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Zimbabwe taps private sector to boost freight rail capacity

6 Sep 2024

Zimbabwe's state-owned railway operator has opened its network to private companies, including South Africa's Grindrod, to boost freight volumes after years of underinvestment. The National Railways of Zimbabwe, which once transported 12 million tonnes of cargo annually at its peak in the 1990s, now handles less than 3 million tonnes due to a shortage of locomotives and poor infrastructure maintenance.

Source: jplenio1 via Freepik

The collapse also followed a sharp decline in agricultural and mineral output, triggered by the violent seizure of white-owned farms championed by Zimbabwe's former leader Robert Mugabe in 2000.

However, mineral output is on the rebound, mainly driven by chrome and lithium demand from China.

Chinese companies such as Tsingshan Holdings, Sinosteel, Sinomine, Zhejiang Huayou Cobalt and Chengxin Lithium have in recent years established iron ore, steel, chrome and lithium operations in Zimbabwe.

NRZ capacity constraints

They export the minerals to China through Mozambique's ports, and the growing commodity export volumes exceed the NRZ's current capacity. The state-owned group is now looking to restore its capacity with the aid of private companies.

"Last year we uplifted 2.8 million tonnes against the available business of 3 million tonnes," NRZ spokesperson Andrew Kunambura told Reuters in an interview on Wednesday, 4 September.

"So these private companies are coming in with their locomotives and wagons to augment what we have."

Grindrod, through its Zimbabwean subsidiary Beitbridge Bulawayo Railway, has deployed three locomotives and 150 wagons since March as part of the arrangement.

The South African logistics company is positioning itself for freight rail partnerships in southern Africa as under-funded state-owned operators open up their creaking networks to private investors.

Southern Africa's emerging rail opportunities

The mineral-rich region holds some of the world's biggest deposits of copper and lithium, needed for cleaner energy, and is seeing growth in new mining projects which require expanded rail capacity.

Grindrod has restructured its rail business to take advantage of emerging market opportunities in the region, CEO Xolani Mbambo told analysts last week.

The company has recently agreed on a partnership with the DRC's inland railway company and says it is ready to partner with South Africa's Transnet, which also plans to open up its network to private players.

Source: Reuters

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