China Railway in Talks on $30 Billion South African Bullet-Train Project

China Railway Group Ltd., the world’s second-largest publicly traded heavy construction company, said it is in talks with South Africa’s government for a $30 billion high-speed rail project between Johannesburg and the eastern port city of Durban.

Discussions are at an early stage and no funding is in place, China Railway Chairman Li Changjin said in an interview in Beijing today. China Railway has signed an agreement with Standard Bank Group, Ltd., Africa’s biggest lender, Li said.

Standard Bank and China Railway will “cooperate across a broad spectrum of opportunities,” the bank’s spokesman Erik Larsen said in an e-mailed response to questions. This will include “working together to develop infrastructure and funding solutions for African rail and infrastructure projects.”

South Africa’s government said in April it was studying the feasibility of a high-speed railway link between Johannesburg and Durban, South Africa’s busiest harbor. Driving the 566 kilometers (352 miles) between the two cities takes between five and seven hours, while a high-speed train would complete the trip in about three hours, according to the Transport Ministry.

South Africa is hoping Chinese state-owned banks can provide loans for the project, Li said on the sidelines of a China-Africa investment forum, while China Railway wants South Africa to contribute as much as 40 percent of the capital. Standard Bank sold a 20 percent stake to the Industrial & Commercial Bank of China in 2008 as part of a plan to profit from growing trade between Africa and China.

Africa’s first rapid rail line began operating on June 8 this year between Johannesburg’s main airport and the business district, with the project expected to cost 25.2 billion rand ($3.4 billion).

South African President Jacob Zuma is in China this week to discuss investment opportunities. At the talks today China’s Railway Minister, Liu Zhijun, and his South African counterpart signed a memorandum of understanding on cooperation for “railway-related matters.”

--Yidi Zhao in Beijing and Renee Bonorchis, Nicky Smith in Johannesburg. Editors: Bill Austin, Vernon Wessels.

To contact the Bloomberg staff on this story: Yidi Zhao in Beijing at Yzhao7@bloomberg.net; Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net.

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