AFTER years of talks about a new high-capacity manganese terminal at Ngqura, Transnet has finally issued a Request for Qualification (RFQ), outlining a sophisticated private-sector partnership structure, including an innovative model that ring-fences investment and separates two sets of risks.
On Friday 25 September, Transnet issued the RFQ, thereby starting the selection process for a strategic partner for the Ngqura Manganese Export Corridor (NMEC) Private Sector Participation (PSP) project for 25 years.
Transnet said the corridor runs from Hotazel in the Northern Cape to the Port of Ngqura in the Eastern Cape, where a new manganese terminal will be built, leading to a forecasted 20% expansion in rail exports.
Following the RFQ phase, Transnet said it will invite parties that meet the qualification requirements to participate in a subsequent Request for Proposals (RFP) phase.
Interested parties will be required to demonstrate their technical capability, operational experience and financial capacity, as well as compliance with Transnet’s requirements. Respondents will also be required to outline their approach to delivering sustainable socio-economic benefits and community upliftment through the project.
The initiative aims to overhaul how the nation’s rich mineral wealth moves from the Northern Cape basin to global markets, and Transnet has packaged an investment envelope estimated between R30 billion and R44 billion, with the following components:
- An estimated R10 billion to R20 billion is required to addressing legacy maintenance backlogs, upgrading tracks, and securing the 1,100-kilometre corridor.
- Approximately R16 billion is allocated for the Design, Build, Finance, Operate, and Maintain (DBFOM) delivery of the greenfields Ngqura Manganese Export Terminal (NMET). The facility is planned with an initial handling capacity of approximately 14.7 million tonnes per annum (Mtpa), with built-in provisions to expand toward 16 Mtpa.
- Roughly R 4 billion is required for heavy-haul locomotives, wagon fleets, and integrated train operating systems.
The corridor itself targets an initial throughput baseline of approximately 12 Mtpa, scaling up to 16 Mtpa as market demand and subsequent asset optimisation permit.
By coordinating line capacity, rolling stock, and terminal infrastructure under a unified strategy, the project aims to significantly lift rail exports and consolidate fragmented export footprints into a streamlined, high-performance logistics chain.
A long haul
South Africa holds some of the largest and most sought-after manganese reserves globally, a critical metal heavily relied upon for steelmaking and advanced battery manufacturing. The majority of export manganese – about 80% – makes the long haul from the Northern to Eastern Cape.
Increases in manganese production and global demand, as well as decades of underinvestment, cable theft, signalling obsolescence, and locomotive shortages, have severely overloaded the system. Consequently, freight volumes that should move seamlessly by rail have routinely been diverted onto regional roads. This heavy road haulage has resulted in severe back-of-port congestion, accelerated road surface degradation, localised environmental and dust pollution, and inflated logistics expenses that erode the international competitiveness of South African mining houses.
Kick-starting a stalled project
Despite years of discussion, Transnet has been reluctant and unable to risk investing in a new manganese export terminal at Ngqura. Through the RFQ structure, Transnet demonstrates an understanding of how to manage the required investment risk.
Two distinct, ring-fenced Special Purpose Vehicles (SPVs) are in place. This mechanism is engineered to isolate operational variables from asset upkeep risks, thereby maximising project bankability for commercial lenders and institutional investors.
SPV1 (terminal and rail operations) oversees terminal development, cargo handling, customer contracting, and rail haulage operations. Transnet will retain a strategic 51% majority shareholding in SPV1, while the chosen private sector consortium will hold the remaining 49% through a holding company. This vehicle carries the commercial, market demand, and operational performance risks.
SPV2 (infrastructure maintenance) is wholly owned by the private consortium’s holding company; SPV2 is tasked with the heavy-lifting rehabilitation, renewal, and continuous lifecycle maintenance of the rail corridor. Rather than depending directly on volatile freight volumes, SPV2 will operate under an availability-based compensation model governed by the Transnet Rail Infrastructure Manager (TRIM), ensuring reliable payouts tied directly to strict asset availability and network performance standards.
Denise van Huyssteen, CEO of the Nelson Mandela Bay Business Chamber, said it is encouraging that the RFQ aligns with Transnet’s overall strategy for handling public sector partnerships across the various nodes. “Lessons learnt from other corridors and terminals such as Durban and Richards Bay should be incorporated into the project to minimise risks and to achieve a successful outcome,” she said.
Catalyst
Van Huyssteen expressed hope that the initiative serves as a catalyst for finally relocating manganese from the Port of Port Elizabeth to the Port of Ngqura. “It should also address some of the substantial challenges experienced with storage of manganese in areas such as Markman.”
“Additionally, the project should play an instrumental role in getting a significant portion of the manganese transported via rail instead of by trucks. This in turn should alleviate the current pressure on roads and other infrastructure, which was not designed to deal with this type of commodity and its impact,” she said, highlighting how the project could benefit the Bay.
The rehabilitation of the corridor from Hotazel, through Kimberley and De Aar to Ngqura, and the modernisation of port assets in the Nelson Mandela Bay metro will not serve manganese miners exclusively. While the capital layout is anchored in bulk mineral exports, the underlying mechanics of fixing a core national freight corridor yield wide-reaching multi-sector benefits.
“This should provide opportunity for the automotive sector and general containers to be transported between both locations, thus increasing the viability of the corridor. This is vital to lay the foundation for more vessels to call at the ports at Port Elizabeth and Ngqura, which in turn would benefit the broader base of export and import businesses which are located in the Bay,” said Van Huyssteen.
