Lobito Corridor Rail Line Planned from Angola to DRC
Trafigura, Mota-Engil and Vecturis to construct the railway to expedite mineral exports.
The Transport Ministry of Angola has awarded the contract to build the Lobito Corridor railway infrastructure to a consortium comprising Singaporean commodity trader Trafigura, Portuguese construction company Mota-Engil, and Belgian private rail operator Vecturis.
Under the terms of the contract, the consortium was granted a 30-year concession to operate, manage and maintain the rail infrastructure for cargo transport, minerals, liquids, and gas for the corridor.
The successful consortium outbid a rival offer from a Chinese group comprising CITIC, China Railway 20 Bureau Group and Sinotrans.
The Lobito Corridor project aims to connect the mines in mineral rich Democratic Republic of Congo (DRC) to the Angolan port of Lobito, 500 kilometres south of Luanda, the Angolan capital. The selected consortium will operate, manage and maintain the rail link and help transport minerals, liquids and gas to Lobito from Luau, an Angolan town near the border with DRC.
Currently copper, cobalt and other metals are exported from the DRC east via Dar es Salaam in Tanzania, via Beira in Mozambique, or south via Durban in South Africa, a journey that takes several weeks or more. As export volumes have increased from the DRC due to the demand for minerals needed for the energy transition, the roads have become more congested and delays at the border more protracted.
This new export corridor removes trucks from the roads utilising existing national rail infrastructure, thus reducing the several weeks it currently takes to export copper, cobalt, and other minerals from DRC east.
Trafigura and Mota-Engil each own a 49.5% share in the concession. Vecturis, a Belgian rail developer, owns the remaining 1%. The 30 year concession could be extended by 20 years if the consortium builds a branch line to Zambia.
The Lobito Corridor consists of the 1,067 millimetre-gauge Benguela Railway which runs for a distance of 1,344 kilometres within Angola, west to east from the port of Lobito on the Atlantic Coast to Luau on the Angolan border with DRC. The rail line extends to Ndola in the DRC, with the overall length of the corridor being 1,866 kilometres.
The concession terms include an up-front fee of US$100 million payable by the concessionaire. The concessionaire will also pay US$319.4 million to Angola for the first ten years of the contract, US$787 million for the next ten, and US$919 million for the final ten.
The concession terms also require the concessionaire to provide significant capital for the improvement of rail infrastructure and invest in more rolling stock for freight operations.
The consortium will invest US$256 million in infrastructure, US$73.4 million in equipment and rolling stock, and US$4.3 million in various activities over the concession duration. The concessionaire is also required to transport 1.67 million tonnes of freight per year by the fifth year of the concession. This will increase to 2.98 million tonnes by the tenth year and 4.98 million tonnes by the twentieth year.
The privatisation of the operation and maintenance of the railway will help increase economic activity and development along the corridor. The railway will help Angola’s agricultural and mining industries and decrease the country’s oil dependency, which is part of the government plan to help diversify the economy.
In a press release, Trafigura stated that the rail line would help keep trucks off the roads and reduce traffic congestion and border waiting times during travel out of DRC. It would offer “considerable cost and time savings for miners in the Copperbelt”.
Trafigura also noted that Lobito Corridor could be the third most crucial logistics route in the Southern African Development Community region by 2050.
Ricardo Viegas D’Abreu, Angola’s Transport Minister, estimates that the Lobito Corridor rail line will generate US$2.03 billion in revenue over 30 years.
The rail will contribute to increased competition in the logistics sector which could help reduce freight transport tariffs.
The contract is expected to be signed in mid-September, following the Angolan general election which is scheduled for August 24.
The Ministry of Transport’s press release can be read here.
Top Photo: Railway Line - Stock Image (Jacques Hugo | Dreamstime)
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