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Moatize coal link funded

12 Oct 2009

MOZAMBIQUE: Construction of a second rail link into the Moatize coalfield is expected to get underway before the end of this year, following the announcement of a US$500m package of international funding put together by the government to support local investors. Transport Minister Paulo Zucula says funding from the Dutch and Danish governments, as well as the European Union, could see the new line operational by around 2015.

Brazil's Vale group reached agreement with the government in November 2004 to develop the Moatize coalfield in Mozambique’s northern Tete province, which it says is ‘one of the world’s last great unexploited coal reserves’. According to its initial studies, the mining group expects the Moatize reserve to produce ‘11 million tonnes of metallurgical and thermal coal per year over the next 35 years’. The project is expected to generate around 900 direct jobs at the peak of production, plus up to 3 000 posts during the implementation phase.

Moatize is connected to the Indian Ocean port of Beira by the 575 km Sena line, currently being refurbished by a Rites-led consortium to carry around 6 million tonnes a year. The line is expected to be ready by the end of this year, but the port at Beira is badly silted and cannot handle large ships. According to Zucula, some of the aid money will be used for dredging, but this is only seen as a stop-gap measure.

The favoured long-term strategy is to use the deep-water port at Nacala. The bulk of the money will therefore be used to build a link from Moatize to the Nacala Corridor, and upgrade the existing railway which links Malawi with Nacala. The route is currently operated by Central East African Railway as part of the Corredor de Desenvolvimento do Norte consortium. CDN was established by US-based Railroad Development Corp with local investors and state railway CFM, but RDC sold its stake in both the Malawi and Mozambique operations back to local investors last year.

Zucula believes that construction of the new line and refurbishment of the Nacala – Malawi railway will be completed by the time that coal production at Moatize has ramped up to its peak output.