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State-owned freight logistics group Transnet has initiated a process to select a private partner for a new leasing company, or 'LeaseCo', that will lease rail rolling stock to private train operating companies (TOCs).

A request for qualification (RFQ) has been issued seeking submissions from entities interested in partnering with Transnet, with the subsequent request for proposals (RFP) to be limited to respondents shortlisted during this pre-tender phase.

Transnet has indicated previously that LeaseCo will supply wagons and locomotives to the TOCs that could arise as a result of reforms designed to open the domestic network to third-party operators.

In a statement announcing the RFQ, Transent said the proposed entity will drive the acquisition, management and leasing of rail rolling stock to domestic and regional markets.

"The establishment of the LeaseCo is part of the rail reform programme, which seeks to enhance the competitiveness of the South African freight system by working to ensure competitive industry supply chains and crowding in private sector investment.

"Central to this reform is the separation of rail infrastructure management from operations, which aims to level the playing field for both public and private sector operators."

Access to rolling stock is viewed as a potential constraint to these reforms, despite the Transnet Rail Infrastructure Manager, or TRIM, having confirmed recently that it received 98 applications for slots being made available across the network.

However, the poor state of the physical network, as well as proposed tariff increases have also been held up as likely constraints to the introduction of third-party operators.

Separately, the Department of Transport has launched a request for information to test market appetite for potential private sector participation (PSP) investments across key rail corridors and has set a May 9 closing date for submissions.

The responses will help guide the development of the first PSP procurement phase, which could begin before the end of August.

The LeaseCo RFQ submission period, meanwhile, remains open until July 4 and shortlisted bidders from the process will proceed to an RFP phase in August.

Noncompulsory virtual briefings on the RFQ are scheduled for 11:00 and 15:00 on May 6.

A new Green Cape report is forecasting that 6 GW of new private solar PV and 3.5 GW of new private wind capacity will be installed in South Africa by 2030, involving total investments of R132-billion.

This, despite serious grid constraints and uncertainty over the future of public procurement, which led the authors to exclude from their estimate any new capacity arising from government's Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) over the period.

The 'Large-Scale Renewable Energy Market Intelligence Report 2025' estimates that the solar PV deployment will involve investments of R72-billion by 2030, while the investment value of the wind projects is estimated at R60-billion.

Although public programmes have, until recently, been the primary driver of large-scale renewable-energy development in South Africa, the report states that the industry is increasingly shifting to private offtaker agreements with independent power producers (IPPs).

The recent underperformance of the REIPPPP, the report adds, has also increased uncertainty over the programme's continuation in its current form.

"Unless new bid windows are announced, there will be no new investment opportunities in the public space," it adds.

The private agreements, meanwhile, are being further enabled through the use of wheeling; a financial arrangement that allows electricity generated by IPPs to be allocated across a transmission or distribution network to end consumers, regardless of their geographic location.

"This presents an opportunity for investors to develop large-scale renewable-energy power plants to sell electricity directly to customers through the Eskom or municipal networks," the report states.

It adds that demand is underpinned by companies seeking to improve energy and cost certainty and reduce their carbon footprints.

This shift is especially prominent in the mining and industrial sectors, where export-oriented companies are seeking to prepare for the introduction in 2027 of a carbon border adjustment mechanism in Europe, and potentially in other markets too.

"The key barriers to unlocking the private large-scale renewable-energy market in South Africa are grid capacity constraints, uncertainty around Eskom unbundling and reform, as well as risks associated with private power purchase agreements.

"Overcoming these barriers has the potential to unlock further investment in large-scale renewable energy," the report states, noting that an 80 GW pipeline of renewables is currently under development in South Africa.

In yet another step towards clearing the path for South Africa's inaugural procurement of independent transmission projects (ITPs), draft regulations have been published for a 30-day public comment period.

Their release follows a Ministerial determination by Electricity and Energy Minister Dr Kgosientsho Ramokgopa opening the way for the procurement of the first phase of the ITPs, involving 1 164 km of 400 kV powerlines and 2 630 MVA of transformers across seven projects in three provinces.

Government plans to pursue a two-stage procurement process, with a request for qualifications in July aimed at prequalifying bidders ahead of the November launch of a full-blown request for proposals.

