Mozambique increase rail capacity by 31.5 million tons

15 February 2016

The capacity of the railways in Mozambique will increase significantly once the line between Moatize and Nacala, known as the Nacala Corridor, with the strengthening of the Sena line, to be completed in the coming months.

The Nacala Logistics Corridor has the capacity to transport 18 million tons of cargo per year and will serve mainly the coal industry at a time when some exporters are facing logistical problems that make it even more difficult to continue operating at a profit, given the low prices of the commodity.

The opening of the line led the Economist Intelligence Unit to revise coal production forecasts upwards in the short term, allowing for a faster increase in exports in 2016 and 2017 and, consequently, a smaller current account deficit for Mozambique.

“Nacala will finally ease transport bottlenecks in the Mozambique coal industry,” the EIU said in its latest report on the country.

About 18 months behind schedule and costing more than the initial budget, the 902-kilometre line and associated deep water port were developed by Brazilian group Vale, which has a concession on Mozambique’s largest coal mine in Moatize, which can now increase production and reduce costs.

Construction of the proposed US$3.5 billion dollar project started in 2012 when the price of coal was over US$100 per ton, double the amount recorded at the end of 2015, leading the major producers such as Vale, Jindal Power, International Coal Ventures Limited (ICVL) and Beacon Hills Resources to delay expansion plans.

“For the rest of the industry, Nacala will free up space on the Sena line, the only one available,” but the Mozambican coal industry will remain below its potential, said the EIU.

The new railway is also used by other mining companies to transport their production, and state port and rail company CFM will transport of passengers and cargo.

The provincial governor of Nampula, Victor Borges, recently said that the second phase of the works to modernise and expand the port of Nacala, a US$270 million investment, could begin this year and tenders are currently being prepared.

In the first half of this year work to increase the capacity of the Sena line is due to be completed, increasing from 6.5 million to 20 million tons per year, said the provincial director for Transport and Communications of Sofala, Hélcio Canda.

The Sena line links the port of Beira to Moatize, between the provinces of Sofala and Tete, over a total length of 575 kilometres, including the Inhamitanga/Marromeu branchline. (macauhub/MZ)