffic to 92% from 79%.

Of the total investment, about R151bn ($18.91bn) will be allocated to general freight. This will help support the growth in volume to 170 million tonnes per annum (mtpa). Export coal traffic will increase from 68 million tonnes to 97.5 million tonnes by 2019, while iron-ore exports will rise from 53 million tonnes to 82.5 million tonnes.

MDS will allocate TFR R78bn ($9.7bn) to build new locomotives over the next seven years; 50% of which will be spent on local suppliers.

TFR has been working with Anglo American, BHP Billiton and Kumba to increase capacity on heavy-haul lines, as well as on improvements made over the last year. During the last week of March, TFR delivered 2.2 million tonnes of iron-ore on the Sishen to Saldanha line, which is thought to be their highest delivery to date.

The company said that through MDS, it will satisfy validated demand by accelerating investment in freight logistics capacity, as well as supporting movement of bulk and manufactured goods.

According to the company, the implementation of the MDS will help to almost triple its revenue, from R46bn ($ 5.76bn) to R128bn ($16.03bn) over the next seven years.