Transnet customers are losing 4.5-million tonnes of goods due to infrastructure theft despite the state-owned rail and ports company spending R4bn annually on private security.
Addressing the Joburg Mining Indaba on Thursday, Transnet CEO Michelle Phillips bemoaned the exorbitant security costs that account for a large portion of overheads and deprive the group of much-needed revenue and profit.
“When Transnet works, SA thrives. If we want Transnet to work, we must all do what is required,” Phillips said. “We are tired of paying more than we should. We are tired of people attacking our network.
“I pay R4bn a year purely to private security companies. Despite that R4bn I paid this past year, my customers and I lost 4.5-million tonnes to theft.
“Seven-million tonnes were lost to derailments. The million tonnes and the billion rand that I lose equates to R9bn that the economy loses,” she said.
“We need to fix those things so that this business can run — so the private operators have something to work with.”
Transnet is undertaking a fundamental shake-up, offering private companies access to its vast rail network for the first time.
In Numbers
- R4bn — Annual spend on private security
- 4.5-million tonnes — lost to infrastructure theft
- 7-million tonnes — lost to derailments
- R9bn — Total estimated annual economic loss
- R14bn/year — Needed to fix network over 5 years
- R1.9bn — Net loss in 2024/25
- R144.8bn — Current group debt
- R156bn — Expected peak debt this year
- R127bn — 5-year capital expenditure plan
- R60bn — Annual cost of smuggling & theft in mining
Transnet Rail Infrastructure Manager (Trim), which will facilitate the transition, was established last year to drive the recovery of SA logistics by attracting more focused, private investment into the country’s rail corridors — a critical reform given the vital role of railways in the economy.
However, cash-strapped Transnet has estimated it needs R14bn a year over the next five years to get its ailing network up to standard for private operators.
The enterprise reported a net loss of R1.9bn in the 2024/25 financial year, while its debt burden increased to R144.8bn from R137.7bn the previous year.
Phillips expects group debt levels to peak at about R156bn in the current financial year, and the group has set out a R127bn capital expenditure plan for the next five years in a bid to stabilise the system before private operators join.
“When private operators enter this network and it is not fixed, I am not going to take responsibility for trains being delayed,” Phillips said.
“We can spend about R25bn on our own, but with stakeholders we can spend a little more and get a little more done,” she added.
Infrastructure theft continues to plague SA industry in general, costing the economy billions of rand in productivity losses.
Mineral & petroleum resources minister Gwede Mantashe estimated that smuggling and theft costs the mining industry R60bn a year.
Trade, industry & competition minister Parks Tau last week announced that chrome ore would be placed under export control by the International Trade Administration Commission to combat illegally mined chrome ore, which is thought to account for 10% of all chrome ore mined in the country annually, or about 2.7-million tonnes a year.
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