A study has been launched to assess South Africa's existing railways manufacturing capacity and capability and to make recommendations on how policy and procurement can be leveraged to bolster localisation and transformation.

The study has been commissioned by the Localisation Support Fund (LSF) and will be conducted by Letsema Consulting over the coming six months.

It is being supported directly by the African Rail Industry Association (ARIA), which has urged its members to provide detailed inputs, as well as the Department of Trade, Industry and Competition, which has provided funding.

ARIA chairperson Anand Moodliar says the study will assess the opportunities for expanding rail localisation as both Transnet and emerging private train operating companies (TOCs) gear up to meet the target of lifting rail volumes to 250-million by 2030 from the approximately 160-million tons achieved by Transnet in 2024/25.

Moodliar, who is also CEO at the Barberry Group, one of 11 TOCs to have secured slots to operate on the Transnet network, says this will require the Transnet Freight Rail Operating Company to deliver about 185-million tons yearly and the TOCs the other 65-million tons.

To scale up to 65-million tons, the TOCs would need to invest between R30-billion and R40-billion in locomotives and wagons, which together with ongoing Transnet investment, created the potential for local industrialisation.

To deliver on the slots awarded to it, Barberry has ordered 28 of Alstom's 23 Class electric locomotives, a model for which there is already local manufacturing, as it has also been procured by Transnet.

Moodliar also highlighted some of the local-content spin-offs relating to a R3.4-billion rolling stock investment programme by Traxtion, which has also secured slots to operate on the Transnet network.

Transnet is in the process of establishing a leasing company to supply local locomotives and wagons to the TOCs, and chief business development officer Yolisa Kani reveals that it has received interest from half of the 11 TOCs and has already signed four contracts.

Moodliar expresses confidence that this rising level of investment activity is sufficient to stimulate a supplier ecosystem supportive of localisation and transformation, while also stressing the importance of competitive supply if the industry is to recapture rail volumes from a road industry that is highly competitive.

The LSF's Tondani Nevhutalu says there is currently more than R2.5-billion of rail equipment being imported yearly, much of which could potentially be met by domestic industry should a supportive policy and procurement framework be developed.

She reports that the study will assess aggregated demand across Transnet, the Passenger Rail Agency of South Africa and the Gautrain and evaluate local supply capabilities to meet that demand. Five workstreams will, thus, be created to study demand aggregation, supplier capability, policy instruments, procurement reforms and competitiveness.

Letsema Consulting's Shenelle Nair says the aim will then be to identify strategic opportunities for localisation and transformation based on the demand-side mapping, the supply-side assessments, and a review of the policy instruments.

The study will also make recommendations for new policy instruments including which products and components should be designated by government for localisation and what local-content thresholds should be put in place to support industrial growth.

ARIA CEO Mesela Nhlapo says that, with the reform of the rail sector now advancing, localisation represents the next big challenge for the industry.

"Every locally produced locomotive, wagon and rail component represents livelihoods, technical skills and opportunities for artisans, engineers, technicians and small businesses across the value chain, Nhlapo asserts.