Ministry of Transport Works Supply and

“From a landlocked to a land linked Zambia”
CHINGOLA-SOLWEZI-JIMBE RAILWAY LINE
Presented by
Ministry of Transport Works Supply and
Communications
and
October 2013
Presented to
PUBLIC-PRIVATE DIALOGUE FORUM
Johannesburg, South Africa
Outline…..
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INTRODUCTION
REGIONAL MAP AND POSITION OF ZAMBIA
PROJECT TYPE
PROJECT IMPORTANCE TO SADC INFRASTRUCTURE
STAGE OF DEVELOPMENT
LEVEL OF ENGAGEMENT OF KEY ACTORS
CHALLENGES & FINANCIAL REQUIREMENT
CONCLUSION
DEVELOPMENT OF INTERNATIONAL ‘SPOKE & HUB’ TRANSPORT
LOGISTICS CENTER AND INLAND PORTS
1. Introduction.....
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Zambia is strategically poised at transforming its geographic absolute advantage of being a
landlocked country to being landlinked.
From its eight neighbouring countries, Zambia appreciates the regional economic confidence and
support it gets as exemplified here by SADC and the NEPAD Business Foundation in according us
the opportunity to present our vital jigsaw puzzle pieces to the SADC Regional Infrastructure
Development Master Plan.
The Chingola Solwezi Jimbe Railway Line is one of the main priority Zambian infrastructure
development projects which not only stands as a derived demand transport infrastructure project
from the increasing economic and more especially mining activity sectors but an essential rail link
for trade and regional development between Angola and Zambia, AND GETWAY TO THE WEST
To realize the benefits of this project and indeed other projects, the Government of the Republic
of Zambia has acknowledged the need to appropriately engage potential partners and investors .
To this effect, we have an established legal and institutional frameworks to guide our partnerships
and collaboration, i.e. the Zambia Development Agency Act and the Public Private Partnership Act
of 2009 among others.
Chingola Solwezi Jimbe Railway Line is thus being proposed for development, construction and
operation on a Public Private Partnership basis.
With an estimated internal Rate of Return of 15% at a project cost of USD$ 1.1 billion the project
has been evaluated to have positive Net Present Value.
Its direct benefits amongst others include providing the shortest rail link and export route for the
SADC Region through Port Lobito, importation of refined oil products from Angola, reduce
regional transport cost by providing a more competitive and appropriate transport mode for the
SADC bulk cargo for both imports and exports.
Our project plans are alive to the rehabilitation of Port Lobito and the railway network in Angola,
our commitment to SADC and more especially the Regional Infrastructure Development Master
Plan (RIDMP) on the Lobito Development Corridor.
PROJECT LOCATION.....
• Phase 1 – Chingola-Solwezi-Lumwana-Kalumbila freight rail link (through to Kalumbila)
• Phase 2 – Connecting Kalumbila to the Zambian border with Angola at Jimbe and linking to
Benguela Railway
2. Project Type.....
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The Chingola-Solwezi to Jimbe Railway Project is in phases. Phase one involves the
construction of rail line project from Chingola in the copperbelt of Zambia to Solwezi in the
NW Province. Phase two in involves undertaking detailed and full feasibility studies and
design, engineering, procurement and construction of the rail line from Kalumbila to Jimbe.
The project aims at connecting the Zambian railway network from Chingola were it currently
ends, to the Angola railway network, yet to be brought to border town of Jimbe. The rail link
pronounces the economic viability of Port Lobito as it will appropriately serve as the main
transport mode for freight cargo to and from Zambia and Democratic Republic of Congo.
Therefore, the Chingola-Solwezi to Jimbe Railway link affirms the impetus of the Lobito
Development Corridor as it shall provide an alternative import and export route for Angola,
Zambia, Democratic Republic of Congo and the entire SADC member states with South and
North American countries and other Atlantic Ocean bordered countries .
This railway project has an estimated total length of 640 km of which the first 290 km from
Chingola to Solwezi has had an aerial route survey and a detailed environmental impact
assessment conducted. The construction of this surveyed component of the project has
been estimated to cost USD$470 million. The remaining segment from Solwezi to Jimbe with
estimated length of 350 km shares a similar plateau land scape and environment and has a
preliminary construction cost estimate of USD$630 million. Thereby bringing the total
project cost to USD$ 1.1 billion for a complete 640km railway spur.
