Departure of CEO adds to crisis at South Africa’s port and rail monopoly

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The head of South Africa’s state ports and freight rail monopoly has quit after alarm from business and labour groups over a growing crisis in a group that underpins the continent’s most industrialised economy.

Portia Derby will leave as chief executive of Transnet at the end of October, according to a statement on Friday by the group, which operates Africa’s busiest port at Durban, other terminals and railways that move coal, iron ore and other natural resources to global markets.

Derby, who was appointed in 2020 by President Cyril Ramaphosa’s government, was under increasing pressure to resign over a failure to turn around a collapse in volumes transported by Transnet.

Ramaphosa warned earlier this year of a “crisis of catastrophic proportions” threatening Transnet, with analysts saying it could become the country’s “next Eskom” after the broken state power monopoly, which has been unable to solve rolling blackouts that have left millions of South Africans with only intermittent power.

The problems piling up for Transnet, such as vandalism of train lines, cable theft and blockages at ports, have hit global miners such as Anglo American and Glencore, threatened thousands of mining jobs and ultimately hit crucial tax revenues badly needed to boost South Africa’s strained public finances. 

This week union allies of Ramaphosa’s ruling African National Congress joined business calls for Derby’s exit, after some coal miners announced plans to cut jobs over the freight crisis.

“We are witnessing the collapse of Transnet because of endemic levels of corruption within it . . . and a management team that is woefully out of its depth [and] must now go,” Cosatu, the biggest South African trade union federation, said on Friday.

Michelle Phillips, head of Transnet’s pipelines business, will become interim chief executive while recruitment for a permanent replacement takes place, Transnet said.

Ramaphosa’s government is already struggling to hire a permanent chief executive for Eskom after the previous head quit at the end of last year as the utility’s crisis worsened.

Nonkululeko Dlamini, Transnet’s chief financial officer, also left on Friday to take up the same position at Telkom, South Africa’s listed phone company.

This month Transnet reported losses of R5.7bn ($302mn) in the year to the end of March as a result of the collapse in freight volumes and debt levels reaching R130bn.

At just over 50mn tonnes, South Africa’s coal exports last year were its lowest since 1993, with the decrease attributed to cable theft and missing trains on a critical Transnet line. In 2017 earlier exports totalled nearly 80mn tonnes.

Many mining groups turned to trucks to haul coal to ports, particularly when demand for South African coal surged last year as many countries banned Russian imports after its full-scale invasion of Ukraine. But a recent fall in coal prices has made trucking costs less viable.