Before then, regulations under Section 35(4) of the Electricity Regulation Act also must be finalised to facilitate the procurement.

These regulations will outline the terms of transmission service agreements between the ITP and the buyer, which will be the National Transmission Company South Africa (NTCSA) - the legally separated division of Eskom Holdings, with its own board and executive.

They will also contain the cost-recovery mechanism to be used to enable the NTCSA to pay the ITP for the financing, construction, operation and maintenance of the infrastructure over the concession period, while earning a "fair" return.

That period, as well as the preferred procurement model are still to be determined, but Ramokgopa has indicated that its recently conducted market-sounding exercise points to there being appetite for some form of build, operate, own and transfer model or build, operate, transfer model.

Ministerial adviser Shaakira Karolia tells Engineering News that the Department of Electricity and Energy, which is now operating separately from the previous Department of Mineral Resources and Energy, is eager to receive feedback from stakeholders.

She says that having sound regulations is crucial for creating the "predictable, credible and transparent framework" required for private-sector participation in the expansion of the country's transmission infrastructure.

FIRST PROJECTS

While the NTCSA will continue with its own build programme, government believes ITPs are required to accelerate the financing and build-out of the grid, particularly in areas where there is insufficient capacity to connect new renewable-energy generators.

This backlog is reflected in the seven pre-selected projects, namely:

The 200-km Aries-Aggeneis 400 kV powerline, in the Northern Cape;

The 126-km Groeipunt 400 kV powerlines upgrade, with 500 MVA of transformers, in the Northern Cape;

The Kimberley Street Phase 4 project, involving the 265-km Boundary-Ferrum 400 kV overhead line, in the Northern Cape;

The Nama and Gromis projects, in the Northern Cape, involving 117 km of powerlines and 1 000 MVA of transformation capacity;

The 180-km Mahikeng Integration Phase 1 development, with 630 MVA of transformation, in the North West province;

The 240-km Mookodi-Hermes 400 kV powerline, in the North West province; and

The 36-km Hera-Westgate 400 kV powerline and 500 MVA of transformation capacity, in Gauteng.

Together the seven projects are expected to unlock 3 222 MW of additional renewable-energy generation when they enter into commercial operation in stages during 2029 and 2030.

The projects themselves have been selected from the NTCSA's Transmission Development Plan and are all at an advanced stage of development, with regards to servitude acquisition and environmental approvals. The NTCSA has also appointed an ITP project manager to facilitate the programme.

In addition, the Independent Power Producer Office, which has developed significant procurement capabilities since 2011, will be the procurement agent for the initial ITPs, owing to its experience in managing bidding processes and advancing projects to financial close.

CREDIT GUARANTEE VEHICLE

Karolia reports that, besides finalising the regulations, work is also progressing with the National Treasury and the...

South Africa has confirmed that it has no intention of imposing retaliatory tariffs on the US after President Donald Trump announced that South African imports faced so-called "reciprocal tariffs" of 31% from April 9, while automotive imports faced 25% tariffs.

Trade, Industry and Competition Minister Parks Tau argued that it would be "counterproductive" for South Africa to retaliate before engaging with the US, particularly given that it was yet to understand the basis on which the 31% reciprocal tariffs had been calculated. South Africa's own calculation is that US imports face tariffs of only 7.6%.

The actual formula used has little to do with the tariff rate that foreign countries impose on the US, however. Instead, the calculation is based on America's trade deficit with individual countries, and the tariff announced appears designed to cancel out that deficit.

"I think it's a risky thing to do to simply decide that we are going to impose reciprocal tariffs. I think it is a race to the bottom," Tau said at an April 4 briefing hosted jointly with International Relations Minister Ronald Lamola.

Instead, South Africa would continue to pursue a bilateral trade agreement with the US, given that Trump's tariff announcement had effectively "nullified" the tariff- and quota-free market access that the country had hitherto enjoyed under the African Growth and Opportunity Act (Agoa).

South Africa's Agoa eligibility would officially be reviewed by the US Congress in September, but the reciprocal tariffs had been implemented by means of a Presidential executive order, while the automotive tariffs were imposed under Section 232 of the US Trade Expansion Act.

