Bringing Central Africa’s Minerals To Port

Via STRATFOR (subscription required), analysis of how several southern African nations are competing to bring minerals produced in Africa’s landlocked regions to ports along the coastline:

A freight train at South Africa’s port of Durban.

Summary

A competition is developing among several southern African nations to bring minerals produced in Africa’s landlocked regions to ports along the coastline. The prize for the competing nations is Katanga province, a mineral-rich region in the Democratic Republic of the Congo, and Zambia’s Copperbelt province. Currently most of Katanga’s mineral exports pass through South Africa and Tanzania, but efforts are underway to redirect some of this traffic to Angola and Namibia. Of course, the success of these efforts depends partly on the completion of various infrastructure development projects. But if successful, they could produce new, dependable export corridors in countries that sorely need the revenue and the commercial opportunity such trade routes create.

Analysis

The Katanga and Copperbelt provinces are awash in minerals. Katanga produces 580,000 metric tons of copper per year and about 60,000 metric tons of cobalt per year. Zambia produces about 675,000 metric tons of copper per year. Together they account for 7 percent of the world’s copper production and roughly half the world’s cobalt.

Mineral producers would prefer to transport their wares by rail, which is much cheaper than road transport. But with its vast rain forests, central Africa’s geography is ill suited for the requisite infrastructure. There are a few exceptions; minerals sometimes are shipped by rail through Zambia to the Tanzanian port of Dar es Salaam. Given the geographic constraints and the reliability of South Africa’s export infrastructure, minerals produced in Katanga and Copperbelt typically are transported by road through Zambia and Botswana to the South African port of Durban.

With a more efficient transport system, Katanga and Zambia could export larger volumes of minerals, assuming their respective governments do not interfere too much. Africa already is increasing its copper production, but perhaps even more noteworthy is the high quality of Katanga and Copperbelt’s ore. Indeed, it is as much as five times higher than the global average, even higher than the ore mined in Chile.

But Zambia and the Democratic Republic of the Congo also have some of the highest production costs in the world. This is largely a result of high energy prices — producers typically use diesel in their operations — and expensive transport costs. If producers could bring these costs down, the region’s copper would become significantly cheaper.

Potential Corridors

Export infrastructure connecting Katanga and Copperbelt to the African coast is concentrated along four transport corridors, each of which each want to become the favored transit route of central African mineral producers.

South Africa

With its extensive mining sector and the required export infrastructure, South Africa is an attractive option to link central Africa to the Indian Ocean. But no single railway connects to the two areas, and the sheer distance from Katanga and Copperbelt to Durban creates problems. As a result, mineral producers have to transport their products across more than 3,500 kilometers (2,175 miles) of roads.

Though the route is long, it is at least reliable. It suffers from few disruptions, which is more than can be said for other routes. Thus, the Durban route is currently the most suitable.

 Tanzania

A smaller proportion of central Africa’s mineral exports reach the Indian Ocean through Dar es Salaam, Tanzania’s economic hub. The port is connected directly to Lubumbashi, Katanga’s mining capital, by about 2,500 kilometers of rail that pass through Zambia. However, exports are constrained by capacity issues at Dar es Salaam, which can only accommodate vessels with a draft of fewer than 10 meters (by comparison, Durban can accommodate vessels with 12-meter-deep drafts). The decrepitude of the Tanzam railway, which has seen little upgrade since it was built in the 1970s, also prevents central Africa from sending larger quantities of minerals to the Tanzanian coast.

While Tanzania recently has improved its transport infrastructure, it has directed most of its efforts toward the corridor that connects Rwanda, Burundi and Uganda to the Indian Ocean coastline. The infrastructure therein does not service Katanga and Copperbelt. Still, upgrades to the central corridor have led to calls to expand Dar es Salaam’s port capacity, which would in turn benefit Katanga and Copperbelt. Japan, for example, has expressed modest support for such a project, though no specific plans have been put forth.

Namibia

Namibia’s Walvis Bay port is not a traditional destination for central Africa’s minerals. But recent initiatives to further develop a Walvis Bay corridor that links directly with Katanga through Zambia show Namibia’s desire to change this trend. Aside from Zambia’s lackluster rail networks, the biggest drawback for this route is the utter lack of railways in Namibia’s Caprivi region. This narrow stretch of land is the only direct connection between Zambia and Namibia and currently depends on the Trans-Caprivi road to connect Zambia’s rail network to Namibia’s inland rail network, which eventually connects to Walvis Bay.

The Walvis Bay Corridor Group recently announced that construction would soon begin on a road that will shorten the travel distance through the Caprivi region from 1,200 kilometers to 800 kilometers. The group also plans to spend $300 million to expand the port starting in 2014. However, these projects will only marginally increase Katanga’s connection to Walvis Bay. A railway would have much greater advantages, and though feasibility studies have been conducted to that end, several years will pass before construction could even begin.

Even if Namibia completes these projects, its connection to the central African mining industry will still depend on the state of Zambia’s rail network and on the political will to remove other inefficiencies along the route. Zambia has announced plans to invest $1.8 billion to overhaul its railroad infrastructure over the next five years, but the success of this project remains to be seen.

Angola

Angola’s Benguela rail line, which connects Katanga and Copperbelt to the port of Lobito, was constructed in the early 20th century as a way to tap into Katangan wealth. But the line fell into disrepair in the mid-1970s as civil war broke out in the country, leaving Benguela neglected in both Angola and the Democratic Republic of the Congo. So while Luanda has invested in Benguela’s improvement, the feasibility of a new line also depends on the willingness and ability of the Congolese to refurbish their portions of the rail lines. If completed, the Benguela line through Angola would eventually offer the shortest route to the coast.

The World Bank already has provided the Democratic Republic of the Congo with $280 million to upgrade these and other railway links to Katanga, but its rail operator is still courting private investors for the $200 million needed to complete the project. The purchase of materials and equipment has already started, but even when financing comes through, the project will require another four or five years for completion.

Remaining Issues

Clearly, none of these projects are coming online anytime soon. But when they do, they could begin to compete with the existing transport routes in South Africa and Tanzania. This is especially true for projects in countries along the west coast that see a proportionately smaller amount of Katanga’s mineral exports. Of course, efficiency will always remain an issue; border and port customs, political encroachment and financing will always play a role. In the meantime, central Africa will remain dependent on the corridor running through South Africa.



This entry was posted on Tuesday, October 29th, 2013 at 3:59 am and is filed under Uncategorized.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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