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MAPUTO (Capital Markets in Africa) – Thai Mocambique Logistics SA, which is developing a $2.3 billion railway and port to export coal from central Mozambique, awarded the construction contract to Mota-Engil SGPS SA and China National Complete Engineering Corp.
An agreement is expected to be signed next month, TML Chief Executive Officer Jose Pires da Fonseca said in an interview Tuesday in the Mozambican capital, Maputo. The total cost of the project, which will include a deep-water harbor and a 500-kilometer (300-mile) rail line, will rise to $3.5 billion including the cost of machinery and staff, he said.
“Thirty percent of the work will be financed by shareholders and the remainder by third parties,” Fonseca said. The project doesn’t have sovereign guarantees so the contractor will arrange financing. Standard Chartered Plc is the project’s financial adviser, he said.
Construction of the railway line, from the town of Moatize in the central Tete province to Macuse in Zambezia province, is expected to begin in 2018 and last three years, Fonseca said. A Mota-Engil’s spokesman declined to comment, and calls to CMEC went unanswered.
Vale SA of Brazil operates the world’s fourth-biggest coal mine in Tete. Jindal Steel & Power Ltd. of India operates in Marara district in the same province and has a 25-year contract for a mine with an estimated 7 million tons ofreserves. Tete alone has an estimated 23 billion tons of coal, according to Mozambique’s government.
“The port of Macuse has the advantage of location,” Fonseca said. “It is closer to the market, India and China, than Mozambique’s competitors in coal production, Thailand and Australia.”
Thai Mocambique is 60 percent owned by Italian-Thai Development PCL, the Bangkok-based company that in 2013 won a tender to build the project to help Mozambique boost coal shipments. The other shareholders of ITD are the Zambezia Integrated Development Corridor, known as Codiza, and state-owned Mozambique Ports and Railways.
The onshore and offshore port facilities will be constructed on 1,000 hectares (2,741 acres) of land, while the entire development will have access to 22,000 hectares, Fonseca said.
Rio de Janeiro-based Vale currently ships its coal along a 900-kilometer railway link that passes through neighboring Malawi, connecting its mines to a terminal it’s built at Nacala port in northeastern Mozambique.