While various South African minerals, chemicals and pharmaceutical exports to the US have been exempted from the tariffs, Tau said that the country's agricultural, food, beverage, boatbuilding, equipment and machinery and chemicals exports have been included in the reciprocal-tariff basket, while its automotives and automotive components are captured under the Section 232 tariffs.

In 2024, South Africa exported about R153-billion-worth of products to the US, including vehicles, which made up about R35-billion of South Africa's exports to America last year, including luxury cars produced locally by BMW and Mercedes-Benz South Africa.

Lamola said South Africa remained committed to a mutually beneficial trade relationship with the US, while bemoaning the "punitive" tariffs that had been imposed unilaterally.

"The tariffs affirmed the urgency to negotiate a new bilateral and mutually beneficial agreement with the US that will establish a more fair trade relationship with the US as an essential step to securing long-term trade certainty," he said.

He also stressed that South African exports posed no threat to the US, with South Africa accounting for only 0.4% of US total imports, while 7.45% of South Africa's total exports in 2024 went to America.

"[W]here there is a trade imbalance in favour of South Africa, it is mainly on agriculture products which are counter-cyclical and on minerals which are inputs in US industries."

Neither Tau nor Lamola provided a timeframe for future bilateral talks with the US, indicating only that a trade offer was being developed and would be discussed by Cabinet before a delegation was sent to the US.

Tau said the timing of such an engagement would be determined by President Cyril Ramaphosa, while Lamola indicated that the groundwork would be laid by the special envoy or envoys that Ramaphosa planned to appoint.

The envoy or envoys would also bridge the diplomatic gap left after the recent expulsion of former US ambassador to the US Ebrahim Rasool.

These engagements would be elevated to the political level "at the right time", Lamola added, hinting that Ramaphosa himself would play a direct role.

Meanwhile, the Department of Trade, Industry and Competition stressed that it was also alive to the indirect effects of the broad-based tariffs imposed intern...

Engineering News editor Terence Creamer discusses the uncertainty surrounding South Africa's Budget, as well as the imposition of 30% tariffs by the US administration on South African goods imported into that country.

The industry body that represents South African carmakers has called on government to initiate urgent trade discussions with the US, warning that the costs associated with the 25% tariffs being imposed on automotive imports to America cannot be absorbed by domestic original equipment manufacturers (OEMs).

In a statement following President Donald Trump's 'Liberation Day' tariff announcement, which included the imposition of 30% tariffs on South Africa and confirmed 25% tariffs on vehicle imports to America, naamsa | The Automotive Business Council highlighted the importance of the US market.

In 2024, South African carmakers shipped about R35-billion-worth of vehicles to the US, or 6.5% of total vehicle exports, making it the third-largest export destination for South African vehicles.

"The proposed 25% tariff increase will severely impact local manufacturers operating in South Africa, including BMW, Ford, Isuzu, Mercedes-Benz, Nissan, Toyota, and Volkswagen - who produce vehicles for global markets, including the US," CEO Mikel Mabasa said.

The move, he warned, imperilled jobs, industrialisation and investment, and posed "yet another challenge to a sector already grappling with multiple headwinds".

"Urgent trade discussions must be initiated and prioritised and this is why we urge the South African government to continue negotiating and delivering solutions that support job creation, consumer demand, and economic growth."

While using all "available diplomatic channels", naamsa said government needed to urgently seek clarity on the future of the African Growth and Opportunity Act (Agoa) and "ensure that South Africa's automotive sector is not unfairly penalised under these new trade measures".

In parallel, naamsa would attend the Council meeting of the International Organisation of Motor Vehicle Manufacturers scheduled for Washington, DC, on April 18 to "advocate for South African positions".

"The US decision to impose these tariffs undermines existing trade agreements and the principles of a fair, rules-based trading system," Mabasa argued.

AGOA HAS 'ESSENTIALLY ENDED'

XA Global Trade Advisors' Donald MacKay also warned of the threat posed to South African automotive exports, but said that Trump's April 2 announcement suggested that the tariff- and duty-free access granted under Agoa had "essentially ended".

Even though the official Agoa review was due to be finalised only at the end of September, MacKay said the 30% announcement rendered the review meaningless.

