Mines to Market: Mozambique Seeks Botswana’s Coal

Infrastructure developments in Mozambique compete with Namibia.

Ramzy Bamieh, Barnaby Fletcher & Amelia Salutz

MOZAMBIQUE-BLOG
MAPUTO, MOZAMBIQUE – In Mozambique the government has invited bids for a $2 billion 525 km railway that will link the coal fields of the Moatize Basin to a new port at Macuse and announced plans for a new $7 billion deepwater port at Technobanine. Expansion work is also underway in the ports of Maputo, Beira and Nacala, the three largest of Mozambique’s seven main seaports.

In addition to increasing physical infrastructure, strong efforts are being made to increase efficiency. In partnership with its port operators, Mozambique has implemented Janela Único Electrónica (JUE), an online, electronic port processing system. “The establishment of the JUE has lead to at least a 50% improvement in efficiency at the ports. The system as a whole has now stabilised, it increases the speed which documentation is finished therefore speeding up the whole system. All three major ports in Mozambique can now be considered efficient and much credit should go to the operators DP World, MPDC, Cornelder and Portos do Norte. However, since the recent unrest companies have been reluctant to transport goods by road and we have seen some backlog at the ports as a result. Particularly in the case of Beira, which acts as the transit port for Zambia, Malawi, Zimbabwe and, to a lesser extent, Botswana. In general the ports system in Mozambique has improved vastly over the past year,” explained Karen de Almeida, general manager – finance and administration for UTi.

Mozambique has much work to do before its infrastructure is global best practice standards. Container dwell time at its ports still average far higher than those of its northern peers; let alone South Africa. Upgrades on the Sena line, connecting the Tete province to the Beira seaport, will increase capacity from 3 million mt/y to 6.5 million mt/y, yet this more-than-doubling still falls well below the total capacity of the Tete province, which at maturity is estimated will reach 100 million mt/y. The African Union, in a study done for the Programme for Infrastructure Development in Africa, estimated that even with currently planned port and terminal expansion, Mozambique will still suffer from short-term port container capacity gaps by 2020.

These worries have not stopped Mozambique seeking to serve as the trade route for their neighbouring countries in the region. Its Nacala Railroad, being expanded by Vale, connects to the Central East African Railway of Malawi. The Beira Railroad connects to Harare in Zimbabwe and the Maputo Railroad connects to South Africa, Zimbabwe and Swaziland.

One of the largest competitions being played out at the moment is for the coal of Botswana. In August the Mozambican Minister of Mineral Resources invited his Batswana counterpart and the Batswana Minister of Transport and Communications to discuss the export of coal and acquisition of fuel through Mozambique. “Evaluations are currently being made to decide if existing railway lines between Mozambique and Botswana should be refurbished, which would better connect the country to the ports of Maputo and Matola,” explains the Honourable Onkokame Kitso Mokaila, Ministry of Minerals, Energy and Water Resources of the Republic of Botswana.
Yet Walvis Bay of Namibia is also hoping to secure Botswana trade, as well as that of other landlocked countries, and can at the moment boast shorter transit times. “As a relatively new port, we cannot compete on volumes with Durban at this stage but we can reduce the cost of doing business in southern Africa. Walvis Bay has five competitive advantages: Namibia is safe, it is secure, is it easy to do business in, our transit times are much better than the rest of southern Africa, and we are efficient along the complete corridor” suggest Johny Smith, CEO of the Walvis Bay Corridor Group. “Namibia has a coastline of 1,500 km and Walvis Bay is very strategically located. Walvis Bay can cover southern Angola, Zambia, southern Democratic Republic of the Congo (DRC), Zimbabwe, Botswana, and also parts of South Africa.”
While the need to support its own mining industry will restrict, though not stop, Mozambique’s regional transport corridor ambitions in the medium-term, they will nonetheless also restrict any attempt by Tanzania to increase its regional influence southward. Like Mozambique, Tanzania is not free from port problems. “There are long delays at the Port of Dar es Salaam, which we know the authorities are working hard to rectify. In the meantime Minesite Tanzania is using the Port of Mombasa to ensure zero loss of production and downtime for our end users,” said Damien Valente, country manager for Minesite Tanzania, a mining service provider based out gold-mining hotbed Mwanza.

This article was written as part of the research conducted on African mining jurisdictions by Global Business Reports (GBR) as part of our partnership with African Mining Indaba LLC. The aim of this partnership is the production of the single most comprehensive intelligence report on the continent’s mineral sector. The Official Mining in Africa Country Investment Guide, will be launched next February 2014, as the only official publication providing country-specific information at Africa’s top mining event, the 2014 Investing in Africa Mining Indaba™ held in Cape Town, South Africa.

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