New Rail Network for Southern Africa Set to Change Transnet Monopoly

A new cross border industrial rail network linking Botswana, Zimbabwe, Mozambique and Malawi might change regional logistics and exports in Southern Africa, where South African rail monopoly Transnet currently has dominance. Still in the proposal stage, the multi link southern Africa rail network, set to start in 2012, will connect Ponta Techobanine to Southern Africa, another new development for a deep-sea port in Mozambique, which aims to compete with the highly congested Richards Bay Coal terminal in South Africa.

Presently, the Richards Bay Coal terminal is the primary port for exporting commodities, particularly coal, from Southern Africa. Thus, the construction of the new rail system will serve to diminish the reliance of Southern African countries like Botswana to export their minerals on the South African rail, road and sea freight networks. Transnet in particular has benefited from this dependant situation. Even though the logistics parastatal is often criticised for the inefficiency of its rail networks and the constant bottlenecking of its ports, Southern African countries have no choice but to use their rail network. At the moment, 90 million tonnes of coal can be exported through Richards Bay and the clearing agent companies based there, but only two thirds of that can be transported by Transnet’s current rail network. With the new rail network and port, Transnet’s monopoly will be broken, and the export of minerals like coal, iron ore and manganese by mining countries will no longer be limited.

Overall, the $7 billion, ten year project is set to boost the mining sector in Southern Africa. Investment growth in South Africa alone has been limited to 7% in the past decade, compared to the 24% in Australia, because of “logistical challenges, including operational inefficiencies in the rail system and high port changes,” according to the treasury. However, with the preparation of the rail networks, Southern Africa is positioning itself for a commodities boom by ensuring that infrastructure is world class. The rail network and port in Mozambique will be particularly beneficial for the Southern African country, who already has leading mining companies based there, and is set to gain further investments.