While highlighting that South Africa's tariffs averaged only 7.5% compared with Trump's claim that the country "charged the USA" 60%, MacKay cautioned that "facts don't matter" and the fallout would be negative, particularly for BMW and Mercedes-Benz South Africa, which both export luxury cars to America.

"The President also announce a 25% tariff on autos and it's not clear where the 30% encapsulates the 25%, or if it is on top of. But either way, selling those two cars into the US is going to be a problem."

In addition, he warned of indirect consequences as manufacturers in other markets also affected by high US tariffs sought to find new markets for their products, possibly at price points below South African production costs.

In addition, South Africa's relative competitiveness could be undermined by the fact that some other producing countries face lower tariffs than is the case for South Africa.

This point was amplified by the Nelson Mandela Bay Business Chamber, which said in a statement that "by far the biggest risk in the short to the medium term is the competition that South Africa will face from non-US manufacturing countries which may have a lower tariff base".

The chamber also highlighted the high reliance of the Eastern Cape economy on the automotive industry, with almost half of the country's employment in the sector being in the province.

"We are particularly concerned about the potential knock-on impact of reduced vehicle assembly volumes of affected...

South Africa's Presidency has expressed concern over new tariffs that have been imposed on South African exports to the US following President Donald Trump's April 2 'Liberation Day' announcement.

Trump said "reciprocal tariffs" of 30% would be implemented on South Africa, while also imposing a 10% base tariff, alongside higher individual tariffs for specific countries, including 20% for the EU, 24% for Japan, 26% for India and 34% for China.

"Whilst South Africa remains committed to a mutually beneficial trade relationship with the United States, unilaterally imposed and punitive tariffs are a concern and serve as a barrier to trade and shared prosperity.

"The tariffs affirm the urgency to negotiate a new bilateral and mutually beneficial trade agreement with the US, as an essential step to secure long-term trade certainty," the Presidency said in a statement issued on April 3.

VERY BAD FOR SOUTH AFRICA

Trade specialist Donald MacKay, of XA Global Trade Advisors, said the development was "very bad" for South Africa, which exported about R153-billion to the US in 2024, making it South Africa's second-largest export destination.

It also effectively ended the country's African Growth and Opportunity Act (Agoa) eligibility, despite an ongoing review of the country's status in this regard.

While highlighting that South Africa's tariffs averaged only 7.5% compared with Trump's claim that the country "charged the USA" 60%, MacKay cautioned that "facts don't matter" and the fallout would be negative, particularly for BMW and Mercedes-Benz South Africa, which both export luxury cars to America.

"The President also announce a 25% tariff on autos and it's not clear where the 30% encapsulates the 25%, or if it is on top of. But either way, selling those two cars into the US is going to be a problem."

The US is South Africa's third-largest destination for South African automotive exports, and shipped some R35-billion-worth of vehicles in 2024, or 6.5% of total vehicle exports last year.

In a statement, naamsa | The Automotive Business Council also expressed its concern and CEO Mikel Mabasa expressed hope that the "South African government will activate all available diplomatic channels" to urgently seek clarity on Agoa's future

Should the 30% also apply to South Africa's platinum group metals exports, MacKay cautioned that it would have serious cost consequences for US automakers, which had few alternative sources of supply.

However, the Minerals Council South Africa says platinum group metals, coal, gold, manganese and chrome have been specifically excluded from the tariffs, but raised concern over the inclusion of iron-ore and diamonds in the 30% reciprocal-tariff basket.

"Despite the exclusions, we remain concerned about the adverse impact on business and consumer sentiment and the resultant feedthrough to business investment, consumer spending and ultimately global real GDP growth caused by this unprecedented upheaval in world trade.

"Global growth coming under threat is bad news for the entire South African mining industry," says Hugo Pienaar, chief economist at the Minerals Council.

Likewise, MacKay questioned the sense in applying the 30% to South Africa's agricultural exports, as most of these exports were "counter seasonal" and, thus, did not compete directly with US farmed products.

South Africa's steel and aluminium exports, meanwhile, would also be negatively affected.

MacKay was concerned that workers and businesses in the Eastern Cape (automotives), KwaZulu-Natal (aluminium), Western Cape (citrus), and Gauteng (automotives) would be hurt directly by the development.

