New Rail Link to Give Zambia Access to Angolan Port and Oil

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--A new rail link that has the potential to create an Atlantic gateway to Central Africa through the port of Lobito will be built, operated and maintained by Grindrod (PNK:GRDLI) (Durban, South Africa), in cooperation with Zambia's Northwest Rail Company (NWR).

The first phase of the project, estimated at $489 million, will run from the mining center of Chingola, on Zambia's Copperbelt, to the Kananshi, Lumwana and Kalumba mines, and will service existing ore and finished copper traffic. The second phase, estimated to cost $500 million, will connect with the existing Benguela rail line on the Angolan border near Jimbe. This will allow Zambia, which is landlocked, to import Angolan oil and will stimulate mining activity in the western Copperbelt region.

The exclusive rights for the rail line were granted to NWR in July 2006. After signing the agreement on Monday, the two companies will move to conclude the project's bankable feasibility study, which is under way. An infrastructure and major projects team with professional services and advisory firm KPMG has developed the project with NWR during the last 12 months and facilitated the closure of the deal.

Grindrod's rail division operates railways; builds, refurbishes and maintains locomotives; provides rail signaling systems; and builds and maintains track infrastructure. Investment in the Zambian project will enable the company to extract synergies from existing investments in the North-South rail corridor, and port operations in Maputo, Richards Bay and Durban.

Zambia's existing copper mines are located in the eastern Copperbelt and are serviced by smelter near Chingola and Lubumbashi in the Democratic Republic of Congo (DRC). New mine development has started in the central and western Copperbelt and more are in the pipeline, which will require the ore to be transported up to 300 kilometers (260 miles) for processing. The new rail line will provide a cost-effective alternative to road transport and will be much less damaging to the environment.

For related information, see June 29, 2011, article - Tanzania Plans Rail Infrastructure to Release Massive Mineral Resource Potential.

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