Ethiopia, China Communications in $1.5 Billion Rail Deal

Ethiopia signed a $1.5 billion agreement with state-run China Communications Construction Co. to build a railway to carry potash from mines being developed in the nation’s northeast.

The 360-kilometer (224-mile) line will transport passengers and freight along a route to neighboring Djibouti’s Tadjourah port, which is being built. It should be completed by July 2015, Ethiopia’s Foreign Ministry said in a statement posted on its website yesterday.

CCCC (1800), a Chinese government-owned transportation infrastructure company, will be “mobilizing substantial resources to guarantee completion of the project,” the ministry said, citing the company’s vice president, Zhou Yongheng.

Ethiopia, sub-Saharan Africa’s second-most populous nation, is in the middle of a five-year plan to modernize and upgrade its infrastructure and industries. The government last year signed two agreements with Chinese companies to build a 4,744- kilometer (2,948-mile) rail network to Djibouti.

Landlocked Ethiopia lost its access to the sea after Eritrea voted for independence in 1993. The new rail line will run between the cities of Mekele and Hara Gebaya.

Canada’s Allana Potash Corp. (AAA), Sainik Potash Plc of India, Ethiopian Potash Corp. (FED) and Melbourne-based BHP Billiton Ltd. are all developing projects to extract potash, a fertilizer ingredient, in the Afar region.

To contact the reporter on this story: William Davison in Addis Ababa at wdavison3@bloomberg.net

To contact the editor responsible for this story: Bryson Hull at bhull5@bloomberg.net

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