Grindrod Unit, Northwest Rail Sign $989 Million Zambia Line Deal

Zambia’s Northwest Rail Company Ltd. has signed an agreement with South African transportation company Grindrod Ltd. (GND) to build a railway connecting mines owned by Canada’s Barrick Gold Corp. (ABX) and First Quantum Minerals Ltd. (FM)

Work on the $989 million project, which will also connect mines in Africa’s biggest copper producer to the Angolan border, should start this year, Grindrod said today in an e-mailed statement.

“I have been developing this project for a number of years and the synergies with Grindrod’s rail businesses makes Grindrod an ideal partner in the joint venture,” Enoch Kavindele, Northwest Rail’s founder, said in the statement.

The first phase of the 590-kilometer (367-mile) line will link mines at Lumwana and Solwezi with smelters in Chingola, lowering transportation costs. Phase two of the project will combine with Angola’s Benguela railway that runs to the Lobito port. Last month the Tanzania-Zambia Railway Authority signed a deal with Trafigura Beheer allowing the commodity trader to run its own trains on a line connecting Zambia with Dar es Salaam, the Tanzanian commercial capital.

Northwest Rail received environmental approval to build the railway in May, and had initially planned to start construction by December. A bankable feasibility study on the line is under way, Grindrod said.

Most of Zambia’s copper is taken by truck to ports at Dar es Salaam and Durban in South Africa. Moving the metal by rail will probably be cheaper as trains use less energy. The line to the Angolan border will also allow Zambia to import oil from Angola, Grindrod said.

To contact the reporter on this story: Matthew Hill in Lusaka at mhill58@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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