The Government of Zambia commits to construct, develop and operate this line on PPP basis
3. Project importance to SADC .....
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SADC has two prominent ports on the Atlantic Ocean cost- The Port of Walvis Bay in Namibia
and the Port of Lobito in Angola both of which are being developed as the main import and
export points for SADC trade cargo with players on the Atlantic Ocean market.
The Ports are currently served by road networks which are increasingly being congested, and
posing an environmental hazard in terms of pollution, traffic accidents and other social
undesirable such as the HIV and AIDS and other communicable diseases. With the Ports
currently trading at over 4.5 million tonnes per annum with about 300 ship calls per month,
the road has become an inappropriate transport mode to meet the demand capacity.
SADC region now requires reliable and environmentally friendly transport services with
capability to safely transport its bulk and heavy exports (minerals and other primary
products) whilst at the same time importing, bulk, equipment and materials for its
development.
The Chingola-Solwezi to Jimbe Railway Projects is the identified solution with respect to the
Port of Lobito. The economic benefits thereof are cost effective transportation of heavy
freight, reduced maintenance costs for the road infrastructure, reduced transit times as well
as cost of moving goods whilst also allowing importation of fuel at lower cost. The Railway
project will also provide considerable employment opportunities both during and after
construction. The Project with thus enhance regional trade competitiveness.
The two Governments of Angola and Zambia have committed to realizing this project as
agreed in the Lobito Development Corridor Agreements. Their commitment is also attested
by the current railway developments in the two countries.
4. Stage of Development.....
The project is being considered in two phases. Phase 1 (290km) essentially connects Zambia’s
emerged mining areas of Solwezi, Lumwana and Kalumbila to the Zambia railway network at
Chingola. The following milestones has been achieved to this effect:
• A Concession Memorandum of Understanding has been signed between Government and a
local private sector developer (North West Railway Co. ltd.);
• A Rail Construction permit was issued to North West Railway Co. Ltd;
• An Investment License has already been issued by the Zambia Development Agency;
• Aerial route Survey and EIA (approved) was conducted
• Detailed preliminary capital cost assessment performed estimates -10% to +30%
• Strong letter of intent to participate in the Project from an Operator and Rolling Stock
supplier;
• Strong letter of commitment from potential off-takers (FQM & Barrick)
Construction of Phase 1 is expected to commence in 2014 and be completed in not more than 2
years.
Phase 2 of the project requires a detailed feasibility, engineering design study though is has
been preliminarily estimated to be 350 km. Considering that the land scape and geographic
features around phase 2 are similar to phase 1, the cost estimate for Phase 2 is USD$630 million.
5. Level of engagement of key actors…..
• At regional level, Zambia has expressed its commitment
towards this project through its support of the SADC RIDMP
and more specifically the Lobito Development Corridor
Agreements.
• Between Angola and Zambia, there will be need, at an
appropriate time, to revise their railway bilateral
agreements.
• For the purpose of PPP engagement, Angola and Zambia
will need to harmonise their respective legislation.
• Committed to provide the required land resource for the
project.
• Consultation with the local leadership is on-going.
6. Challenges & Financial Requirments..
• Phase 1 funding requirements include capital expenditure of USD
$470 million. Whereas Phase 2 has been estimated to cost USD $630
million.
• According to KPMG Service Limited, for Phase 1, the project is
expected to yield an approximately 15% internal rate of return based
on a USD2 to 2.5 million per 1% shareholding calculation. The project
currently requires USD 10 million to take it to bankable feasibility and
or financial close.
• Phase 2 detailed feasibility and engineering design can be conducted
at an estimated cost of USD $ 6 million and will require collaboration
with the Angolan government especially with respect to the segment
at which the project crosses the border.
• In this regard, SADC is anticipated to prudently facilitate the process.
CONCLUSION…….
• We have all the confidence and optimism of actualizing the ChingolaSolwezi to Jimbe Railway Line;
• The SADC member states have expressed their support for this project as
coined under the Lobito Development Corridor initiative facilitated by the
SADC Secretariat;
• The Lobito rail line project connecting Zambia to the Port of Lobito in
Angola is to get an US$18 million funding from the African Development
Bank (AfDB) to facilitate regional and international trade for bulk cargo
such as copper whose production is projected to rise to more than a
million tonnes by 2015.
• The project will significantly improve not only Zambia’s economic
development but Angola’s as well.
• We look forward to your continued support and partnership towards
realization of this project
THANK YOU!!!