Mozambique targets 2018 to build $2.7 billion railway
Mozambique's Ministry of Transport and Communications has set a 2018 target to start construction of a $2.7 billion coal export railway and port terminal project in the central region of the country, hoping to conclude it in the first quarter of 2021, APA can report on Monday.
The head of the Ministry’s legal department, Luis Chauque, told APA in an interview that the government has picked Bangkok-based contractor Italian-Thai Development Pcl to construct the 537 km rail line, from the Moatize coal mines in Tete province to Macuse on the coast in Zambezia province.
"The project forms part of ambitious plans made by Mozambique with foreign investment partners to become a major exporter of metallurgical and thermal coal to the global market, based on estimated reserves of at least 2 billion tonnes", Chauque said.
The official added that these are the world’s fourth-largest untapped recoverable coal reserves, and the project includes a new deep water port at Macuse, and a railway from the Moatize coal basin to Macuse, a distance of around 500 kilometres.
"The construction of a new railway from the western province of Tete to Macuse, on the coast of Zambezia province, should begin in late 2018, and be concluded in the first quarter of 2021", Chauque said in an interview with APA on Monday.
Companies like Vale of Brazil and Rio Tinto have invested billions of dollars, helping Mozambique launch in 2011 as a coal producer and exporter. Mozambique is currently exporting around 5 million tonnes of coal, and is developing capacity to rapidly increase this.
According to Chauque, the main purpose of the new railway and port will be to export coal from Tete and the proposed railway will be much shorter than the existing lines from Moatize to the ports of Beira and Nacala-a-Velha.
Macuse port will be able to take ships of up to 80,000 tonnes while Beira, a port which must be regularly dredged, cannot match this capacity, although Nacala-a-Velha can take ships of any size.
It is precisely the lack of available modern railways and ports that places Mozambique at a big costs disadvantage when compared with major coal producers like Australia, putting big new projects under pressure at a time of low coal prices.
Despite the challenging market conditions, Brazil’s Vale is also pressing ahead with its own $4.5 billion project developing a 900 km rail corridor from its Moatize mine to Nacala port in northern Mozambique. The first coal train on this new line, which will cross the small neighbouring nation of Malawi, is expected to run by the end of the year to Nacala port.
The Moatize-Macuse rail-port project, which foresees deep-water container and general cargo facilities, as well as a coal export terminal at the port, will need existing major coal miners operating in Tete to come onboard with shipments.
Mozambique’s ports development plan sees a massive ramping up of tonnage handling capacity over the next three years to 2020, as a country still stricken by widespread poverty and recovering from a 1975-1992 civil war hopes to benefit from huge coal and offshore natural gas deposits discovered in recent years.
Mozambique’s own infrastructure deficit reflects a situation existing across Sub-Saharan Africa, where the potential of exploiting untapped national resources is being held back by the absence of road, rail and
port networks to get the oil, gas and minerals out easily to world markets.
The World Bank has forecast that coal and gas may generate up to $9 billion in revenues by 2032 for the southern African state, which is still poor and recovering from the devastating civil war.
Rio Tinto , Brazil’s Vale and India’s Jindal have invested heavily in developing Mozambique’s coal deposits, the fourth-largest untapped recoverable coal reserves in the world.
However, billions of dollars of investment in rail and port expansions are still needed to carry the coal from the inland resource/rich Tete mines to the seaborne market.