Local media reported that mining giant Vale has signed a rail concession contract with the Malawian government allowing it to build and operate a new railway across southern Malawi.

The agreement was signed by Malawian Transport Minister Mr Sidik Mia and the Director of Operations of Vale Mozambique, Mr Paulo Horta.

The new line is part of Vale's project to link the Moatize coal basin, in the western Mozambican province of Tete, to the port of Nacala. The new line will run from Chikwawa in the far south of Malawi for 137 kilometres to Nkaya Junction, where it will meet the existing line to Nacala.

The Vale release states that, in addition to the general benefits of regional economic integration, the line will provide jobs for Malawians in the construction phase, and will hire local companies to provide goods and services.

The line will be used not only to carry coal from Vale's open cast mine in Moatize but also Malawian exports and imports.

To complete the railway will require rehabilitating the existing line from Nkaya to Nayuci on the border with the Mozambican province of Niassa.

This line is currently operated by Central East African Railways. Vale owns 51% of the shares of Mozambique's Northern Corridor Development Company, which in turn owns 51% of CEAR.

Currently Vale is exporting coal from Moatize via the Sena railway which runs from Moatize to the port of Beira. But with other companies also planning to exploit the massive reserves of coal in Moatize, it is clear that the Sena line and the Beira coal terminal will be woefully inadequate. Even if the Sena line's capacity were to be doubled it could still not carry more than 12 million tonnes a year. And the estimate of Mozambican Transport Minister Paulo Zucula is that by 2020 the country will be producing 100 million tonnes of coal a year.

Nacala is an attractive alternative, since it is regarded as the best deep water port on the east African coast. Unlike Beira, it does not require dredging and can accommodate ships of any size.

(Sourced from Agencia de Informacao de Mocambique)