Green light for DP World’s $2bn Mozambique port expansion

Mozambique approved an extended deal for DP World Ltd, Grindrod Ltd, and other operators of its biggest port, including a $2 billion expansion that will further draw cargoes away from neighbouring South Africa’s creaking trade infrastructure.

The group, which also includes Mozambique’s state-owned railway operator, won a 25-year extension to run the port in Maputo, the capital, ending in 2058.

Read: Logistics crisis: Neighbours eat SA’s lunch

The Council of Ministers approved the deal on Tuesday, according to a statement. The agreement includes investments of nearly $1.1 billion by 2033 when the original concession was due to end.

Maputo’s port has grown rapidly in recent years, as it caters to demand from Mozambique’s growing economy and exports from neighboring South Africa. Miners of coal, chrome and magnetite, a type of iron ore, have been sending increased volumes by truck to Maputo as snarl-ups at South Africa’s state-owned rail and ports company Transnet SOC Ltd.’s have cost them billions of dollars in lost revenue.

Capacity at the port is set to increase to 54 million tons per year by 2058, from 37 million tons this year, according to the extended concession agreement. That includes expanding a coal terminal in Matola next to Maputo to 18 million tons yearly, from 7.5 million tons. Annual shipping-container capacity will almost quadruple to a million units over the same period.