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Race To The Middle of Africa

Race To The Middle of Africa

Chinese firms win $9bn Tanzanian rail scheme amid East African transport boom

Tanzania has awarded rail contracts worth $9bn to a consortium of Chinese firms led by China Railway Materials (CRM), with construction to begin as early as this month.

Tanzania had signed a framework agreement with China Railway No 2 Engineering Group to build a rail link between the southern port of Mtwara and coal and iron ore developments being undertaken by a Chinese group, to the southern port of Mtwara near big offshore natural gas discoveries.

Chinese mining group Sichuan Hongda is involved in a $3bn joint venture with Tanzania to mine coal and iron ore.

Race to the middle of Africa

The quick start of the project reflects the race to develop rail and port infrastructure in east African countries.

In particular, Tanzania is competing with Kenya, its northern neighbour, to build rail links with the Great Lake states of Uganda, Rwanda, Burundi and, beyond them, the Democratic Republic of Congo (DRC) with all its undeveloped mineral wealth.

To the south, Mozambique is also developing infrastructure rapidly.

The country that completes its transport and export infrastructure first will be in a position to sign deals capturing the market for mineral exports.

Kenya and Uganda are both engaged in partnerships with Chinese rail builders. On the other side of the continent, the standard gauge Benguela line has already been constructed across Angola, linking the Atlantic with the DRC.

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Chinese_Contract_Tanzania_Railway

Tanzania set to boom

Tanzania’s ability to compete in this race reflects the country’s new-found bankability, which is founded on the recent discovery of offshore natural gas. It is expected that over the next two years, reserves of up to 2 trillion cubic feet will be established.

According to accountant PwC, Tanzania will shortly become one of the fastest growing economies in the world. It estimates that transport and power projects worth $19bn will shortly come to market.

Meanwhile, Tanzania is set to upgrade 10 airports in the present financial year in an attempt to keep pace with the country’s passenger and cargo traffic, which is growing at a rate of 20% a year.

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Source: Global Construction Review

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