Moves in Mozambique’s Mining Sector To Impact Malawi

A 5-hour drive from Malawi and Mozambique’s shared border post lies Tete, which is the Mozambican province that is increasingly becoming known for its vast coal deposits. The Brazilian mining company Vale SA has been involved in the province for a few years and has been exporting coal from its coal project, Moatize, since September 2011. It was given concessions in 2004 for the next 25 years.

Reports in November 2011 revealed that Vale intended to expand the project and for this infrastructure, particularly transportation routes, had to be improved. As Reuters reported last year from an interview with Vale’s general manager for marketing and sales at their coal unit, Marcelos Matos,

The expansion of Moatize will include about $4.4 billion dedicated to the building of a new coal terminal at the northern port of Nacala and a 912 km rail line connecting the coal mine with the port, partially passing via Malawi.

The deep-water Nacala port is seen as more adequate to handle panamax vessels than the shallower one at Beira, from where Vale’s first exports have been shipped.

The line and the port will initially have a capacity of 18 million tons to meet Vale’s rising demand for exports.

The sharing of that capacity with other entities would need to be discussed and would happen under certain conditions, Matos said, but did not give details.

“The investments that are planned are for our own expansion,” he said.

Mozambique is planning to establish a framework for how infrastructure projects are planned and who will benefit, to ensure all the projects expected to come online in coming years will get access to ports and rail.

Vale’s rail construction and rehabilitation project made international headlines today because Malawi’s president, Joyce Banda, broke ground for the USD 1bn rail project. A deal the Government of Malawi signed a year ago.

One of Vale’s competitors, Ncondezi, will also be able to make use of the rehabilitated railway that runs from Tete to Nacala across southern Malawi.

The Facts:

  • 138.5 kilometre line from Chikwawa that will connect with a line in Balaka. The railway line will run across southern Malawi
  • USD 1bn for construction and rehabilitation will be invested over three years
  • 4,500 people are expected to be employed, 3,000 will be Malawians
  • 38 hours to travel between Nacala (Mozambique) and Limbe (Malawi), at present this journey takes 5 to 7 days as trains cannot travel more than 20 kilometres per hour
  • 5m tonnes of cargo from Malawi expected to be carried annually
  • Malawi may save up to USD 120m in transportation costs
  • The company will meet the costs of the resettlement of people
  • Aurecon carried out the Social and Environmental Impact Assessment for this project which was accepted by Malawi’s Environmental Affairs Department (this is unfortunately not available online)

Update 7 December 2012: Today, the Malawi Voice reported that the Democratic Progressive Party (DPP), through its spokesperson Nicholas Dausi, has claimed Joyce Banda lied about the Vale rail deal:

During the event which took place in Neno, President Banda claimed the project is enveloped within the Economic Recovery Plan (ERP), which government launched few months ago. However, DPP Spokesperson Nicholas Dausi said President Banda is not telling the truth on the matter, saying at the time of President Bingu wa Mutharika’s death, the project’s plans were at a very advanced stage, therefore PP [People’s Party] cannot claim its ownership.

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8 responses to “Moves in Mozambique’s Mining Sector To Impact Malawi

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