6 June 2012

Mozambique: Vale to Spend Four Billion On New Rail Route

Maputo — The Brazilian mining company Vale plans to spend four billion US dollars on developing a new rail route to transport coal from its mine in Moatize to the port at Nacala in the north of the country, according to a report in the daily newspaper "Noticias".

The railway will travel from its coal mining venture in the western province of Tete, through Malawi, to a new coal terminal at Nacala-a-Velha port.

Although Vale would fund the new railway, which would be built in partnership with the public ports and rail company CFM, the railway would also be used to transport other cargo and passengers.

According to the chief executive of Vale, Murilo Ferreira, the initiative is necessary because it is clear that the country has a weak logistical infrastructure incapable of coping with large scale mineral extraction.

He said that the building work is expected to generate thousands of jobs, with the majority being filled by Mozambicans.

Work on the railway has already begun in neighbouring Malawi, and Vale hopes that negotiations will soon be concluded with the Mozambican government so that work can also begin in Mozambique.

In December, Vale signed a rail concession contract with the Malawian government allowing it to build and operate the new railway across southern Malawi.

The new line will run from Chikwawa in the far south of Malawi for 137 kilometres to Nkaya Junction, where it will meet the existing line to Nacala.

Speaking on Monday at the ceremony marking the official opening of the new coal terminal at the port of Beira, Murilo Ferreira said that Vale intends to transform the business of extracting natural resources into one which brings sustainable economic growth and prosperity.

He pointed out that the company is intensifying the training of local personnel with the aim of improving on the current situation, in which 85 per cent of its employees are Mozambican.

Vale is currently exporting coal via the Sena railway line that runs from Moatize to the port of Beira. But with other companies also planning to exploit the massive coal reserves in Moatize, it is clear that the Sena line and the Beira coal terminal will be woefully inadequate.

Despite plans to increase the Sena line's capacity to 12 million tonnes per year by the end of 2012, this will still not meet Mozambique's needs. Transport Minister Paulo Zucula estimates that by 2020 the country will be producing 100 million tonnes of coal a year.

Nacala is an attractive alternative, since it is regarded as the best deep water port on the east African coast. Unlike Beira, it does not require dredging and can accommodate ships of any size.

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