Grindrod to Build $989 Million Zambia Mine Railway Route

Northwest Rail Co. of Zambia agreed with Grindrod Ltd., a South African transportation company, to build a $989 million railroad connecting mines owned by Canada’s Barrick Gold Corp. and First Quantum Minerals Ltd.

Work on the project, also connecting Zambian mines to the Angolan border, should start in 2014, Grindrod said today in an e-mailed statement. Zambia is Africa’s biggest copper producer.

“We have taken an equity stake in Northwest Railway,” James Holley, chief executive officer of Grindrod’s rail unit, said by e-mail, declining to give the size or cost of the share.

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

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

Mining companies in North-Western province have also shown interest in buying a stake in the rail company as has the state, Kavindele said by phone from Lusaka, Zambia’s capital.

Northwest Rail received environmental approval to build the railroad in May and had initially planned to start work on it by December. A bankable feasibility study is under way and first trains should be operational by 2016, Holley said. “We will be taking the project to the debt markets to raise funding.”

Most of Zambia’s copper is shipped by truck to ports at Dar es Salaam and Durban in South Africa. The railroad will likely be cheaper because less energy is used. The line to the Angolan border will also allow Zambia to import oil, Grindrod said.

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