Transnet CEO Brian Molefe said on Wednesday he expected the mining sector to object to plans to hike cargo tariffs on dry bulk by more than two-thirds and reduce those on manufactured goods by almost half.
Molefe said the proposed tariff restructuring was imperative to encourage beneficiation and bring Transnet's pricing strategy in line with the government's economic policy and the National Development Plan.
Under the plan, tariffs on manufactured goods will go down by 47 percent and those on dry bulk will go up by 68 percent.
"We expect them to complain. They will make those comments to the regulator," Molefe said on the sidelines of a meeting of Parliament's portfolio committee on trade and industry.
He said the mining sector had been "hugely subsidised" by a tariff structure weighted in favour of raw exports, at the expense of the manufacturing and agricultural sectors.
Transnet's tariff application for 2013/14 also proposes imposing a minimum export cargo tariff of R6 a ton on all dry bulk and break bulk shipments.
Tau Morwe, the chief executive of Transnet National Ports Authority (TNPA), said this would double the price of sending iron ore from Sishen to Saldanha.
Molefe said: "We send away our own God-given iron ore and then we have unemployment, but we can't process anything with our own hands.
"We have seven trains that are each four kilometres long running between Sishen and Saldanha carrying iron ore, and then we import steel."
Riad Khan, the CEO of the Ports Regulator of SA, said the deadline for comments on the application was 31 May, and a decision could be expected "a month or two" later.
Khan said whatever tariff reductions the regulator approved for the manufacturing sector, care would be taken to ensure they ultimately prove "revenue neutral" for the TNPA.
"There is no way the regulator will... allow the TNPA to get into trouble. You will never need to subsidise the TNPA."
Trade and Industry director general Lionel October welcomed the planned tariff restructuring as "real progress", and said it was the result of years of talks between the department and Transnet.
"Restructuring is necessary because our economy has been subsidising the mining sector regarding below-cost transport."
He said the planned reductions for agricultural goods would prove a relief to food-growers, who had told the department it was not worth their while to export goods to Europe.
"This will cut their costs by practically half. It is a huge incentive."
DA energy spokesman Lance Greyling questioned the wisdom of escalating costs for an embattled mining sector.
"The question is whether the mineral sector can absorb these costs on dry bulk? I don't know whether anybody has really asked that question. It has shrunk and now we're putting more pressure on."
Greyling said he believed the question was whether Transnet needed a profit margin as big as it currently enjoyed.
He said the freight group was using the same argument as Eskom for tariff hikes, namely the need to strengthen the balance sheet to keep down the cost of borrowing to fund expansion projects. This however had damning consequences for the wider economy.
In September, the freight group posted a mid-year profit of R1.76 billion, a decrease of some 24.5 percent.
Molefe told Sapa he was pleased that Transnet's R300bn, seven-year expansion programme would be funded from its own balance sheet and some R86bn in borrowings.
He said R47bn would go to TNPA and "not a cent comes from the fiscus".