Kumba opens contract talks with Transnet amid uncertainty

KUMBA Iron Ore may need more capacity on Transnet’s Sishen to Saldanha Bay railway, but where volume isn’t in shortage is in complexity. Not, at least, when it comes to running a bulk mining business while the Government’s trains and ports operator muddles through reform that seems to be slowing.Mpumi Zikalala, CEO of Kumba said on Thursday her company had opened talks with Transnet on a new rail contract as their existing agreement ends in 2027. The complexity of those discussions is whom, how and for what it negotiates. Potentially, negotiations start with one party but end with another.The hope was for quicker Transnet reform, in which train slots are allocated by the independent Transnet Infrastructure Manager (TRIM), and the physical line is managed by a concessionaire.However, that process of reform has not yet materialised. TRIM exists but it is not procuring and the concessioning of the rail network is a long way off. Transnet issued its Request for Information from the industry in May last year, but hasn’t yet followed up on Requests for Proposal, the next, all important stage of the rail liberalisation process.Therefore, in respect of contract negotiations, Kumba has started negotiations on rail and ports contract with Transnet knowing the counterparties may change.Mpumi Zikalala, CEO of Kumba says the company’s strategy is to get “everyone in the room” in order to get “a holistic deal”.“Our current contract takes a holistic approach. There’s the rail network itself, the rolling stock that runs on it, and the port side – and collectively there’s a contract covering volume, tariffs, and so on,” said Zikalala. “The change that’s taken place is that TRIM is now operating slightly outside of the rest of Transnet,” she said.Kumba wants to get TRIM involved in the discussion. “Discussions are taking place, but it has somewhat changed the nature of the game,” said Zikalala who added, however, that Transnet were “open” about the negotiations. For all this, Zikalala is confident discussions will be concluded by early next year.There is also the immediate matter of rail and ports performance. An insight into Kumba’s confidence in this regard is its guidance on future production doesn’t much change from 31 to 33 million tons a year, set a while ago.That’s because rehabilitating the rail network, through the Ore Corridor Restoration programme, a joint venture between Transnet and the industry-controlled Ore Users Forum, is a complex. Transnet needs assistance with planning and procurement.There were four derailments last year despite Transnet twice taking the line out on maintenance. Zikalala is hopeful of improvement. She expects Kumba’s volumes to be unaffected by another 20 days of maintenance this year – which the company supports – indicating the tempo is improving, albeit slowly.Then there is uncertainty about the commercial vehicle that will be used to manage funds provided by Government for the line restoration to return the network to its 60 million tons a year capacity.“We know there is a budget facility for infrastructure that government has made available to Transnet, but they also need the vehicle for that money to be spent,” said Wimpie Pienaar, head of logistics for Transnet.The Sishen Saldanha rail network is 861 kilometres with 19 crossing loops so trains can pass each other. But the pathway to reform is longer and more complicated.The post Kumba opens contract talks with Transnet amid uncertainty appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com