Kumba “registered interest” in taking stake in Transnet, says CEO Themba Mkhwanazi

Themba Mkhwanazi, CEO, Kumba Iron Ore

KUMBA Iron Ore has registered an interest in taking a stake in Transnet, South Africa’s government-owned freight and logistics company.

“Transnet is obviously looking at private-public partnerships in terms of its rail infrastructure. With the limited engagements that we’ve had with them on this, we have registered our interest,” said Kumba Iron Ore CEO, Themba Mkhwanazi.

“We are of the view that what we require is a system view in terms of what the art of the possible is,” he said. “We in turn as part of the industry – because there are other players – we see ourselves as playing a role in that.”

Mkhwanazi was responding to analyst questions following the presentation of the Anglo American-owned firm’s interim results in which it reported record headline earnings and paid out an R72.70 interim dividend, also a record.

Transnet has suffered a number of derailments over the past two years and commented recently that its coal infrastructure could be a victim of sabotage.

Earlier this month, Kumba downgraded its sales guidance by one million tons to between 39Mt and 40Mt for its 2021 financial year. It has maintained production guidance at between 40Mt and 41Mt.

Said Mkhwanazi, “Transnet is probably costing up about 10% of the nameplate capacity of that system. We believe we can claw the gap back.”

BusinessLive reported earlier this month that Transnet was hoping to open parts of its rail network to private, third-party operators but this falls short of the public-private partnership the market believes Transnet requires.

Kumba Iron Ore has missed out on sales at a time when the iron ore price burst through 10-year highs owing to freight problems that Mkhwanazi today blamed on a combination of system deficiencies, inclement weather, and two locust infestations that slowed trains.

Transnet’s problems also extend to its ports.

Currently, about 1.5 million tons (Mt) of iron ore are sitting at Saldanha Port that Mkhwanazi said he would prefer to be “in the hands of customers”. The company could increase that inventory hold to 2.5Mt before it became a logjam in itself, it said.

Sabotage

Transnet declared force majeure at the country’s key container terminals after disruptions caused by a cyberattack five days ago, according to a report by Bloomberg News.

“Transnet, including Transnet Port Terminals, experienced an act of cyber-attack, security intrusion and sabotage, which resulted in the disruption of TPT normal processes and functions or the destruction or damage of equipment or information,” Transnet said in a notice sent to customers.

“Investigators are currently determining the exact source of the cause of compromise and extent of the ICT data security breach or sabotage,” it said.

Transnet is taking “all available and reasonable mitigation measures” to limit the impact from the disruption, said Bloomberg News. Container terminals are operating, but at a slower place pace, while a manual system for moving containers has been adopted.