Mozambique's $200 Million Sena Coal Railway Line to Reopen in 2010

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Researched by Industrial Info Resources (Sugar Land, Texas)--According to the World Bank (Washington, D.C.), reconstruction of the Sena railway line in Mozambique is on track and the rail link will be reopened for commercial traffic in early 2010. The World Bank is partly funding the $200 million project. The 665-kilometer rail line links the Moatize coalfields in the Tete province to the Beira port at the Indian Ocean.

The Sena rail line is a part of the Beira railroad, which was sabotaged during the country's 16-year civil war, lasting from 1977-1992. Renovation of the rail lines began in 2002, and the 128-kilometer stretch from Beira to Muanza was reopened last year for the first time after more than 20 years of closure. Construction of the Muanza-Moatize section is slated for completion this September, following which comprehensive testing will be conducted. The line is planned to be open to general traffic by early 2010.

The Sena railroad is of paramount importance in coal transportation from the rich fields of Moatize to the Beira port for export purposes, and completion of the line will help boost the country's battered economy. The port is designed to handle between 12 million and 15 million tons of coal per year. The coalfield is estimated to produce nearly 40 million tons per year, but the Sena rail line is capable of transporting only 8 million tons of coal. It is estimated that an additional investment of about $250 million-$280 million would be required to increase the transportation capacity of the rail line.

The World Bank has funded more than 50% of the total project cost by providing $104.5 million and is considering lending an additional amount of $45 million. The remainder is being financed by the CCFB consortium, which consists of RITES Limited (New Delhi), Ircon International Limited (New Delhi), and state-owned railway company Portos e Caminhos de Ferro de Mocambique EP (CFM) (Maputo, Mozambique). RITES, earlier known as Rail India Technical and Economic Services, and Ircon are subsidiaries of Indian Railways and jointly hold a controlling stake of 51% in the project. RITES is the majority equity partner in the international consortium with a stake of 26%, followed by Ircon with a stake of 25%. CFM holds a stake of 49% in the project. RITES and Ircon have jointly financed $20 million for the project as equity. The consortium was awarded the contract for construction and rehabilitation of the line in September 2004 and will operate the railway line for 25 years once it reopens next year.

The Tete province has vast reserves of unexplored coalfields with estimated reserves of approximately 3.6 billion tons, which are attracting many multinational companies for exploration and production projects. Companhia Vale do Rio Doce (NYSE:RIO) (Rio De Janeiro, Brazil), a leading multinational mining company, is constructing a coal project in Moatize at a cost of $1.3 billion. The mine will have a capacity to produce 11 million tons per year of coal. Apart from Vale, Riversdale Mining Limited (ASX:RIV) (Sydney, Australia) and Central African Mining and Exploration Company plc (LSE:CFM) (London, United Kingdom) have also obtained mining licenses in the region.

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