South Africa's government will give Transnet an additional R94.8-billion rand guarantee facility to support the ailing State-owned logistics firm's recovery plan, the transport ministry said on Sunday.

The facility comes on top of a R51-billion guarantee the government announced for Transnet in May, including R41-billion to cover the company’s funding needs over the 2025/26 and 2026/27 financial years, and R10-billion earmarked for debt servicing and capital investments.

The new guarantee comprises R48.6-billion to cover all debt redemptions over the next five years, and an additional R46.2-billion to mitigate against further credit rating actions, the ministry said in a statement.

The government is supporting Transnet's five-year turnaround strategy, which seeks to restore freight rail volumes to 250-million metric tons per year by the end of the period. Those volumes fell to 152-million metric tons in the 2023/24 financial year, from a peak of 226-million metric tons in 2017/18.

Transnet has failed to deliver reliable freight rail and port services due to equipment shortages and maintenance backlogs after years of under-investment. Its capacity has been further constrained by widespread cable theft and vandalism.

The company's debt has risen to R145-billion from R138-billion at the end of the 2023/24 financial year, according to its chairperson, Andile Sangqu. Its loss widened to R7.3-billion in 2023/24, from R5.7-billion the previous year.

Transnet's struggles have cost mineral exporters - primarily coal and iron ore producers - billions of rand in lost revenue. These exporters account for nearly 70% of Transnet’s freight volumes.

Due to a lack of railway capacity, most of South Africa's chrome exports now reach ports by road, raising costs, damaging roads and the environment.