Another Mozambique coal railway project develops despite debt situation

Caminhos_de_Ferro_de_Mocambique,_Railway_Station_in_Maputo,_Mozambique

The international tender for the construction of a new railway to link Mozambique’s coalfields to the coast closed at the end of last week. The project is being developed by Thai Moçambique Logística, a joint venture between Thailand-based Italian Thai Development Company, which has a 60% share, local State-owned ports and railways company Portos e Caminhos de Ferro de Moçambique (better known as CFM), with a 20% stake, and local private-sector consortium Corredor do Desenvolvimento Integrado do Zambeze (Zambeze Integrated Development Corridor, generally known by the acronym Codiza), also with 20%.

Seven companies are known to have submitted bids for the project. Two are from China, two from Turkey, and one each from Brazil, Portugal and South Korea. The aim of the project is to provide a third rail link from the coal-rich inland province of Tete, this one running to the part of Macuse, in Zambézia province. This will allow the future expansion of coal production in Tete.

Originally, the Tete district of Moatize – currently the centre of the country’s predominantly metallurgical-coal mining industry – was connected to the coast by the Sena railway, which ran to the coastal city of Beira. Despite upgrades, this simply cannot fulfil the demands of the miners. Consequently, a second line, from Moatize through Malawi to the Mozambique coastal city of Nacala was developed (with a mixture of greenfield new construction and brownfield rehabilitation of existing track) by a consortium led by Brazilian mining group Vale (which developed and operates the Moatize mine).

A diesel locomotive from CFM - Caminhos de Ferro de Moçambique (Mozambique's Railways)
A diesel locomotive from CFM – Caminhos de Ferro de Moçambique (Mozambique’s Railways)

The new Macuse line will run for 480 km to 500 km, although talks are under way with the government to add another 120 km, which would serve coal deposits not yet connected or close to any railway. The project also helps with the problem of port congestion by adding a third harbour for the export of the energy mineral. Indeed, being capable of taking ships of up to 80 000 t, Macuse has greater capacity than Beira.

Meanwhile, in a felicitous coincidence, the theme of the Fifth Mozambique Mines, Petroleum and Energy Conference was Utilising National Natural Resources to Catalyse the Development of Infrastructure, Inclusive Growth and Economic Transformation. It was held in Maputo on April 27 and 28 and was opened by Mineral Resources Minister Pedro Couto. In the mining section of the conference, one of the focuses was, unsurprisingly, on updates on the mining logistics and transport situation. Another one was the future of the country’s coal sector, in the light of international coal demand trends. Other important topics included the changing legal and financial framework for the country’s mining sector and environmental management. The development of local skills and a local equipment supplier base was another focus.

Unfortunately for the country, in general, the recent revelations that the Mozambique government has been hiding excessive foreign debts (totalling more than $1-billion) from the International Monetary Fund (IMF) has damaged international investor confidence in the country. These debts were largely taken on in 2013 and 2014 under then President Armando Guebuza, and neither the Mozambique people nor the IMF were told about them. As a result, the IMF has cancelled the release of a second tranche of a $283-million emergency loan to the country. The country now has a high-risk debt rating. Further, the World Bank has delayed the authorisation of development loans to Mozambique until it has analysed the country’s debt situation.

Source: Mining Weekly