The leaders of three southern African nations signed a deal to proceed with a rail and port project to help land-locked Botswana export its massive coal reserves through a Mozambican port, though they still need to find the money to make it happen.
The African Development Bank has agreed to finance a feasibility study for the project, at a cost of about $4-million, Mateus Magal, Mozambique’s transport and communications minister, said on Friday at the signing ceremony broadcast over state television.
The project involves upgrading existing railway lines running through the two countries and Zimbabwe and building new connections. It includes a new deep-water port south of Mozambique’s capital, Maputo, near a national park home to elephants and cheetahs.
STRANDED ASSET
Botswana has around 212-billion tons of coal reserves, according to the World Energy Council, and is eager to find ways to get it to markets before the world’s efforts to transition to renewable energy renders it a stranded asset.
The plan — which has been around for decades without gaining much traction — faces major hurdles. Financing for new coal projects has become increasingly scarce, as banks shun the dirtiest fossil fuel.
In Mozambique, Ncondezi Energy had planned a 300 MW coal power plant in the centre of the country. It signed a construction contract with China Machinery Engineering Corp. in September 2021, hoping Chinese financing would follow. It didn’t.
The same month, President Xi Jinping announced his government would no longer fund foreign coal projects. And after months of uncertainty, Ncondezi ultimately dropped the coal project and reinvented itself as a solar power developer. Last year, it changed its name to Solgenics.