Government looking to tap private companies to save Transnet

South Africa has taken its biggest step yet to invite the private sector to help it fix dilapidated freight-rail lines and ports that are stymieing exports from companies including Glencore Plc, Anglo American Plc and BMW AG.

On Sunday, Transport Minister Barbara Creecy asked for information on how companies could invest in crucial rail lines and ports through which key exports such as iron ore, coal, manganese, chrome and cars move.

In August, her department will ask for more formal proposals.

Coal railings have dropped to the lowest in almost 30 years, and the amount of iron ore moved to the west coast port of Saldanha is close to a decade low.

Carmakers based around the capital of Pretoria have to spend much of their production to ports by road, while those located near the coast have to do the same to get their vehicles to the industrial hub of Gauteng, the country’s biggest car market.

“South Africa’s rail and port infrastructure faces substantial challenges, including declining performance,” Creecy said in a statement.

“The limited availability of state resources to fund infrastructure development and address backlogs has intensified these challenges.”

The government plans to retain ownership of infrastructure, including rail lines and ports, meaning private-sector participation would need to involve running private trains on the tracks, offering skills and expertise, leasing rail and port operations, and investing in export terminals.

The government plans to focus on the rail line from the Northern Cape to Saldanha, which companies including Anglo’s Kumba Iron Ore Ltd. use, as well as the line south from the Northern Cape that takes manganese to the ports of Ngqura and Port Elizabeth.

It will also seek information on lines that carry coal and chrome to the eastern port of Richards Bay and potentially magnetite, a low-grade form of iron ore, to that site.

The government is also seeking to improve the performance of a container-rail line between Gauteng and the port of Durban and lines to the automotive ports in the Eastern Cape province.

Coal, iron ore and cars are three of South Africa’s five biggest exports.