Mozambique: China Helps Fund US$2.7B Railway Coal Project

Mozambique is undertaking the final construction stage of its latest railway project, the US$2.7 billion Moatize-Macuse Railway line, with the help of loans from the Chinese government.

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The initial launch of the Moatize-Macuse Logistics Corridor will take place next year, however, final works will end in 2022, according to the Chinese newsletter China-Lusophone Brief, or CLBrief.

The 639 km-railway will transport coal from the mines located in Moatize and Chitima in Tete to a new floating coal terminal off the coast at Macuse, Zambezia, just north of Quelimane, according to the Pan African News Wire.

Coal prices have jumped two-fold over the past two years, reaching US$100/tonne for thermal coal and $175/tonne for cooking fuel.

The majority Mozambique's coal is currently transported via Nacala on a railway extending nearly twice as long as the new Macuse line. Also, it costs more than US$50 to ship the coal on the Nacala route.

The new Macuse line would make themral coal profitable again by reducing transport time.

The consortium venture is headed by Thai Mozambique Logistica, or TML. The group won the project in 2013 and maintains a majority stake in the project. Chinese capital in public banks and China Export and Credit Insurance Corporation, or Sinosure, investing in Mozambique and other East African countries, will finance the TML project.

The construction contract was signed in June 2017, by Mota Engil Mozambqiue and China National Complete Engineering Corporation, a subsidiary of the China Machinery Engineering Corporation.

Local owners retaining 20 percent each in the railway include Caminhos de Ferro de Mozambique, or CFM, and the Corredor de Desenvolvimento Integrado de Zambeze, or Codiza.