Mozambique Ports and Railways sells US$106 million in shares

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Mozambique Ports and Railways sells US$106 million in shares

3:26 CAT | 02 Aug 2016

File photo / Maputo railway station

Mozambique Ports and Railways and Ports sold US$106 million-worth of shares, but the deal, according to Minister of Transport and Communications Carlos Mesquita, does not mean the definitive sale of its assets.

“CFM owns all rail and port assets in the country, with concessions granted within well-established programs with a period of validity. The assets in question are to be returned to the company in accordance with the provisions in the agreement and the law of public-private partnerships,” explained the minister.

The shareholder restructuring aims to facilitate logistics in various segments of the Moatize coal value chain, including the terminals at Nacala-a-Velha in the north and general cargo and passenger rail services.

“To allow the implementation of the new investment model in the Nacala Logistics Corridor, which requires massive investment, we conducted a feasibility study to evaluate various scenarios in order to get a clear perspective on the impact that each partner may have from the point of view of insertion of capital, or even dividend insertion,” the minister explained.

“This all happened at a time when the price of coal was around 140 to 150 dollars per ton. Reality shows that, in recent times, this scenario was reversed due to the global financial and economic environment, with particular emphasis on commodity prices, including coal, natural gas, petroleum, nickel, among others,” he said.

According to the minister, this assumption substantially changes the results of the various financial models that had been studied. “Vale Mozambique continues to operate at a loss, creating the conditions for the government to accept the sale of part of its stake in the Moatize mine to a strategic partner,” Mesquita said.

Japanese multinational Mitsui is to acquire part of Vale’s participation including the rail project, so ensuring production flow during the current period of low commodity prices.

In the minister’s opinion, Mitsui’s participation, as one of the main customers, reassures the government of its continuing presence in the business chain, and brings to the project funding in the order of US$3 billion, of which US$2 billion is for supply chain transportation and coal production in Mozambique.

“The balance of the funding will go to the coal production and transportation chain from Moatize through Malawi to the port of Nacala,” Mesquita concluded.

Source: AIM