Trafigura and Kamoa-Kakula agreed long-term commitments to transport minerals via the Lobito Atlantic Railway for a minimum term of six years – a deal that will help alleviate some of the mining truck congestion on South African roads.
The terms of the Reserved Capacity Agreements were signed during the Mining Indaba in Cape Town, and mark the first long-term commercial commitments to the Lobito Atlantic Railway, a new import-export trade route between the African Copperbelt and Angola’s Atlantic coast terminating at the port of Lobito.
Kamoa-Kakula produced 393 551 tons of copper in concentrate in 2023, much of which was transported by truck to Durban in South Africa or to Dar es Salaam in Tanzania.
This at a time South African roads are rapidly deteriorating due to elevated levels of mining trucks caused by Transnet freight woes.
The 2024 annual production guidance for Kamoa-Kakula is between 440 000 to 490 000 tons of copper in concentrate, following the anticipated completion of the Phase 3 concentrator during the third quarter of 2024, so there was a need to shift to the cheaper rail option.
The Lobito Atlantic Railway uses the rail bed of the 120-year-old Benguela Railway and its original design capacity was 20 million tons of cargo and four million passengers per year. The railway is Cape gauge, or 1 067mm (3 ft 6 in), so it can use locomotives and rail trucks from other railways in southern Africa.
In 1899, the Portuguese government initiated the construction of the railway to give access to the central Angolan plateau and the mineral wealth of the then Congo Free State and a 99-year concession was granted to Sir Robert Williams on November 28, 1902, and construction started on March 1, 1903.
In its heyday, the Benguela Railway was the shortest way to transport mineral riches from the Congo to Europe. The line proved very successful and profitable, especially in the early 1970s after Zambia closed its border with the then Rhodesia. The railway reached an operational peak in 1973 when it transported 3.3 million tons of cargo.
On July 4, 2023, the Lobito Atlantic Railway company secured a 30-year concession for railway services. This joint venture involved Trafigura, a Singapore-based company, Mota-Engil, headquartered in Portugal, and Vecturis, a Belgium-based rail operator. The concession agreement encompassed the entire 1 300km railway line in Angola, extending to the 400km line into the Democratic Republic of the Congo (DRC), and also includes any potential service extensions in Zambia.
The Lobito Atlantic Railway is expected to ramp up to an annual export capacity of one million tons per annum before the end of the decade. Trafigura’s allocation of export capacity on the Lobito Atlantic Railway will be up to 450 000 tons per annum from 2025.
In addition, the Kamoa-Kakula copper complex, a joint venture between Ivanhoe Mines and Zijin Mining, has been allocated a minimum capacity of 120 000 tons and up to 240 000 tons per annum of copper products.
The African Development Bank (AfDB) in October 2023 signed a Memorandum of Understanding (MoU), joining global partners to mobilise resources for the Lobito Corridor. Other signatories included the US, the European Commission, the Africa Finance Corporation, and the host governments of Zambia, Angola and the DRC.
The MoU outlined the partners’ intentions to collaborate to realise the full economic potential of the corridor. It also includes the construction of about 550km of rail line in Zambia from the Jimbe border to Chingola in the Zambian Copperbelt and the 260km of main feeder roads within the corridor.
The AfDB plans to contribute about $500 million (R9.4 billion) to the project through a blend of sovereign and non-sovereign instruments, including concessional allocations. The programme will create thousands of jobs and industrial opportunities for the private sector along the entire Lobito Corridor, connecting with Angola and the DRC.
BUSINESS REPORT