South Africa Opens Freight Rail to Private Operators as Mining Demand Grows
South Africa has allocated freight capacity of up to 24 million tonnes a year to 11 private train operating companies, putting one of the country’s most consequential logistics reforms onto the railway rather than leaving it on the policy books.
The first operators are expected to begin running on the national freight network from April 2027. They will enter a system that remains publicly owned but is being opened to competing train operators across some of the country’s most important coal, manganese, container, fuel and general freight routes.
For South Africa’s mining industry, the timing is particularly important. Mineral production is only commercially useful if mines can move material reliably and competitively to ports and customers, and the country’s long-running rail and port constraints have increasingly made logistics part of the investment calculation.
Transnet Freight Rail Chief Executive Russell Baatjies is expected to put that relationship between mineral development and transport infrastructure under scrutiny when he joins the Regional Connectivity: Financing Africa’s Mineral Infrastructure panel at African Mining Week in Cape Town from 14 to 16 October 2026.
Briefing
- Eleven private Train Operating Companies have been allocated capacity on South Africa’s national freight rail network.
- The operators plan to move up to 24 million tonnes of additional freight annually, with operations expected to begin from April 2027.
- Government is targeting 250 million tonnes of annual rail freight by 2029.
- Transnet has issued an RFP to establish LeaseCo, providing locomotives and wagons to established and emerging operators.
- Russell Baatjies will discuss rail modernisation and mineral infrastructure financing at African Mining Week 2026 in Cape Town.
Opening the National Freight Network
The introduction of third-party operators changes a fundamental part of South Africa’s freight railway model. The rail infrastructure remains in public ownership, managed through the Transnet Rail Infrastructure Manager, while Transnet Freight Rail is no longer intended to be the only significant operator using it.
Eleven private Train Operating Companies have been allocated slots across strategic corridors. According to the South African government, their planned operations could introduce up to 24 million tonnes of annual freight capacity, with potential for this to increase substantially as the market develops.
That additional capacity has to be considered against the scale of the railway Transnet is trying to recover. President Cyril Ramaphosa said in March that approximately 160 million tonnes of freight had moved by rail during the previous financial year, up 5.5% year on year. Government’s target is 250 million tonnes annually by 2029.Β That gap remains considerable.
South Africa’s railway once carried a much larger proportion of the country’s freight burden, while declining performance has pushed traffic towards road transport. The Presidency estimates that approximately 69% of freight now moves by road and has put the economic cost of logistics inefficiencies at close to R1 billion a day.
Bulk minerals are particularly suited to rail, especially where large volumes must travel hundreds of kilometres between inland production areas and export terminals. When rail capacity or reliability deteriorates, miners face higher transport costs, constrained exports or greater reliance on roads never intended to absorb such volumes.
The open-access model is intended to bring additional operating capacity into that system without privatising the underlying national network.
Rolling Stock and Market Entry
Track access alone cannot create a competitive railway. New operators also need locomotives and wagons, which introduces another substantial barrier to entry.
Transnet addressed that problem in June when it issued a Request for Proposal to two shortlisted bidders for the establishment of a dedicated rolling-stock leasing company, known as LeaseCo. The procurement followed an earlier qualification process that attracted 14 submissions.
The proposed company would acquire, manage and lease rolling stock to domestic and regional operators. Rather than requiring every new entrant to assemble a complete fleet before running its first train, leasing could separate access to locomotives and wagons from ownership of those assets.
Freight locomotives and specialised wagons require substantial capital, and the assets have long working lives that make ownership sensible for established railway businesses but potentially prohibitive for companies trying to enter a newly liberalised market.
LeaseCo also gives the reform a regional dimension. Transnet envisages the business serving domestic and regional markets, creating the possibility of a rolling-stock platform that supports traffic beyond South Africa’s borders as Southern African freight corridors become more closely connected.
Infrastructure management, train paths, rolling-stock supply, safety regulation, maintenance capacity and commercial agreements will all have to function together as the new operators enter the network.
Mining and Freight Capacity
President Ramaphosa has valued South Africa’s mineral reserves at more than R40 trillion, while government has set a broader target of attracting R2 trillion in new investment across the economy over five years. Mining and critical minerals form an important part of that investment strategy.
Coal, manganese, iron ore, chrome and platinum group metals are already deeply dependent on freight corridors linking inland mining districts with ports. New mineral developments will add little to export earnings if transport capacity cannot expand alongside production.
Transnet has been strengthening direct relationships with mining customers including Exxaro Resources, United Manganese of Kalahari, Hotazel Manganese Mines and Tshipi Γ© Ntle Manganese Mining as it works to recover volumes and improve the use of existing corridors.
