Chinese-funded Moatize-Macuse Logistics Corridor scheduled to launch in 2019

 

The Moatize-Macuse Logistics Corridor, the largest infrastructure project in Mozambique, has reached its final stage, with the launch scheduled for 2019. The consortium is led by Thai Mozambique Logistica (TML), a subsidiary of the Ital-Thai Development (ITD) of Thailand, which won the project in 2013, and holds 60% of the capital.

 

The TML is to be financed exclusively by Chinese capital through public banks targeting Africa, and China Export & Credit Insurance Corporation (Sinosure) based in Beijing. The World Bank, through the Multilateral Investment Guarantee Agency (MIGA), of which Mozambique is a member, covers the political risk of such an investment. Project funding is in the process of being finalised.

 

The concession has a 30-year term and its primary objective is to transport coal between Zambezia and the new port of Macuse, which will also be built from scratch.

 

The investment is estimated at US$ 2.7 billion. This value will cover the railway infrastructure between Moatize/Chitima – Macuse, the port of Macuse (Zambezia), and the railway fleet (costing approximately US$ 300 million).

 

The 639 km-railway will mainly transport coal from the mines of Moatize in Tete province. The first operational train carrying coal and other goods should occur in 2022, taking into account that the construction contract will last 44 months. There are also potential plans to transport people and goods.

 

There will be 14 trains of ore transported per day, each with a capacity of 11,200 tonnes of coal, along with two trains for the transport of passengers.

 

In 2016, engineering consultants Mota Engil Mozambique and China National Complete Engineering Corporation, a subsidiary of the China Machinery Engineering Corporation listed on the Hong Kong Stock Exchange were selected for the project. The official contract was signed in June of 2017.

 

The economic potential of the project is significant. The increase in production at the Moatize mines is expected to grow from 8.7 million tonnes per year (mtpy) in 2016 to 18 mtpy by 2018. The positive outlook for the coal sector should turn this raw material into the main source of export revenues, surpassing aluminum. The new deep-water port of Macuse will have an initial capacity of 33 mtpy but can be extended to a capacity three times higher.

 

Mozambique is the 8th country in the world with the largest estimated reserves of coal (28 billion tonnes), with sustained growth since 2011 reaching 11 million tonnes in 2017, i.e. 18 times the export volume in 2011. Mozambique’s mineral resources and energy sector have led to a lot of foreign direct investment and is one of the main sources of job creation in the last 4 years along with agro-industry and construction. The main customers of Moatize coal are in the Asian market, namely India, Japan, China and Thailand.

 

Aside from the Thai Mozambique Logistica (TML), Caminhos de Ferro de Moçambique (CFM) and the Corredor de Desenvolvimento Integrado do Zambeze (Codiza) hold 20% of the capital each.

 

Codiza is formed by Transzambezia and Olaba Zambezia, a company owned by Graça Machel. Codiza was initially headed by jurist and former deputy president of the Assembly of the Republic Abdul Carimo from Zambézia but is now headed by Salimo Abdula. Abdula was the former President Armando Guebuza’s right-hand man in business as well as the representative of Frelimo’s economic interests.

 

In June 2018, Abdula was honoured with the Performance Award of Excellence for his performance in the Business Confederation of the Community of Portuguese Speaking Countries (CE-CPLP) in Portugal.

 

The added value of Codiza for the project is the creation of a safe investment environment through the political influence of its partners with decision-makers.

 

According to local sources, it is also a way for SPI – Gestão e Investimento to be involved with the project through Codiza after having lost the bid to Ital-Thai Development, which provided more favourable terms.

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