In addition, the indirect impacts could also be large, as other products from those countries also hit with high US tariffs "look to find a home", probably at a lower price point than can be achieved by domestic suppliers.

"So I would expect to see tariff applications increase, along with antidumping applications and safeguard actions . . . as countries try to...

Steel group ArcelorMittal South Africa (AMSA) has confirmed that the Industrial Development Corporation (IDC) is considering taking a larger equity stake in the JSE-listed group and will conduct a due diligence over the coming six months to assess its position.

This, after a deal was reached to again defer the winding down of AMSA's long-steel businesses - this time for six months.

On March 31, the IDC approved another R1.68-billion in funding support to AMSA to ensure that the Newcastle blast furnace, in KwaZulu-Natal, was not turned down as planned, as well as to also sustain AMSA's longs operations in Vereeniging and eMalahleni.

In January, AMSA announced that it would wind down the longs business by the end of February, citing ongoing losses and various structural impediments to the unit's continue competitiveness.

These impediments included government's scrap policy, which AMSA said placed Newcastle at an unfair disadvantage when compared with domestic electric arc furnace steelmakers, limited import protection and enforcement, rising electricity prices, as well as expensive and unreliable rail services.

The longs business remained operating during March after the IDC extended an initial R380-million loan and the latest loan is linked to a Temporary Employee Relief Scheme (TERS) grant to assist with employee costs. The final TERS amount is yet to be determined and will reduce the amount that AMSA draws down against the IDC's new R1.68-billion facility.

INTERIM SOLUTION

AMSA CEO Kobus Verster says the latest deferral represents an interim solution and the intention now is to find a permanent solution by the end of August.

The IDC loan does not include any equity conversion obligation, but Verster confirmed that the State-owned financier saw AMSA as a whole, including the longs business, as "strategic" and had expressed a desire to increase its shareholding beyond its current 8.2%.

Therefore, the IDC will use the due-diligence period to "look under the bonnet and see whether they want to increase [their ownership in AMSA] and at what value".

Absent the latest IDC loan, however, the deferral would not have been feasible. The funding meets AMSA's condition that the longs business should not incur further losses or result in negative cashflow for the group.

"The terms are payment by agreement, and repayment out of the profitability of the longs business," Verster reports.

Nevertheless, he also expresses optimism that there could be imminent relief in relation to some of the structural problems facing Newcastle, including changes to government's scrap policy and the introduction of new safeguard tariffs on some steel imports.

An initial safeguard duty of 13% could be imposed on hot-rolled coil and plate, falling to 11% in the second year and 9% in the third. The South African government has also initiated a far-reaching review of the steel tariff structure for both upstream and downstream products.

Further protection for AMSA will be unpopular among steel consumers, however, with some already highly critical of the support that has been extended to AMSA over the years, which has placed pressure on downstream metals and engineering firms.

However, the deferral of the wind-down is likely to be supported by trade unions, as it also means that retrenchment consultations initiated under Section 189(3) of the Labour Relations Act have been suspended.

That said, certain areas outside the longs business may still undergo restructuring for operational reasons, with AMSA in the process of retiring a coke battery.

The company says it is in communication with its customers in a bid to clear up prevailing uncertainty about the future of the longs business, as well as to try and rebuild its order backlog, which Verster says will be key for any permanent solution.

AMSA will also be making a new application to Eskom and the regulator for more favourable electricity pricing, as is catered for under negotiated pricing agreements.

"The next si...

South Africa intends launching a pilot programme for the procurement of 1 164 km of 400-kV powerlines, involving seven corridors in three provinces, in November as part of an initiative to mobilise private investment to address a grid backlog that is currently constraining new projects in high potential renewable-energy regions.

The pilot independent transmission project (ITP) request for proposals will be overseen by the Independent Power Producer Office (IPPO), which has managed South Africa's public renewables procurement since 2011, and will be preceeded by the release of a request for qualification in July.

On March 28, Electricity and Energy Minister Dr Kgosientsho Ramokgopa Gazetted a Ministerial Determination under Section 34 of the Electricity Regulation Act opening the way for the procurement of ITP capacity in the Northern Cape, the North West province and Gauteng.

