South African coal and iron-ore exporters aim to sign agreements with state-owned logistics company Transnet SOC Ltd. in February that could pave the way for them to spend billions of rand to help fix crucial rail lines and boost shipments.

Organizations representing firms including Glencore Plc and a unit of Anglo American Plc are negotiating the terms of the pacts with Transnet, said Ian Bird, head of transport and logistics for B4SA, a business group that’s partnering with the government to revive South Africa’s sub-standard transport and energy infrastructure and operations.

The collapse of freight-rail lines due to poor maintenance and theft of equipment saw coal exports plunge to a 30-year low of 48 million tons in 2023, while iron-ore railings slumped to the lowest in a decade. While coal railings improved to 52.1 million tons in 2024, the first increase since 2017, that was well short of a 60-million ton target. It also equated to just over half of total rail capacity of 91 million tons.

The government has agreed to allow private operators to run trains on the lines from about April to boost export income. “We are now at a point where something has to be done,” Bird said in an interview. The state of the lines has an “impact on both Transnet Freight Rail and third-party operators,” he said.

The parties haven’t publicly disclosed the likely terms of the agreements, which should facilitate an infusion of private capital and expertise. Transnet, in a response to Bloomberg queries, put the cost of repairing the coal line over three years, at about 12.9 billion rand ($700 million) and the iron-ore line at about 9 billion rand. Repairing all Transnet’s tracks, including those used to transport containers and manganese, would require 64.5 billion rand over five years, Transnet said in 2024.

“The conclusion of the agreements with the customers is on track,” Transnet said. “The investment is required to get these lines back up to a standard at which we can move more volumes.

”Companies export iron ore from the Saldanha port on South Africa’s west coast, while they ship most coal from Richards Bay on the eastern seaboard. Alongside gold, platinum group metals and cars, the two commodities are among South Africa’s biggest exports.

The Ore Users Forum, which counts Anglo’s Kumba Iron Ore Ltd. and Assmang Ltd. among its members, declined to comment. Richards Bay Coal Terminal Ltd., the privately owned coal-export port whose shareholders include Glencore, Thungela Resources Ltd. and Exxaro Resources Ltd., also didn’t comment.

The aim is to restore the lines “to near-enough maximum operational capacity,” Bird said. “It’s now a case of where the money will come from.”

He expects the Treasury to provide some clarity on funding for Transnet, which is deeply indebted, in February’s national budget. Projected revenue the company earns from third parties will be lower than forecast because tariffs were roughly halved after negotiation, Bird added. Independent entities have completed technical assessments of the work needed on the coal and iron-ore lines, and they will carry out further studies on the other routes. Transnet’s own attempts to boost its volumes are stalling.

Below Target

At the meeting between representatives from the government, state companies, B4SA and President Cyril Ramaphosa in January, Transnet said it disclosed that total freight-rail volumes for the year to March 31 were up 5.3% from a year earlier, but about 7 million tons below target. The annual objective is 170 million tons. Derailment, theft and vandalism are to blame, it said.

The goal for the 2025-26 financial year is 193 million tons, and for 2029-30 it is 250 million tons, about a fifth of which would be due to private operators and investment, a document drawn up for the meeting by the Government Business Partnership, which includes B4SA, showed. The business group confirmed the authenticity of the document.

Processing of containers at Transnet’s ports will also miss a target of 4.4 million 20-foot equivalent units this financial year, with a throughput of 4.2 million containers compared with the previous year’s 4.1 million tons, the presentation showed, and Transnet confirmed. The company has set the 2029-30 aim after private intervention at 5.4 million units, the presentation shows.

The rollout of new electricity-generation capacity and transmission lines last year was also 48% and 28% below target respectively, charts in the presentation reveal.