Exxaro says it can double coal exports if Transnet delivers

In recent weeks, a growing narrative has emerged around the challenges faced by businesses in South Africa due to systemic failures within the country's infrastructure and governance systems. At the heart of this discussion lies the issue of coal transportation, specifically the inability of Transnet, the state-owned logistics provider, to meet the demands of private sector entities such as Exxaro, one of South Africa’s largest coal producers. The situation has sparked widespread frustration among business leaders, who argue that the inefficiencies of state-run services are directly impacting their operations and profitability.

On Monday, Exxaro held a capital markets day, an event typically used to showcase a company’s performance and future plans. During this event, it became clear that Exxaro is capable of significantly increasing its coal output—up to 3.9 million tonnes annually at its Waterberg mine in Limpopo. However, the company faces a critical bottleneck: Transnet, which is responsible for transporting coal to the Richards Bay Coal Terminal, can only move approximately two million tonnes per year. This discrepancy has led to a surge in the number of privately owned trucks being used to transport coal, creating traffic congestion and further straining the already overburdened road network.

The implications of this situation extend beyond mere logistical inconvenience. Exxaro’s CEO, Ben Magara, has expressed concern over the limitations imposed by the state’s infrastructure capabilities. He suggests that if Transnet were able to increase its rail capacity, Exxaro could potentially double its coal exports. This scenario would not only boost the company’s revenue but also contribute to South Africa’s economic growth. However, the current state of affairs has forced Exxaro—and other companies—to bear additional costs and operational burdens, highlighting a broader pattern of underperformance by state institutions.

This issue is not unique to the coal industry. Across various sectors, similar problems have been reported. For instance, Libstar, a food producer, recently had to shut down an entire sauce factory in Johannesburg after experiencing a prolonged period without access to water. Similarly, Astral Foods, another major player in the food manufacturing sector, has relied on self-supplying water at its Lekwa facility due to the local municipality’s failure to provide adequate services. These examples illustrate a recurring theme: the expectation that essential services should be delivered efficiently and reliably by government bodies is frequently unmet, forcing private enterprises to step in and cover the gaps.

The financial burden of these shortcomings is significant. Companies are effectively paying for services that should be funded through public resources, resulting in a form of double taxation. This phenomenon has become a point of contention among middle-class citizens and business leaders alike, who argue that the cost of state failure is ultimately borne by the general population.

Meanwhile, the debate surrounding immigration has intensified, with some political figures advocating for stricter controls on foreign nationals. While some leaders are motivated by prejudice, others frame the issue as a response to the country’s high unemployment rate. However, the underlying causes of unemployment remain complex and multifaceted, making simplistic solutions ineffective.

As the conversation continues, the focus remains on whether the government can improve its service delivery and infrastructure management. Until then, the strain on both the economy and the daily lives of South Africans is likely to persist.