{"id":845281,"date":"2025-12-02T15:13:26","date_gmt":"2025-12-02T13:13:26","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=845281"},"modified":"2025-12-02T15:13:33","modified_gmt":"2025-12-02T13:13:33","slug":"end-of-an-era-for-120-year-state-monopoly-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/845281\/end-of-an-era-for-120-year-state-monopoly-in-south-africa\/","title":{"rendered":"End of an era for 120-year state monopoly in South Africa"},"content":{"rendered":"\n

Private South African freight-rail operator\u00a0Traxtion<\/a>\u00a0will invest R3.4 billion in locomotives and wagons, almost doubling its fleet as the country\u2019s more than century-old state rail monopoly comes to an end.<\/p>\n\n\n\n

The acquisition of 46 locomotives will allow the Johannesburg-based company, which operates in nine other African countries and is the continent\u2019s biggest private rail firm, to run freight trains on Africa\u2019s largest network of rail lines. <\/p>\n\n\n\n

State logistics company Transnet SOC Ltd. has struggled to meet demand, holding back economic growth.\u00a0<\/p>\n\n\n\n

Since 2022, when the government approved a new national rail policy to reorganize the country\u2019s ailing freight industry, South Africa has been moving toward allowing privately owned trains to operate on the state network.<\/p>\n\n\n\n

That came after coal exports fell to a 30-year low and iron ore shipments declined to their lowest in a decade as Transnet\u2019s service deteriorated. <\/p>\n\n\n\n

Mining companies including Glencore Plc and Kumba Iron Ore Ltd. have struggled to get their commodities to port and industries including automobiles and agriculture have also been affected.\u00a0<\/p>\n\n\n\n

\u201cWe are a 38-year-old South African company that has never operated one kilometer of South African main rail and that\u2019s about to change,\u201d James Holley, the company\u2019s chief executive officer, said in an interview. <\/p>\n\n\n\n

\u201cWe are making this investment because of our confidence and our belief in government policies and because of the demand from our big blue chip mining companies.\u201d<\/p>\n\n\n\n

For the deal, Traxtion raised equity from its largest shareholder Harith General Partners, and debt from Standard Bank Group Ltd. and Absa Group Ltd., Holley said. The majority of the funding came from Harith, he said. <\/p>\n\n\n\n

While the government has set a target of moving 250 million tons of freight by rail by 2030, Transnet is currently only railing about 160 million tons.<\/p>\n\n\n\n

Traxtion\u2019s investment will only meet 5%, or about 4.5 million tons, of that 90 million-ton gap, opening the way for further expansion by the company and rivals such as Grindrod Ltd. <\/p>\n\n\n\n

More to come<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

While Traxtion\u2019s current shareholders may support two more rounds of fundraising, the company might need to look at alternatives, he said.\u00a0<\/p>\n\n\n\n

\u201cThere does come a point where every business becomes constrained in its ability to raise equity, and at that stage we will engage with our shareholder body and decide what is the long term capital strategy for the business,\u201d Holley said in Johannesburg. <\/p>\n\n\n\n

\u201cCertainly an initial public offering at that stage would be an option,\u201d potentially in four to five years time, he added.<\/p>\n\n\n\n

The company is considering a further R2.4 billion investment, he said at a later press briefing, without giving details.\u00a0<\/p>\n\n\n\n

Growth of private participation in the rail industry will also depend on Transnet and the government committing to partnerships with private companies to improve and modernize the most important routes on the country\u2019s 23,000-kilometer rail network, he said.<\/p>\n\n\n\n

Those include lines to move coal to the eastern port of Richards Bay, iron ore to Saldanha on the west coast and manganese to ports in the Eastern Cape province. <\/p>\n\n\n\n

The freight rail line between the port of Durban and the economic hub of Gauteng, which includes Johannesburg, is also key.\u00a0<\/p>\n\n\n\n

Under the agreement, Traxtion will spend R1.8 billion rand buying diesel-electric locomotives from New Zealand\u2019s Kiwirail Ltd. and another R1.6 billion on wagons. <\/p>\n\n\n\n

The locomotives will arrive between May next year and August 2027 with the first ones being conditioned to start service within 12 months. <\/p>\n\n\n\n

South Africa uses a narrow rail gage similar to that used in parts of Brazil, Australia and New Zealand.<\/p>\n\n\n\n

The company, which currently operates about 55 locomotives in countries including Guinea and Zambia, will add at least 662 jobs, more than doubling its staff numbers. <\/p>\n\n\n\n

While the firm currently earns about three-quarters of its revenue outside South Africa, the implementation of the rail reform and injection of the planned fleet will, \u201cflip that on its head,\u201d said Holley. <\/p>\n\n\n\n

\u201cThis will be the largest private freight rail investment in the history of the country,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"

Private South African freight-rail operator\u00a0Traxtion\u00a0will invest R3.4 billion in locomotives and wagons, almost doubling its fleet as the country\u2019s more than century-old state rail monopoly comes to an end.<\/p>\n","protected":false},"author":59,"featured_media":769920,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[2138],"class_list":["post-845281","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-transnet"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/845281","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=845281"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/845281\/revisions"}],"predecessor-version":[{"id":845283,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/845281\/revisions\/845283"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/769920"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=845281"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=845281"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=845281"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}