Outdated infrastructure limiting Mozambique’s potential

Advisory law firm Edward Nathan Son- nenbergs (ENS) aims to be continu- ously involved in infrastructure improvement in Mozambique and plays an advisory role in existing and new gas and coal finds in the country.

The development and exploitation of these finds will, however, require significant new road, rail and port infrastructure, as most of the infrastructure in Mozambique is “outdated” or “inadequate”, owing to a lack of funding and infrastructure investment, notes ENS projects and project finance director John Ferraz.

He highlights that, while mining giant Vale’s Moatize operations, in Mozambique, hold major potential for the country in terms of infrastructure growth and development, rail transport of coal continues to remain a challenge, owing to insufficient railway infra- structure such as the country’s 575-km-long Sena railway line that is still awaiting rehabilitation and upgrading.
The Sena railway line transports limited volumes of coal from mines in the coal-rich province of Tete, in Mozambique, to the port city of Beira. The railway has a capacity of between two-million tons and three-million tons a year. The upgrade will increase this capacity to 6.5-million tons a year.

Built in 1912, the Sena railway upgrade programme has involved the reconstruction of the section of the line between Beira and Dondo (both in the Sofala province), lifting and replacing track, replacement of the rails and sleepers and augmenting the ballast between Savane (also in Sofala province) and Moatize. Further, additional passing loops have been built at five locations – the stations and halts at Póvoa, Dondo, Milha-8, Cundue and Murraça (all of which are in Sofala province), Mining Weekly reported in February.

The line was initially scheduled for completion in September 2009 to carry coal from Tete, where Vale and Rio Tinto are developing mines, and to serve Mozambique’s export sector.

The upgrade was rescheduled for completion in December 2012 but was delayed again, owing to a shortage of stone for track ballast.

Ferraz notes that various studies and projects have been undertaken to upgrade the line. However, he adds, Mozambique’s publicly owned Mozambique Ports and Railways (CFM), lacks the necessary capital funding to improve the line and to expand and replace its ageing rolling stock fleet.

“Essentially, CFM and the State are looking to coal mining companies and private- sector investment to assist in implementing a solution for the rail concession. CFM was asked to complete the upgrade of the line after the Mozambique government cancelled a rail concession it had awarded to a joint venture company, Companhia dos Caminhos de Ferro da Beira, in which Indian rail operator Rites was a significant participant. The concessionaire failed to deliver the project,” explains Ferraz.

“A crucial part of Mozambique’s development is ensuring that the Sena railway line rehabilitation and upgrade are completed to assist in unlocking the expected capacity of coal production,” he stresses.

The Vale mine alone is said to have an expected production of about two-million tons a year of export-grade thermal coal and about 12-million tons a year of export-grade coking coal. Riversdale, a Rio Tinto entity and another significant coal producer in the Moatize, is also likely to seek a longer-term sustainable rail solution for coal transport to the Port of Beira, as the current use of barges will not provide a long-term sustainable solution

Maputo Port

Ferraz highlights that, while the Maputo port is functioning, it requires ongoing dredging, owing to silt build-up. “As a result, and even with the constant dredging, the port is unable to handle large-sized vessels, thus necessitating the use of smaller vessels, to move cargo in and out of the port. This is likely to remain a permanent constraint unless new solutions can be found.”

The primary port and marine operations as well as most of the terminals in the port are conducted and operated through a JSE-listed Grindrod-related entity. The Maputo Port Development Company or MPDC has indicated that it plans to expand the terminal and other infrastructure at the Port of Maputo.

The Matola Coal Terminal (TCM) has a capacity of six-million tons a year.

When Phase 4 of its development is complete, its expanded capacity will be 26-million tons. Phase 4 will require excavation and land reclamation, the construction of two new berths, a stockyard and railway infrastructure. The final terminal footprint will be about 120 ha, excluding any reclaimed areas, TCM states on its website.

Grindrod also has a 48 000 m² footprint at the Maputo main port, where sized coal is handled on behalf of customers. Loading is by skip and either vessel or shore crane to replace the degradation of the sized product, it adds.

In January 2012, Grindrod entered into a strategic partnership with Vitol Group, the world’s largest independent energy trader, for the TCM. Vitol will acquire a 35% interest in the company from Grindrod, which owns the Maputo Coal Terminal concession.