African Rail Co. is planning to raise about $170 million this year to expand its operations in South Africa, targeting investments in locomotives and wagons as it prepares to run freight services on the country’s rail network.

The UAE-based firm is among 11 operators awarded access to South Africa’s freight rail system, part of a broader reform effort aimed at opening up the sector to private players and improving efficiency.

The initiative comes as state-owned Transnet SOC Ltd. continues to face operational challenges that have constrained economic growth for years, Bloomberg reported.

The company recently signed a concession deal with a firm led by billionaire Enrique Razon to expand Durban’s main terminal, as inefficiencies—ranked among the worst globally by the World Bank—continue to weigh on trade and drive up costs for businesses.

Chief Executive Officer Youssef Elgonaid said the company will operate along key corridors, including a route linking South Africa to Mozambique, as well as lines connecting Gauteng — the country’s commercial hub — to the port of Durban, which handles a large share of container traffic.

Part of the funding will also support regional operations, including transporting copper from mines in the Democratic Republic of the Congo to Mozambique’s Maputo port.

Elgonaid said investor interest in logistics infrastructure is growing, driven by increasing demand for critical minerals and the need to shift bulk cargo from road to rail. “Rail is the only viable overland solution for these corridors,” he said.

The company plans to raise around 30% of the capital through equity, with the remainder coming from debt financing. Potential backers include private equity firms, particularly from the Middle East, as well as shipping companies and development finance institutions, although specific investors were not disclosed.