Malawi’s Minister of Transport Sidick Mia has said government has signed a $1 billion deal with Brazil’s Vale for the construction and rehabilitation of a rail line that will transport 18 million tonnes of coal from Mozambique.
Vale Logistics, a subsidiary of mining giant Vale, will build a new 138.5 km (86 mile) line from Chikhwawa in the south, to meet an existing line at Balaka.
“Vale will invest about $1 billion in Malawi over a period of three years for construction and rehabilitation of the railway line,” Mia said, according to Reuters.
The Minister said the Brazilian company “is expected to employ 4,500 workers of which 70 percent will be Malawians.”
Vale will also rehabilitate 98.6 km of the existing link between Nkaya to Nayuchi.
Once the required rehabilitation is undertaken, a train would only take 38 hours to travel between Nacala and Limbe at an average speed of 50 to 70 kilometres per compared to the present when it takes 5 to 7 days with the train travelling at 15 to 20 kilometres per hour.
The railway will have annual haulage of at least 5 million tonnes of general Malawian cargo.
“It’s expected that Malawi will be saving in excess of $120 million annually in transportation costs and this has an overall effect of reducing the transport costs of goods to and from Malawi by about 40 percent,” Mia said.
Ministry of Transport’s Director of Planning Victor Lungu said implementation of the rehabilitation would span 3 years and Malawi would be collecting revenue worth $8 million per annum in concession fees from the Vale Mining.
Vale’s interests include coal mining at Moatize in Mozambique’s Tete Province and they have already constructed the railway from the are to Beira.
A source who is familiar with Malawi-Mozambique transport systems said in an interview that the deal present several advantages.
” Malawi’s transport costs that are always high can go down by over 40 per cent. It just require a quick thinker to have this work to their advantage,” said the source.Follow and Subscribe Nyasa TV :