Portia Joy Derby, chief executive officer of Transnet SOC Ltd., at the Africa CEO Forum in Abidjan, Ivory Coast, on Tuesday, June 14, 2022. Photo: Andrew Caballero-Reynolds/Bloomberg via Getty Images
Transnet’s troubles have been a major focus at the Mining Indaba this year, with logistical constraints being blamed for the industry’s failure to take full advantage of the commodity boom.
But while this may create the impression that Transnet is persona non grata, the entity’s chief executive Portia Derby insists that the state logistics company has “a brilliant working relationship with the mining companies”.
“We are going to continue focusing on our core customers, which are the mining companies,” she told the Mail & Guardian on the sidelines of the Indaba on Tuesday. Earlier Derby presented on Transnet’s strategy of co-investment for inclusion, growth and efficiencies in the country’s freight logistics system.
The Transnet chief executive attended the Mining Indaba in the wake of controversy surrounding her relationship with the Minerals Council South Africa.
Late last year, the Transnet and the Minerals Council entities agreed to establish joint collaborative structures with the aim of stabilising the country’s rail and ports systems. However, last month it emerged — through a leaked letter — that the latter entity called for Derby’s axing before the agreement was announced.
Derby recently hit back at the Minerals Council’s letter, penned by its president Nolitha Fakude, saying that the organisation’s antagonism towards her stemmed from its opposition to Transnet introducing more junior players on its manganese export lines.
“We have a perfectly good relationship with the mining companies themselves. The lobby body is a lobby body, I can’t hang my head on a lobby body,” she told Business Times.
The Minerals Council has denied that the letter and the actions it prescribed had anything to do with the opening of the manganese line. On Monday, the Minerals Council’s outgoing chief executive, Roger Baxter, underlined that the organisation represents both major and junior miners.
Derby’s presentation at the Mining Indaba on Tuesday outlined, among other interventions, the decision to open up Transnet’s manganese lines, increasing the capacity allocated to emerging miners to between 25% and 30%.
Emerging miners, according to the presentation, constitute 57% of Transnet’s customer base, yet only enjoy 6% of the entity’s capacity. Moreover, there are 52 mines with no rail allocation at all, meaning that some miners rely on road transportation “and or sell their production to major miners in order to survive.”
Derby underlined the careful balancing act implicit in this effort to bring more emerging miners into the fold, noting that Transnet has had to avoid inadvertently flooding the market and collapsing pricing.
“If we oversupply capacity, we’re back to boom and bust cycles — all of us … As we bring in the juniors, how do we not kill the dynamics of the economics in the sector, the demand and supply equation,” she said.
“Because I think sometimes we need to be reminded, South Africa competes with the world. And so that’s the conversation I’m hoping that we’re going to start having, because that’s a more interesting conversation.”
If industry stakeholders are able to act in concert, Derby noted, prices will be kept at a favourable level, revenues will be maximised and the fiscus will benefit.
“My sense is that Transnet needs to work very closely with industry and government so that we create capacity sufficient, and just enough ahead of the curve, to ensure that when there’s a boom at some point in the future we don’t lose out of it,” she added.
“But just enough so that you don’t break the economics of the sector. Because when you break the economics of the sector, everybody loses. So we need to collaborate and work together.”
Derby was not alone in the hot seat on Tuesday. A discussion between Baxter and outgoing Eskom chief executive André de Ruyter concluded just minutes before the Transnet presentation.
The two chief executives lead entities which are at the centre of the country’s investment-killing structural constraints, a fact that has put them — and their government shareholder — at odds with the private sector.
In their session, Baxter and De Ruyter discussed the slow pace of South Africa’s electricity sector reform, which was mooted in a 1998 energy policy white paper.
“If we had implemented it, we would have had an independent market operator, a state-owned national transmission company, multiple private generators competing with Eskom on the generation business … But there were various roadblocks along the way that didn’t allow that to happen,” De Ruyter said.
“We are really implementing what we should have implemented 25 years ago. But better late than never.”
De Ruyter noted that Eskom’s unbundling should have happened a long time ago, adding that the utility has done everything it can to make progress on the restructuring.
“We’ve done everything in our power to enable the legal separation of our transmission business … Now we are still waiting for a number of licences. We are waiting for some legislative changes and that has not been happening as quickly as it should have,” he said.
It is an uphill battle, De Ruyter said, to turn around state-owned entities “when the entire state apparatus is not aligned and synchronised to those activities”.
“We need to get the state going. I think the national electricity crisis committee is getting there and we are now starting to see action being taken. But it has taken a major crisis of stage six loadshedding to precipitate this action, to galvanise the government into action,” he added.
“One would have wished, frankly, that it didn’t have to come to this and that we could have made these baby steps earlier.”
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