Minerals Council hopes new Transnet board will “establish a relationship” with sector

SOUTH Africa’s mining sector welcomed the overhaul of state-owned rail and ports company Transnet’s board announced on Tuesday in which former Anglo American SA executive head, Andile Sangqu, was appointed chair.

“The Minerals Council South Africa welcomes the appointment of nine new members to the Transnet Board now chaired by Andile Sangqu,” it said in a short statement today. The council added that it looked forward to “establishing a working relationship” in an effort to “stabilise rail and port performances” as well as grow volumes, lowering industry costs.

Pravin Gordhan, public enterprises minister said on July 11 that in addition to the appointment of Sangqu the company would take on nine new non-executive directors bringing the total number of members to 13. “The appointments are a step that underscored the government’s commitment to infuse the state-owned company with the requisite skills, experience and business acumen,” Gordhan said.

“The newly reconstituted board will help propel Transnet’s strategic transformation and the execution of its mandate as a critical cog in the South African freight and logistics domain, as well as a key driver of South Africa’s competitiveness and economic dynamism.”

In addition to Sangqu, the other new appointments are Lebogang Letsoalo, Martin Debel, Dipak Patel, Busisa Jiya, Mosadiwamaretlwe Pearl Zambane, Boitumelo Sedupane, Refilwe Buthelezi, and Elias Monage.

The nine new appointments will join Popo Molefe and Sydney Mufamadi who have been reappointed to the board, together with Transnet CEO Portia Derby and group CFO Nonkululeko Dlamini.

A new board at Transnet helps address concerns raised in June by asset management company FutureGrowth which said there were “evolving governance weaknesses” at Transnet related to unfilled non-executive board positions.

“Of the 12 independent non-executive directors, six have subsequently resigned or retired without being replaced,” said FutureGrowth’s listed credit investment analyst Lindani Vezi. “Alarmingly, four of these vacancies have been open for more than a year.”

The Minerals Council said the new board would have to get to grips with “urgent resolutions to the challenges that Transnet is experiencing”. These include a precipitous decline in coal volumes while the iron ore, chrome and manganese sectors also experienced a drop-off in the performance of freight rail.

The Minerals Council is participating in the National Logistics Crisis Committee set up by President Cyril Ramaphosa in conjunction with Business For South Africa to address concerns about Transnet and transport logistics. It also set up committees across the chrome, coal, manganese and iron ore industries aimed at quick fix and longer-term efficiency improvements.

Transnet said on June 28 that its freight division was “well on track” to exceed coal exports for its 2022/23 financial year of 48.7 million tons (Mt) in the current year owing to collaboration with the private sector. Transnet Freight Rail (TFR)’s financial year ends March 31. For the 2022 calendar year it transported 50.4Mt, a 30-year low.

Ahead of its half year close, Thungela said that by early May, TFR’s run-rate had “stabilised” at 48Mt following “a very weak start to the year” when it was below 40Mt.

In May, however, TFR suffered two derailments which resulted in the loss of 300,000 tons in railed volumes for the company. In order Thungela make the upper end of its export saleable production guidance range 12.5Mt, it requires an industry run rate of 53Mt in the second half of the year.