African Rail Co. backs South Africa freight rail expansion with $170 million

African Rail Co. (ARC), a UAE-based rail logistics operator, plans to raise about $170 million this year to expand freight operations across South Africa and Southern Africa, positioning itself to benefit from sweeping reforms in the country’s rail sector.

The company said the funding will support investments in locomotives, wagons and regional logistics infrastructure as private operators increasingly gain access to South Africa’s freight rail network, historically dominated by state-owned Transnet SOC Ltd..

ARC intends to finance roughly 30% of the expansion through equity, with the remainder sourced from debt. The company is targeting support from Middle Eastern private equity firms, development finance institutions and global shipping companies, although potential investors were not disclosed.

Rail reform opens new growth corridor

South Africa has awarded network access to 11 private rail operators in a move designed to improve efficiency and ease chronic freight bottlenecks that have constrained exports and economic growth.

The reforms come as Transnet continues to struggle with infrastructure constraints, equipment shortages and operational inefficiencies that have disrupted mining and manufacturing supply chains.

ARC Chief Executive Officer Youssef Elgonaid said the company will focus on strategic freight corridors connecting Gauteng, South Africa’s industrial and commercial hub, to Durban’s container port, while also expanding cross-border routes linking South Africa and Mozambique.

The expansion will also strengthen ARC’s regional footprint, including copper transportation routes from mines in the Democratic Republic of Congo to Mozambique’s Maputo port, a growing trade corridor for Southern African mineral exports.

Fuel and commodity logistics drive expansion

Founded in 2013, ARC has built its business around fuel transportation and bulk commodity logistics across Southern Africa. The company says it is currently the largest rail transporter of fuel in both Mozambique and Zimbabwe.

Beyond fuel, the operator has expanded into containerized cargo and bulk commodities, sectors expected to benefit from rising intra-African trade and infrastructure investment. 

The company’s growth strategy aligns with broader efforts to modernize Africa’s logistics network as governments seek private capital to improve rail efficiency, reduce transport costs and strengthen export competitiveness.

For South Africa, increased private sector participation in rail is increasingly viewed as critical to unlocking trade capacity and restoring confidence in one of the continent’s most important freight corridors.