By: ESI Africa

Transnet has signed two separate 10-year contracts with leading manganese producers to transport the mineral by rail from South Africa’s Northern Cape to ports for export markets.

In the past three weeks, the state-owned logistics company confirmed agreements with United Manganese of Kalahari (UMK), and Hotazel Manganese Mines (HMM), a joint venture operated by a wholly owned subsidiary of South32. 

Both deals fall under the third phase of the Manganese Export Capacity Allocation (MECA3) framework, which allocates rail and port capacity to manganese producers for their export volumes.

Manganese is a key industrial metal used primarily in steel production to improve strength, toughness and wear resistance. It is also used in batteries and other alloys.

Manganese deals a ‘vote of confidence’ in Transnet

Transnet Group Chief Executive Michelle Phillips said they are encouraged by the vote of confidence expressed by UMK through their long-term commitment as part of the MECA programme.

“This agreement is a clear demonstration of our customers’ confidence in the efficiency and reliability of our services. It also bodes well for Transnet’s growth and sustainability, which is underpinned by our ambitious Reinvent for Growth Strategy amid various reform initiatives within the freight logistics sector,” said Phillips.

UMK Chief Executive Officer Malcolm Curror said reliable rail freight services remain a key contributor to South African industry. 

“By enabling the efficient movement of bulk commodities such as manganese, MECA not only positively adds to our national export capability but also to a greater competitive revitalisation of the country’s logistics network.”

He added that this is essential for sustaining economic growth and attracting further investment across all sectors. Curror further noted that the MECA agreement holds significant and broader relevance to current national dialogue regarding the mining sector in South Africa.

Manganese deal between HMM and Transnet

The agreement with HMM also secures long-term rail and port capacity for one of the country’s most established manganese producers. HMM has operated in the Kalahari Basin of the Northern Cape for more than four decades, running the Wessels and Mamatwan mines in the Kalahari Manganese Field.

The partnership between HMM and Transnet stretches back to the 1970s, evolving over the years to support growing volumes, infrastructure expansion and South Africa’s broader export agenda.

“This agreement is a testament to the efficiency and reliability of our services. It also reflects our commitment to the mining sector, underpinned by reliable and predictable access to rail capacity for our manganese exporters.

“By securing dedicated rail and port capacity, the agreement provides HMM with the operational certainty needed to support its mining and export activities, which contribute to local jobs and the country’s economic prosperity,” said Phillips.

South32 HMM Vice-President Operations Barry Bezuidenhout said securing long-term rail and port export capacity is vital for HMM to access international markets for its product.

“The signing of this agreement continues our position as a leading global supplier of manganese, as well as a major local employer in South Africa’s Northern Cape. We look forward to continuing our long standing mutually beneficial relationship with Transnet and working together to identify opportunities to grow rail logistics capacity in South Africa,” he said.

Tackling Transnet debt

On 27 July, the government confirmed that it had approved two additional guarantees totalling R94.8 billion (around $5.3bn) for Transnet to “help the state-owned logistics company meet its debt obligations, maintain adequate liquidity and mitigate the risk of further credit rating downgrades.”

The first guarantee, worth R48.6bn (around $2.7bn), is intended to ensure Transnet can meet all debt redemptions over the next five years, and ensure that the entity also maintains sufficient liquidity levels.

“Government has also considered the impact of the credit downgrades on Transnet’s existing debt, and has therefore also approved R46.2 billion (around $2.6bn) for it to mitigate the risks of such ratings actions on its debt. This additional guarantee support for Transnet amounts to R94.8 billion,” said the Department of Transport.

This latest support follows the R51bn ($2.8bn) in guarantees approved by government on 22 May, which included R41bn (around $2.3bn) to cover funding needs for 2025/26 to 2026/27, and R10bn (around $562m) for liquidity management.