How mass theft of railway infrastructure is derailing South Africa’s economy

Wholesale looting of railway infrastructure is the latest blow to an already embattled South African economy, chocking exports, as shippers struggle to find enough cargo carriages to transport their goods to ports.

Kilometres of railway lines and overhead cables are stolen, often in broad daylight, on a daily basis. According to the state-owned logistics operator Transnet, in November alone, more than 200km of heavy gauge steel rails were stolen across the country to be sold for scrap.

“Rail has failed in one of its most important functions for the South African economy,” says Mike Schussler, a Johannesburg economist.

Trains that carry some of the country’s key exports, such as coal and grains, are frequently cancelled or delayed. Almost all freight rail falls under Transnet, a state-owned corporation.

One of the country’s largest coal producers Exxaro, said in a recent earnings guidance that it estimates the industry is likely to export no more than 58.8 million tonnes of coal this year. Another coal producer, Thungela, puts the number closer to 55 million tonnes. In normal years, about 75 million tonnes of coal is exported.

Instead, coal producers are now forced to turn to road freight, a costly and slower alternative, says Mr Schussler. “We are seeing a lot of lorries on the roads carrying coal. This is a very inefficient system.”

Other crucial mineral exports are being slowed as well. Mining industry representative body The Minerals Council estimates the country will this year lose well more than 30 billion rand ($1.8bn) in export revenue from coal, iron ore and chrome, as a result of ailing rail infrastructure and operations.

The losses of infrastructure show no signs of slowing down. In a note published in December, Transnet said 33,500 metres of overhead copper cables had been stolen in the first week of the month alone.

“It’s possible to fix the overhead lines that provide the electricity the trains require,” says David Williams, who recently authored a report for the Johannesburg-based Brenthurst Foundation, on the state of the country’s logistics infrastructure.

“But in many instances the tracks themselves have been stolen. At stations, the buildings themselves have been looted for corrugated iron, bricks for building and so on.”

Even signalling equipment has been removed. Most of the stolen items end up being sold for scrap or in some cases, used for building material in the growing squatter settlements surrounding the country’s urban areas.

Theft of public infrastructure has been an ongoing problem for years, but the coronavirus pandemic and disruptions to staffing, particularly security personnel at stations, has led to wholesale plunder. This is especially damaging now, as exports were one of the few good stories the country has enjoyed in recent years.

Demand for minerals and agricultural products has been brisk as the world emerges from the pandemic, supporting the otherwise moribund South African economy. The onset of the global pandemic in 2020 slammed the brakes on imports, while demand for commodities worldwide drove the country’s international trade.

However, indications are that offshore sales are now slowing, in part because exporters simply cannot get their goods to market. “The value of South Africa’s exports of goods decreased by 6.7 per cent in the third quarter of 2021, while the value of merchandise imports remained broadly unchanged,” the South African Reserve Bank said this month.

“South Africa’s trade surplus, therefore, narrowed noticeably to 455bn rand in the third quarter of 2021, from 582bn in the second quarter.”

It is unclear if the situation will improve any time soon, says Gwen Mahuma, whose company Mahuma Investments invests in component and other engineering suppliers supporting logistics operations. “There’s not much investment into the sector, which is very sad given how important it is for any economy, in any country.”

The administration of President Cyril Ramaphosa has previously pledged to increase infrastructure spending, with a focus on ports and rail.

However, infrastructure investment would be irrelevant without securing and maintaining what was already there, Ms Mohuma says.

“As much as there isn’t enough investment, first things first we need to get that infrastructure that’s already in place, working again.”