Construction of the US$1 billion joint venture North West Rail venture planned to take off next March and will be cardinal in resolving the transportation hurdles faced by mining companies in north western Zambia.
North Western Rail Limited and Grindrod Limited have signed a joint venture agreement to construct the more than 580 kilometre rail line to link Zambia with Angola, after months of planning.
North Western Rail Limited Executive Chairman Enoch Kavindele says the finalization of the agreement with Grindrod Limited is a breakthrough in resolving the transportation problems faced by mining companies-chiefly in north western Zambia.
“It’s a great achievement to have the project finally take off,” says Kavindele. “We hope to start the construction of the first phase by March (2014),”
Kavindele was speaking in an interview, Wednesday with Zambian Mining Magazine on the sidelines of 20th Mining Indaba in Cape Town, South Africa, being held on the theme: Investing in African Mining which has drawn over 1,800 participants’ globally.
The agreement has been cemented with Grindrod Limited under exclusive rights granted to NWR by the Zambian government in July 2006. The partnership will allow the developers conclude a bankable feasibility study now under way.
In recent years, Lumwana mine, a unit of Barrick Gold and Kansanshi Copper Mine, a subsidiary of First Quantum Minerals Limited, among others, have solely relied on roads to transport copper concentrates to refineries on the Copperbelt, leaving serious degradation of the road infrastructure.
The railway facility, which has lacked in the area, will undoubtedly alleviate the wear and tear of the road network.
The more than 100-year-old Zambia Railways Limited has no infrastructure in North Western Zambia and other areas of the country, a situation that has contributed to the rapid tear and wear of the road network because of maximized usage in the transportation of bulk material.
Kavindele envisages that the agreement will reduce the toll on the road infrastructure in the north western province where mining companies are compelled to hire trucks to ferry their concentrates to copper refining facilities.
It is envisaged by developers that the 590 kilometre railway project when completed will link Zambia with Angola up to Jimbe Port.
The first 290km first phase of the railway project will run from Chingola to the Kansanshi, Lumwana and Kalumbila mines in north western Zambia, at an estimated capital cost of $489 million.
The second phase, to gobble about $500m, will connect with the Benguela line on the Zambia-Angola border near Jimbe. This phase will open a direct corridor to Lobito.
This railway link will allow landlocked Zambia to import oil directly from Angola and to stimulate further mining activity in the western copper belt region.
KPMG’s infrastructure and major projects team have developed the project with NWR over the past one year and facilitated the closure of the deal.
Dave Rennie, the chief executive of the Grindrod Freight Services division, hopes the conclusion of the project will allow Grindrod to extract synergies from its existing investments in the north-south rail corridor and its port operations in Maputo, Richards Bay and Durban.
The copperbelt straddled the border of northern Zambia and southern Democratic Republic of Congo and was one of the richest and most underdeveloped geological regions in Africa.
The rail line venture, upon completion, will enable Lumwana and Kansanshi mines cut costs on transportation
“The first locomotives will be ready to carry copper concentrate in 18 months,” Kavindele had earlier envisioned.
Last year, the Government was forced to enact a law, introducing a toll-road system due to the heavy wear and tear on the infrastructure. This will help to raise the much needed resources to maintain the road infrastructure.
Finance minister Alexander Chikwanda has in his 2014 budget set aside US$120 million to upgrade Zambia Railways Limited infrastructure and reduce the effect on roads.
Grindrod Group of Companies, the Johannesburg Stock Exchange listed company has various subsidiaries, joint venture and associated companies in 37 countries worldwide.
It has a labour force of more than 7 000 skilled and dedicated people. It views empowerment, transformation and education as an important aspect of its corporate responsibility.
It operates Freight, Trading, Shipping and Financial Services – provides operating and marketing synergies locally and internationally in its pursuit of becoming a fully integrated freight, logistics and shipping service provider.
Grindrod continues to invest in assets and opportunities across the four operating divisions with specific focus on dry bulk and bulk liquid commodities, containerised cargo and vehicles.
It envisions remaining a dominant and profitable freight service provider, focusing on infrastructural development on the African continent-hence laying the ground for the development of the North West Rail company Limited.