African Rail Co. is seeking to raise roughly $170 million within the year to scale up its South African operations, with funds directed toward acquiring locomotives and wagons ahead of its entry into freight rail services in the country.
The UAE-headquartered company is one of 11 operators granted access to South Africa’s freight rail network, part of government-led reforms designed to open the sector to private participation and improve performance. The move comes as state-owned Transnet SOC Ltd. continues to struggle with operational setbacks that have long hampered economic activity, according to Bloomberg.
Recently, the firm entered into a concession agreement with a company headed by billionaire Enrique Razon to upgrade Durban’s primary terminal. The development aims to address persistent inefficiencies ranked among the worst globally by the World Bank which have increased costs for businesses and slowed trade flows.
Chief Executive Officer Youssef Elgonaid said operations will focus on major transport routes, including a corridor connecting South Africa with Mozambique, as well as lines running between Gauteng, the country’s economic centre, and the Port of Durban, which handles significant container volumes.
Key corridors connect mining zones to ports
Part of the planned investment will also support regional logistics, including the movement of copper from mining areas in the Democratic Republic of the Congo to the Port of Maputo in Mozambique.
Elgonaid noted that demand for logistics infrastructure is rising, driven by strong interest in critical minerals and a broader shift from road-based freight to rail transport. He described rail as “the only viable overland solution for these corridors.”
To finance the expansion, the company intends to source about 30 percent of the required capital through equity, with the remaining portion covered by debt. Expected investors include private equity firms particularly from the Middle East alongside shipping companies and development finance institutions, though no specific partners have been named.