EDITORIAL: Government should take up Minerals Council offer to help sort out Transnet

It is hard not to sympathise with the Minerals Council’s calls for urgent and radical intervention to stop Transnet, the state-owned freight logistics company, from collapsing, taking the mining industry down with it.

In a December letter, since leaked to the media including this publication, the council, which represents most mining houses in SA, beseeches the board to sack Transnet CEO Portia Derby and Sizakele Mzimela, head of Transnet Freight Rail, and replace them with suitably qualified individuals.

The strongly worded letter, signed by council president Nolitha Fakude, makes a range of practical suggestions including setting up multidisciplinary “war rooms” (a SA favourite solution for problems) for the bulk commodities corridors to turn around Transnet’s deteriorating port and rail performance.

The letter, addressed to Transnet chair Popo Molefe, suggests the mining industry’s mounting frustration with the negative effect on it occasioned by Transnet’s continuing decline from operations as well as financial health perspectives. The loss of confidence comes after months of fruitless engagement with the Transnet management team.

Under the present leadership team, Transnet’s performance has been  deteriorating rapidly. For the first time, it received an injection from the fiscus in October last year, joining other financially distressed state-owned companies such as power utility Eskom, arms maker Denel and the well-run SA National Roads Agency in begging.

The operational decline has been worsened by strange decisions, including an avoidable weeklong walkout by Transnet workers over pay rises. Also, hundreds of locomotives are parked thanks to management’s dispute with a Chinese locomotives supplier. Last August, Transnet inexplicably announced  tentative agreement to settle the dispute with the Chinese which would, if concluded, enable it to buy spare parts from Chinese firm CRRC Corporation.

Last Thursday, as if to divert attention from the council’s bombshell letter, Transnet disclosed that the talks with the Chinese supplier had reached an impasse. Incredibly, it said the parastatal would issue a new tender to replace the Chinese.

The dispute with the Chinese stems from a tainted locomotive acquisition tender for which several former senior Transnet executives are now being prosecuted. It boggles the mind how Transnet’s present leadership believed it could service the locomotives from China in the middle of this dispute.

Transnet’s leadership has blamed state capture and its legacy for the rapidly deteriorating performance. This excuse is not entirely credible — the current management has had a lot of time to arrest the impact of state capture.

Unhelpfully but perhaps unsurprisingly the Black Business Council (BBC), a business lobby organisation, has sprung to the defence of Transnet’s leadership, accusing the mining industry of being anti-transformation (read: opposition against access to Transnet’s port and rail infrastructure by black mine owners).

This is a baseless and diversionary assertion and is a textbook example of post-truth politics. There is no plausible connection between the council’s letter and emerging miners’ access to Transnet’s services.

The mining industry, which continues to be an important contributor to jobs and the fiscus, has many faults. But its gripes about Transnet are legitimate  and deserve government attention, especially from President Cyril Ramaphosa.

Tax windfall

Conveniently, the BBC forgets that it was this much-maligned industry, the council’s members, that provided a much-needed tax revenue windfall. That tax bonus made it possible for the government to extend the R350 social relief grant during the Covid-19 pandemic. Without this grant, poor households would have been plunged into a humanitarian disaster.

The fact is that had Transnet come to the party the SA Revenue Service would have collected much more from the mining industry. This is what business (including the leaders of the BBC), government and Transnet ought to be talking about instead of point-scoring.

The council’s letter is a starting point for an urgent and critical conversation that SA ought to have.

Unfortunately, up until now, Transnet’s management has adopted a defensive and bellicose posture when confronted with industry grievances. At one point, some of its senior executives accused the mining industry of greed and wanting super profits, as if profit was a swear word. This needs to stop. SA can ill afford the collapse of a critical player like Transnet.

The council has offered a helping hand. The government, the sole shareholder in Transnet, needs to accept this help.