BergerWorld: 3rd Quarter 2008

Moatize (population 39,073) is located near the Zambezi River in Mozambique's Tete Province. The Moatize coal deposits represent a large, valuable resource, and in recent years, the Government of Mozambique (GOM) has sought to construct a coal mine in Moatize to export coal via rail to the Port of Beira. However, the lack of a functioning railway line and coal terminal at the port has deterred GOM's efforts. In response, GOM selected Brazilian firm CVRD to undertake a feasibility study for the extraction of coking coal and other products from the Moatize coal fields. Completed in 2006, the feasibility study recommended constructing an open-cast coal mine projected to produce 12 million metric tons annually over a 35-year concession period. The coal would be transported along the rehabilitated 575-kilometer-long Sena Line railway, which has been badly damaged after 20 years of civil war and disuse, to a new greenfield coal terminal for export.

GOM had previously granted a concession to a consortium led by the Indian railway operator RITES to rehabilitate and upgrade the Sena Line and operate it to transport coal, other commodities and passengers. When the mine and railway concessionaires were unable to come to terms on a mutually agreeable tariff, GOM and the World Bank retained the Louis Berger Group to carry out an independent assessment of the proposed operation and develop a framework for establishing an equitable tariff. Berger experts utilized a train performance calculator to model an intensive operation over difficult terrain; developed a tariff estimation model; conducted benchmarking with major coal railway operations throughout the world; and recommended a tariff framework based on the premise of full cost recovery. The analyses and tariff model are now available for GOM to analyze different operational scenarios and facilitate an agreement between the mine and rail concessionaires.