The project to build a railway from the Moatize coal basin in the western Mozambican province of Tete to a new deep water port at Macuse, on the coast of Zambezia province, is in serious trouble, since it has been unable to secure funding, according to a report in Friday’s issue of the Maputo daily Noticias.
The problem is the collapse in the world market price of coal. Coal logistics projects no longer look as attractive as they did a couple of years ago.
Building a new port and a 500 kilometre new railway seemed an excellent option when it was predicted that Mozambican coal exports might reach 100 million tonnes a year, and that the existing Sena line, from Moatize to the port of Beira could not cope with more than 12 million tonnes a year.
Abdul Carimo, chairperson of the Zambezia Integrated Development Corridor (CODIZA), the company proposing the project, said that about four billion US dollars are needed. No-one will provide sums that large without cast-iron guarantees that the railway and port will be viable.
Speaking in the Zambezia provincial capital, Quelimane, Carimo suggested that one way out is to involve the Indian consortium, ICVL (International Coal Ventures Limited).
Last year ICVL purchased the Mozambican coal assets of the Anglo-Australian company Rio Tinto for the remarkably cheap price of US$50 million. The main asset is the Benga open cast coal mine in Moatize.
Exporting Benga coal to India is not dependent on international coal prices since ICVL was set up by the Indian government exclusively for the purpose of acquiring coal mines and other coal assets abroad to meet India’s own coal requirements.
Carimo said that ICVL currently imports more than 450 million tonnes of coal a year. India’s need for imported coal is expected to rise to 650 million tonnes a year. Much of this could come from Moatize, and would be more than enough to justify the new railway and port.
Carimo also wanted the government to authorise extension of the planned railway westward, to Chitima. There is good quality coal in Chitima, he said, and over 70 companies have coal exploration licences there – but nothing was yet being mined.
He was confident that, if the railway were to be extended to Chitima, and ICVL came on board, then the market and logistics problems for the Chitima coal would be solved. – AIM