Pan African Mining Logistics Business Plan › Section 2 › Industry Overview & Macroeconomic Context

2.1 Sector Definition

Mining logistics, as defined for the purposes of this Plan, refers to
the integrated movement, handling, and management of bulk mineral and
industrial commodities from the point of extraction (the mine pit or
shaft) through intermediate storage, processing, and consolidation, to
the point of final delivery (typically a port terminal, smelter, power
station, or downstream industrial customer). The sector spans five
inter-related activity domains:

• Pit-to-port haulage. The primary and most
  capital-intensive activity, involving the transportation of bulk
  minerals (coal, iron ore, manganese, chrome, copper, PGMs) from mine
  sites to coastal export terminals using heavy-duty side-tipper trucks,
  rail wagons, or a combination thereof.
• Rail siding coordination. The interface between
  road and rail systems, including loading-bay management, wagon
  scheduling, and the increasingly critical ‘first and last mile’ road
  logistics that complements rail backbone services.
• Bulk terminal handling. Port-side logistics
  including stockpile management, ship-loading, dust suppression, and
  quality testing.
• Cross-border freight movement. Logistics across
  SADC borders, particularly the South Africa–Zambia copper corridor, the
  South Africa–Mozambique coal and chrome corridor, and the South
  Africa–Botswana–Namibia routes serving Walvis Bay.
• Value-added services. Including warehousing,
  customs brokerage, insurance, fuel management, mining-site logistics,
  and mining-supply inbound logistics.

2.2 Market Size and Growth

The South African freight and logistics market reached an estimated
USD 64.1 billion in 2025 and is projected to grow at a compound annual
growth rate of 5.9% over the period 2026–2035, reaching approximately
USD 113.7 billion by 2035 (source: Expert Market Research; Mordor
Intelligence). The mining-logistics sub-sector — which includes
pit-to-port haulage, mining-supply inbound logistics, and cross-border
bulk commodity transport — is estimated by industry analysts to account
for between 18% and 22% of total freight market value, equivalent to
approximately USD 11.5–14.1 billion in 2025.

The South African logistics sector handles approximately 1.5 billion
tonnes of goods annually and contributes approximately 10% of national
GDP, while employing more than one million people. The country ranks
fourth on the World Bank’s Logistics Performance Index for sub-Saharan
Africa. Road transport dominates the modal mix, accounting for over 80%
of freight movements, with the balance distributed across rail, sea, and
air. The structural over-reliance on road is itself a function of
multi-decade underinvestment in rail capacity by Transnet, the
state-owned freight rail operator, and represents the single largest
demand driver for road-based mining logistics businesses such as
PAML.

Figure 1

2.3 Modal Split and the Road Logistics Imperative

Road freight’s dominant share of South African freight movements
(approximately 82% by tonnage in 2025) is the central structural feature
of the market. Three inter-locking factors explain this dominance and
are unlikely to reverse over the strategic planning horizon of this
Plan:

1. Transnet has reported a USD 398.6 million loss in FY 2023/24,
   with cable theft alone forcing the closure of approximately 1,300
   rail-kilometres. Bulk commodity flows for coal, manganese, and
   containers have consequently been pushed onto the road network,
   inflating per-tonne logistics costs by an estimated 18% on affected
   corridors.
2. Transnet’s iron ore line achieved efficiency of just 54% in Q1
   2025, compared to Australia’s benchmark of 85% for comparable bulk
   commodity rail systems. The Port of Richards Bay saw coal exports fall
   22% in 2024 due to combined rail and equipment constraints.
3. Although a December 2024 third-party access framework now permits
   qualified private operators to run trains over Transnet lines — and 11
   private train operating companies are now approved across 41
   mining-corridor routes — the practical realisation of meaningful private
   rail capacity will take years and will, in any event, complement rather
   than replace road-based logistics.

Figure 2

2.4 Macroeconomic Context

The macroeconomic backdrop for South African mining logistics is
characterised by stable but modest GDP growth (1.3–1.6% per annum
forecast over 2026–2028), elevated but stabilising interest rates
following the South African Reserve Bank’s tightening cycle, persistent
USD/ZAR volatility, and a strong commodity-export profile that benefits
from global energy transition demand for copper, manganese, and chrome.
The National Treasury has allocated ZAR 132 billion to infrastructure
spending over 2025–2027, including specific provisions for transport
corridors serving mining regions.

Mining itself remains a cornerstone of the South African economy.
Mining contributed ZAR 142 billion in corporate taxes in 2024
(representing 19% of total corporate tax receipts), with platinum group
metals alone generating ZAR 28 billion in royalties. Despite challenges
including a 22% decline in Richards Bay coal exports in 2024 and
approximately 12% production loss to load-shedding, the sector is
positioned for measured recovery, supported by global commodity demand
and the partial easing of energy and rail constraints.

2.5 Regulatory and Policy Environment

Three regulatory developments are particularly material to PAML’s
strategic positioning:

(a) Rail third-party access framework (December 2024)

The opening of Transnet’s rail network to qualified third-party
operators represents the most significant logistics-sector reform in
three decades. Eleven train operating companies have been approved to
operate over 41 routes covering all major mining corridors. PAML’s Phase
3 strategy (described in Chapter 11) is structured to position the
Company to apply for and operate qualifying third-party rail services on
the Mpumalanga coal corridor and the Sishen iron-ore line by Year 5 of
the Plan.

(b) Cross-border freight harmonisation

The SADC Tripartite Free Trade Area and the operationalisation of the
African Continental Free Trade Area (AfCFTA) are progressively reducing
customs friction at key cross-border posts including Beitbridge
(RSA–Zimbabwe), Kasumbalesa (Zambia–DRC), and Lebombo (RSA–Mozambique).
Average truck dwell times at primary posts have fallen from 36 hours in
2020 to approximately 18 hours in 2025.

(c) Heavy-vehicle Performance-Based Standards (PBS)

South Africa’s PBS regime, jointly administered by the Department of
Transport and the Council for Scientific and Industrial Research (CSIR),
permits heavier and longer truck combinations on approved routes
provided operators meet stringent safety and infrastructure-impact
standards. PAML’s fleet specification (described in Chapter 6) is
designed for full PBS compliance, providing a meaningful per-tonne cost
advantage on approved mining corridors.

Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of Pan African Mining Logistics (Pty) Ltd.