Rail capacity ultimately terminates at ports, stockyards and export terminals, meaning recovery has to extend across the logistics chain. Improving train performance without sufficient terminal and port capacity merely moves the bottleneck downstream.
Government has consequently been pursuing private participation and infrastructure investment across both rail and ports rather than treating freight rail as an isolated problem.
Financing the Recovery
Transnet’s ability to rehabilitate infrastructure while restructuring the market depends heavily on capital.
The company has assembled financing from several international development institutions as part of its wider recovery and modernisation programme. These include a β¬350 million framework loan from the European Investment Bank for rail and port infrastructure renewal and other decarbonisation-related investments.
The EIB facility is accompanied by a β¬21 million European Union grant and is intended to support rehabilitation of freight railway and port infrastructure while contributing to lower-carbon transport and future green hydrogen infrastructure.
The supplied African Mining Week material also identifies financing including β¬300 million from Agence FranΓ§aise de DΓ©veloppement, $278 million from the New Development Bank and $1 billion from the African Development Bank, alongside a R94.8 billion South African government guarantee package.
The scale of the financing reflects the condition and importance of the assets involved. Private train operators can add services and introduce competition, but they cannot substitute for functioning signalling, track, power systems, yards and port connections.
Nor does opening access remove Transnet Freight Rail from the market. It creates a railway in which the incumbent increasingly operates alongside other companies while the infrastructure manager allocates capacity across the network.
From Allocated Capacity to Running Trains
The 11 operators have capacity allocations, but government expects their main operations to begin in April 2027. Safety approvals, rolling stock, commercial arrangements, access to sidings and terminals, infrastructure condition and operating coordination will all influence how quickly allocated capacity becomes regular freight traffic.
The government itself has described the programme as having moved from policy formulation into implementation.
South Africa now has the institutional components of an open-access railway taking shape: an infrastructure manager, a network access framework, private operators, allocated train paths and a proposed mechanism for leasing rolling stock. Capital is also being directed towards rehabilitation of the underlying network.
Performance will ultimately be measured in something much less complicated: tonnes.
The country’s mining companies need predictable paths from mine to port. Train operators need sufficient traffic and reliable infrastructure to build viable businesses. Transnet needs greater utilisation of its network and revenue with which to maintain it. Government needs more exports, less pressure on the road system and a logistics network capable of supporting economic growth.
African Mining Week will give Baatjies an opportunity to describe how Transnet intends to put those pieces together. The more interesting story is already developing outside the conference hall, as South Africa attempts to turn one of Africa’s largest freight railway networks into a system that can accommodate public infrastructure, incumbent operations and private trains on the same tracks.
Key Industry Questions
- When will South Africa’s new private freight rail operators begin running trains?Β The first operations under the new open-access arrangements are expected to commence from 1 April 2027.
- How many private Train Operating Companies have received capacity?Β Eleven TOCs have been allocated capacity on the national freight network.
- How much additional freight could they carry?Β The operators plan to move up to 24 million tonnes annually in the initial phase. The original programme envisages scope for considerably greater volumes as operations expand.
- Will South Africa’s railway infrastructure be privatised?Β No. The reform separates infrastructure management from train operations while retaining the national rail infrastructure in public ownership.
- What is Transnet’s LeaseCo project?Β LeaseCo is a proposed rolling-stock leasing company that would acquire, manage and lease locomotives and wagons to established and emerging train operators.
- Why is rail reform particularly important to mining?Β Bulk commodities including coal, manganese and iron ore depend on high-capacity transport between mines, processing facilities and export terminals. Rail constraints can therefore restrict export volumes even where mines have additional production capacity.
- What is South Africa’s rail freight target?Β Government is targeting approximately 250 million tonnes of freight annually by 2029.
- Does private rail access solve Transnet’s infrastructure problems?Β No. Additional operators can introduce capacity and competition, but train performance still depends on the condition and availability of track, signalling, yards, sidings, terminals and port infrastructure.
Strategic Takeaways
- Private rail participation has moved beyond policy, with 11 operators now holding capacity on the national network.
- LeaseCo could lower one of the largest barriers facing new operators by providing access to locomotives and wagons without requiring outright ownership.
- Additional mineral production depends on sufficient rail, terminal and port capacity to reach export markets reliably.
- Transnet Freight Rail will continue operating alongside private companies on publicly owned infrastructure.
- Higher freight volumes, rather than the number of operators or agreements signed, will provide the clearest measure of whether the reforms are working.
