Transnet Group CEO Michelle Phillips says the cash-strapped and embattled rail and logistics giant needs considerable financial investment to turn around its dire situation.
Transnet wants to leverage its customers for a solution before even considering another loan or bailout, she said.
She was speaking to delegates at the Investing in African Mining Indaba in Cape Town on Tuesday afternoon.
She said in the absence of assistance from the government, the private sector will be a crucial part of Transnet’s recovery and rehabilitation of its logistics infrastructure and rail network.
She said Transnet conducted a critical assessment to establish its key challenges and potential solutions and found that significant investment would be required to fix its operational and financial challenges.
“We have to focus on what we can control. We understand that business is constrained. We have been having conversations with customers, and I think we will settle on how we do this. We have done an independent critical assessment with the support of our customers on these lines,” she said.
“The assessment has indicated to us that over the next five years we need close to R30bn to do some of the work that is required on network ... As Transnet, I do not want to go the minister for money. However, we find ourselves in the situation where we are at. But I need a plan B and that’s the conversation with the customer.”
Phillips said while discussions with customers are ongoing, they have been positive.
She said Transnet will need considerable assistance to rehabilitate its network and gain access to equipment that will allow it to meet its volume targets.
“What I will not do is borrow money that I cannot give back. That’s what we need to figure out ... What we are not going to do is get ourselves deeper and deeper into debt. We will have to find alternatives to try to fund this and we will have to find solutions together with our customers.”
In a lighthearted moment during the panel discussion, Phillips joked that it was hard to get the government to part with any funding unless it involved implementing Operation Vulindlela, which is steered in the presidency project management office by Rudi Dicks.
“We need funding resources and tools that the private sector has. Innovations, innovative solutions ... These things are coming into the market, but we will need the private sector to participate. I have not been fortunate enough like my brother next to me (Dicks) to get the financial support from my father (government).”
She said Transnet went on a drive to ensure that it had equipment on order, and when original equipment manufacturers with long waiting lists could not supply equipment immediately, Transnet's own customers made equipment available to the utility.
Head of the presidency project management office Rudi Dicks said the progress made by Eskom and Transnet in reforming their operations was significant for organisations of their size.
He said the reforms of Operation Vulindlela started gathering pace in 2020, just after the Covid-19 pandemic.
“Many colleagues forget that the president adopted this as part of his growth agenda. It’s not just a government project; it is his programme. The president has been one of the most consistent people in this.”
CEO of Kumba Iron Ore Mpumi Zikalala said the challenges in the coal and iron ore corridor from Transnet’s critical assessment give a proper diagnosis of what needs to be fixed, which was a positive development.
“Many CEOs have experienced these challenges, in the iron ore space as well as chrome and manganese. There is still a little bit more that we need to do. We saw the decline in performance at the beginning of this journey but couldn’t drive a plan for collaboration.”
She said the sector was still in a place of crisis, and some of the mining companies have had to reduce jobs and terminate contracts with companies, some of them started by local communities.
Minerals Council CEO Mzila Mthenjane said reforms will allow the industry to reposition and reindustrialise itself.
He said Transnet would have to ensure it grows logistics volumes so that the mining sector can make the most of highcommodity prices.
“It also brings into stark focus that as soon as we have addressed these challenges, the focus will come back to mining and the work we do with the DMPR [department of mineral and petroleum resources]. We are going to go 30, 40, 50 years, because these are lifelong assets. The asset spend needs to ensure that Eskom goes for another 100 years with adequate maintenance.”
He said the basics must be in place and prospecting rights must be consistent and predictable for miners to make the most of a successful Transnet recovery.
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