Impact of rail freight on the financial viability of coal mining companies in Mpumalanga, South Africa

Abstract

The study explored how the efficiency of rail freight affects the financial health of coal mining companies in Mpumalanga, South Africa. It aimed to determine whether lower performance in the Transnet Freight Rail (TFR) system has a negative impact on key financial indicators such as revenue, earnings before interest and tax (EBIT), and net profit margins (NPM). The research adds to the understanding of how transport performance influences the long-term sustainability and profitability of coal mining businesses. The study used a quantitative research approach based on secondary data from three listed coal mining companies. The analysis included correlation tests, trend analysis, and linear regression to explore the relationships in the data. Rail efficiency was measured by the total amount of coal transported by rail, while financial performance was evaluated using reported figures for revenue, EBIT, and net profit margins (NPM). The findings indicate a strong positive relationship between rail freight efficiency and financial performance. Inefficiencies in the freight rail network were shown to result in higher costs and lower profit margins for mining companies. The results affirm theoretical insights from Transaction Cost Economics and Supply Chain Management theory, both of which emphasise the importance of reliable transport infrastructure for efficient operations and strong financial outcomes. The study focused on three large mining companies and did not include factors like coal prices or exchange rates, which may also affect financial results. Even with these limitations, the research offers recommendations for mining companies and policymakers. These include investing in rail infrastructure, improved scenario planning, and the adoption of integrated logistics strategies to support the long-term success of the coal sector.