Zambia Railways Seeks $350 Million From Bond to Boost CopperKamlesh Bhuckory and Matthew Hill
Zambia Railways Ltd. will seek at least $350 million from the government to boost copper shipped by train 20-fold in the southern African nation, host to mines run by Glencore Plc and Vale SA.
The rail company will ask the government for more than a third of the $1 billion Zambia raised in a Eurobond sale in April when it meets with officials in the first week of June, Chief Executive Officer Muyenga Atanga said in an interview in Johannesburg.
Most of the money will be used to increase the copper ore, concentrate and cathode hauled to 240,000 metric tons a month from 10,000 tons currently, by adding to capacity between mines, smelters and refineries, and extending lines to ports, he said.
Shipping metal by rail is cheaper than by road as Africa’s second-biggest copper producer seeks to almost double output of the finished metal to 1.5 million tons by 2016, according to Mines Minister Christopher Yaluma. Production rose 0.6 percent to 790,007 tons last year, according to the Finance Ministry.
Vedanta Resources Plc’s Konkola Copper Mines unit has begun moving its copper onto rail, while Barrick Gold Corp. and African Rainbow Minerals Ltd. also operate in the land-locked nation.
Proceeds from the $1 billion Eurobond maturing in 2024 will go toward the railways, roads and energy infrastructure, Fredson Yamba, secretary to the treasury, said on May 8. Finance Ministry spokesman Chileshe Kandeta didn’t answer two calls to his mobile or respond to an e-mail seeking comment. Yields on the dollar debt due in April 2024 fell 10 basis points, or 0.1 percentage point, to 5.71 percent, the lowest since May 15.
State-owned Zambia Railways this month began a trial route to Mozambique’s Nacala port through Malawi, the Zambia Daily Mail said May 9. The corridor is “very important” as it’s the shortest from the copper belt to a port, Atanga said yesterday.
With no line connecting Zambia to Malawi, freight has to be transported by road and loaded onto trains at Chipata at the Malawi border. Connecting the town to the Zambia line would cost $300 million, Atanga said, citing a study. Another line to Mpulungu port on Lake Tanganyika would cost $200 million and Zambia Railways is also investigating the option of connecting its network to Walvis Bay in Namibia to the west, he said.
Zambia Railways used the $120 million it received from the country’s debut $750 million dollar-bond sale in 2012 to raise cargo traffic by half, Atanga said. The company will transport 1 million tons of freight this year, he said. That’s in line with last year’s volume, according to a Finance Ministry report.