Lack of cash for Transnet “a concern” says Minerals Council

THE Minerals Council of South Africa said it was concerned there was no allocation for state-owned rail and ports company Transnet in the country’s national budget, tabled today by finance minister Enoch Godongwana.“The lack of support means that Transnet will need to find other funding sources, including through private sector participation on the major commodity corridors,” said Hugo Pienaar, chief economist at the council.“Another potential avenue is direct capex contributions from the mining sector to maintain and upgrade rail infrastructure,” he said.Though it is a concern for the council it is hardly a surprise South Africa has no money for Transnet. Pienaar said in February Transnet needed as much as R15bn a year to rehabilitate its ailing rail and port infastructure.Despite a tariff-driven revenue increase, and a 3.2% increase in rail volumes, Transnet’s  financial problems deepened in the six months ended September. This was owing to a 10.2% increase in net operating expenses to R27.9bn. Reporting on its numbers in late December, Transnet posted an interim R2.2bn loss for the six months ended September, R600m worse than in the previous financial year.The concessioning of Transnet’s freight rail corridors to the private sector was an increasingly likely option, said Duncan Wanblad, CEO of Anglo American in an interview last month. This was in the wake of Transnet’s Network Statement last year which set out how the private sector could lease use of the freight lines through a third party manager.“It’s a package deal,” said Wanblad of the Network Statement. “Whoever operates these lines needs to assurance there is safety first. You can’t concession top of rail when there is work to concession the rail as well. Either Treasury has to come to party or they have to think more creatively how they partner this stuff,” he said.Commenting broadly on today’s national budget – which has suggested a 1% increase in VAT over two years in order to help finance the public purse and contain national debt – the Minerals Council said higher growth rates were needed for fiscal sustainability.“The only way to break the sub-optimal cycle of tax hikes or spending cutbacks to frontline services is through higher rates of GDP growth that is inclusive,” said Pienaar.Ultimately, growth policies help support the mining sector which in turns improves the tax and royalty takes which are expected to contract 28% in the 2024/25 tax period, (April 2024 to March 2025).Mining and petroleum royalties will be down by a similar (large) magnitude, from R15.9bn in 2023/24 to a revised estimate of R11.3bn in 2024/25. Treasury had banked on R16bn in royalty payments during 2024/25, said the council.The post Lack of cash for Transnet “a concern” says Minerals Council appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com