Industry association hails Traxtion’s R3.4bn rail investment as major boost to SA’s freight reform

The African Rail Industry Association (ARIA) has hailed the R3.4 billion investment in locomotive production by Traxtion as a move that will enable competitive and open-access rail network, and reinforce Transnet’s capacity to support national targets.

Traxtion on Tuesday announced that the investment, part of a broader R5bn private-sector commitment made at the launch of the National Rail Policy in 2022, will help expand freight capacity and accelerate sector reforms.

The programme includes R1.8bn for locomotives and R1.6bn for wagons, with a minimum 60% local content requirement. Construction and deployment are expected to create 662 direct jobs.

ARIA on Wednesday said the investment represents the largest private freight rail commitment in South Africa’s history and provides “definitive validation” of government’s reform efforts.

The association said it offers tangible relief for key economic corridors and supports the broader push to rebuild the country’s logistics system.

ARIA CEO Mesela Nhlapo said this investment is not about competition with Transnet; rather, it represents a collaborative effort aimed at making South Africa Inc. globally competitive.

“As Transport Minister Barbara Creecy emphasised, private sector investment is critical to enhancing capacity and efficiency. By unlocking capacity, the rail industry is acting on the imperative to lower logistics costs and improve the country’s environmental footprint,” she said.

Government has set a target of moving 250 million tons of freight on the Transnet network by 2029, up from the current 160 million tons.

In August 2025, Minister Creecy approved 11 Train Operating Companies (TOCs) to access the network, collectively expected to carry around 20 million tons per year.

ARIA said Traxtion’s investment strengthens this broader participation drive and directly supports President Cyril Ramaphosa’s mineral beneficiation and reindustrialisation objectives.

Nhlapo emphasised that the beneficiation of minerals requires a reliable, high-capacity rail network.

“We cannot reindustrialise without railways. Traxtion’s investment bridges the gap between mining and manufacturing, enabling the vision of a value-adding economy,” she said.

The association highlighted Traxtion’s strong localisation focus, noting that the project targets at least 60% local content, with procurement from South African suppliers already exceeding 79%. ARIA said this aligns with its “Power of Local” campaign and reinforces domestic manufacturing capacity.

The Department of Trade, Industry and Competition’s (the dtic) Rail Rolling Stock Designation framework sets minimum local content thresholds ranging from 55% for diesel locomotives to 80% for wagons.

ARIA said Traxtion’s commitment to exceed these targets showcases how private-sector leadership can advance national industrial policy.

“Traxtion's commitment to exceed these thresholds demonstrates how private sector leadership can advance national industrial policy objectives," it said.

"ARIA commends both the dtic for its sustained partnership in driving localisation through these policy frameworks and the Department of Transport under Minister [Barbara] Creecy's leadership for providing the rail reform policy architecture, including third-party access.”

ARIA also noted that Traxtion’s footprint across 10 African countries positions the investment within broader continental ambitions under the African Union’s Agenda 2063 and the African Continental Free Trade Area (AfCFTA).

To sustain momentum, the association urged the government to accelerate the domestication of the Luxembourg Rail Protocol, which South Africa ratified in January and which took effect in May 2025.

ARIA said it continues to engage with Transnet’s Rail Infrastructure Manager (TRIM) and regulators as the Network Statement is refined to provide a clearer framework for rail access.

Traxtion CEO James Holley paid tribute to ARIA and praised it for its early advocacy.

“ARIA's CEO, Mesela Nhlapo, stood as a crucial, brave voice years ago, championing the idea of a competitive rail environment when the prospect of reform was far from certain," he said.

"Traxtion's launch today directly validates that early advocacy. The investment directly addresses approximately 5% of the national freight rail capacity shortfall, delivering immediate, practical relief for crucial economic corridors and ports.”

BUSINESS REPORT