In a further step towards easing transport bottlenecks for coal mining companies operating in Mozambique’s inland Tete province, a Sino-Portuguese consortium has signed a contract with local company Thai Moçambique Logística to build a 500 km railway line from the
coal-rich Moatize district to the coast at Macuse, in Zambézia province. This was announced in a communication to the Portuguese Securities Market Commission, dated June 13.

The consortium comprises Portuguese construction group Mota-Engil and the China National Complete Engineering Corporation (itself a subsidiary of the Hong Kong-listed China Machinery Engineering Corporation); each group has a 50% share in the joint venture (JV), which is the first-ever consortium created between Chinese and Portuguese enterprises. Thai Moçambique Logística is itself a JV between the Thailand-based Italian Thai Development Company (60% share), the State-owned Portos e Caminhos de Ferro de Moçambique (the country’s ports and railways company, which has a 20% share) and the Corredor de Desenvolvimento Integrado do Zambeze (also 20%).

Construction is expected to start next year and take 44 months. The cost is expected to be $2.389-billion. However, the project is running some years behind its original schedule – back in 2014, it was forecast that the line would be completed next year. More recently, it was expected to start operations in 2019. The delays seems to have been caused by poor global coal prices.

In the communication with the Portuguese Securities Market Commission, the consortium pointed out that, as many of the goods and services that will be employed on constructing the railway line will be sourced from China, it was very probable that Chinese export financing institutions, such as the Export-Import Bank of China, would contribute “positively” to the financing of the project. Construction will start once the project finance is in place.

The other part of the project is the construction of a deep-water port at Macuse. This will be able to take ships of 80 000 t (it is not stated if this is deadweight displacement or net or gross registered tonnage). The Moatize coal district is currently linked to ports by the Sena railway line (to Beira) and the recently opened Nacala railway line (to Nacala).

This news came less than a week after the Press Trust of India reported that the State-owned Coal India Limited (CIL) had applied for two new coal exploration licences in Mozambique. The information was contained in the 2016/17 annual report of India’s Ministry of Coal. The annual report stated that “[t]he application was submitted to the government of Mozambique but, up till now, no response has been received”.

CIL has a wholly owned subsidiary in Mozambique, called Coal India Africana Limitada, or CIAL, which already has exploration licences for two coal blocks, covering a total of 224 km2. The studies and analyses that have so far been carried out have led to the conclusion that, of this total area, 170 km2 does not contain any coal up to “at least a depth of 500 m” that is economically exploitable. (The exploration licence for the remaining 54 km2 is valid until August 2019.) This is why CIAL has applied for the two new exploration blocks.

CIL was a founder member of International Coal Ventures Limited (ICVL), which is a ‘special-purpose vehicle’ created on the initiative of the Indian Ministry of Steel to obtain metallurgical and thermal coal assets in foreign countries in order to assure the supply of these coals to India. (The other companies that are partners in ICVL are the Steel Authority of India Limited, the National Mineral Development Corporation, India’s number one power producer NTPC and another steelmaker, Rashtriya Ispat Nigam Limited.) ICVL owns the Benga coal operation, in Tete, which is restarting production this year, after being suspended in 2015 owing to the low coal prices. However, CIL has stated that it wishes to withdraw from ICVL.