The determination designates the Department of Electricity and Energy (DEE) as the procurer and the National Transmission Company South Africa (NTCSA), the Eskom subsidiary of responsible for the grid and system and market operations, as the buyer of the ITP capacity over the concession period.

Neither the precise ITP model, nor the concession term, has been disclosed, but Ramokgopa indicated during a briefing on April 1 that some form of build, operate, own and transfer, or BOOT, arrangement was likely to be implemented.

He also reported that the regulations required for advancing the ITP programme would be published on April 3, presumably for public comment.

The initial seven corridors had been selected from within the NTCSA's Transmission Development Plan project pipeline, which envisages the roll-out of some 14 000 km of new powerlines and associated grid infrastructure over the coming ten years.

ADVANCED PROJECTS SELECTED

Ramokgopa said that only "late-stage" projects had been chosen for the pilot so as not to burden ITP investors with the often-difficult task of securing the servitudes and finalising the environmental-impact assessments needed for transmission infrastructure.

Besides 1 164 km of powerlines, 2 630 MVA of transformation capacity will be procured across the following corridors: Aries-Aggeneis, Groeipunt and Boundary-Ferrum, in the Northern Cape; Mookodi-Hermes and Mahikeng Integration Phase 1, in the North West; and Hera-Westgate, in Gauteng.

Once completed in 2029, the pilot ITPs would unlock grid capacity for a further 3 200 MW of new solar and wind capacity.

The DEE's Shaakira Karolia reported that a reverse-bidding auction was envisaged, whereby the lowest-cost bidders would be selected to build the initial projects and recover their capital, operations and maintenance costs, as well as earn a reasonable return over the concession period.

These costs would be recovered through the regulated tariff, possibly using the Regulatory Clearing Account mechanism.

While government had studied hundreds of similar concessions in countries such as Brazil, Chile, Peru and India, a multidisciplinary team, involving government officials and National Energy Regulator of South Africa members, had been established to ensure that all of the regulatory components were in place ahead of the pilot.

Ramokgopa stressed that the grid infrastructure built by the ITPs would be additional to the capital expenditure under way at the NTCSA and were being pursued largely because neither the NTCSA nor government had the financial resources in hand to address the prevailing grid backlog.

Describing it as a "step change", the Minister said the ITP programme was one of the mechanisms that the Government of National Unity aimed to use to place South Africa on a higher growth trajectory by addressing the electricity constraint to economic activity.

He also expressed confidence in the ability of the IPPO to oversee the pilot procurement, despite the fact that it was currently seeking a replacement for its previous head, Bernard Magoro, whose contract had expired.

An...

JSE-listed steel group ArcelorMittal South Africa (AMSA) has deferred the wind down of its long-steel business for at least six months to August 31, after the State-owned Industrial Development Corporation (IDC) provided another R1.68-billion in funding support.

The Newcastle works blast furnace, in KwaZulu-Natal, which was initially scheduled to be closed at the end of February, remained operating until the end of March after the IDC extended a R380-million loan.

The latest deferral in the mill's wind down meant that retrenchment consultations initiated under Section 189(3) of the Labour Relations Act had also been be suspended, but AMSA said certain areas outside the longs business might still undergo "restructuring" for operational reasons.

The company has also received a Temporary Employee Relief Scheme grant to assist in funding employee costs, which will reduce the draw down required against the IDC facility.

In a statement, AMSA said the IDC facility was repayable subject to agreement between the parties and contingent on the financial performance, solvency and liquidity of the longs unit.

As part of the agreement, the IDC may also conduct a due diligence exercise into possible alternative solutions for the business, but no details were provided as to what solutions might be considered.

"The South African government will utilise the deferral period to expeditiously address structural problems for the industry, including the scrap Preferential Pricing System (PPS), scrap export tax, and tariff measures including safeguards," CEO Kobus Verster said in a statement.

The group said it anticipated imminent changes to the PPS and export tax, along with new protection.

"These measures will help level the playing field in the steel industry to the benefit of the country," Verster stated, while noting emerging signs of demand growth in the South African economy.

"The IDC facility, combined with the government's commitment to address structural challenges in the industry, offers a pathway to potential long-term sustainability for the business," he added.

The next six months would be crucial in determining whether the longs business could achieve the "financial stability required for long-term viability".