Unpacking the P4bn Mmamabule-Lephalale rail link project

The likelihood of the Mmamabule-Lephale rail link project coming to life seems more imminent than ever. For years, skeptical industry players have expressed doubt about the project coming off the ground because industrial projects elsewhere in Africa have been struggling to attract funding. Inspite of this, Botswana Railways and South Africa’s Transnet are willing to take a chance with construction of the 113km rail link from Mmamabule (Botswana) to Lephalale (South Africa)” by seeking funding from the private sector. [ihc-hide-content ihc_mb_type="show" ihc_mb_who="1,2,3,4" ihc_mb_template="3" ] “Approximately P3 billion or R4,11 billion of funding (based on pre-feasibility estimates) will be required to execute the project, excluding bankable feasibility costs,” documents in the form of an expression of interest show. According to the documents, Botswana Railways and Transnet are “seeking for suitable partners to fund, conduct and produce a bankable feasibility report for the Mmamabule-Lephalale rail link”. “This will constitute but not limited to all environmental approvals, land acquisition, detailed engineering designs, operating model, economic and financial analysis,” the documents indicate. Type of funding Botswana Railways and Transnet anticipate the development of the new railway corridor to increase the need for rolling stock (locomotives and wagons) to service customer needs. Botswana Railways and Transnet are also seeking for partners to provide information on how to deal with the additional rolling stock requirements to support the rail link and the increased volume. Potential investors should show how much they will be able to invest in the project, what type of funding this will be and what the investors will require from Botswana Railways and Transnet in order to invest in the project. The documents show that Botswana Railways and Transnet do not intend to contribute financially to project development due to limited resources. Since the link will be a “bridge” between BR and TFR’s networks, the partners should demonstrate how the link should generate revenue to repay investors. The documents say developmental projects of this nature take a long time to become financially viable, therefore the partners should be able to provide or recommend strategies to achieve financial viability. Components Botswana Railways and Transnet intend to develop the Mmamabule-Lephalale rail link as a turnkey project that will be enabled by rail network upgrades in Botswana and South Africa. The development of the new railway corridor will comprise the following deliverables: * Funding the development of Mmamabule-Lephalale rail link line on the 86km greenfield and 27km brownfield (partially built). * Construction of 86km greenfield railway from Mmamabule in Botswana, to the connection point at the Boikarabelo line in South Africa. Approximately 17.1km of the construction will be in South Africa inclusive of a bridge over the Limpopo River and 68.9km will be in Botswana. * Completion of 27km of the Boikarabelo line that is partially constructed from the connection point all the way to the Network Stabilising Facility (NSF), subject to the current owner’s consent. * Information on how to address the need for additional rolling stock for the project. Strategic initiative The Mmamabule-Lephalale Rail Link Project is a strategic initiative of Botswana Railways and Transnet to develop a new rail link from Mmamabule in Botswana to Lephalale in South Africa to facilitate trade within the region through transportation of bulk commodities. The initiative to develop the Mmamabule-Lephalale rail link dates as far back as 2011 when BR concluded a prefeasibility study of the section of the project in Botswana. TFR also carried concept studies of developing the rail link in South Africa. “Although some progress was made in developing sections of the link in South Africa, the development of the link is now being accelerated as a bilateral project that is supported by the governments of Botswana and South Africa,” the documents say. It is understood that the objective of the project is to unlock Botswana’s mineral resources by establishing a new railway corridor which will link the mines in Botswana to South Africa’s ports. A large portion of the corridor exists in both countries but requires development of the proposed rail link to complete it. The pre-feasibility study of the Mmamabule-Lephalale rail link is in progress and expected to be completed by September 2023. The route of the proposed Mmamabule-Lephalale rail link has been identified and will be approximately 113km long, with 68.9km located in Botswana and 44.1km located in South Africa. Adjoining rail networks The entire 68.9km in Botswana will be a greenfields development. In South Africa, 17.1km will be greenfields and 27km will be brownfields. The Mmamabule-Lephalale rail link will have a capacity of approximately 24 million tonnes per annum, operated at 20 t/a. The substructure should be designed and constructed at 26t/a and the superstructure may be constructed at 20t/a. In order to unlock the full capacity of the Mmamabule-Lephalale Rail Link, the adjoining railway networks will have to be upgraded. For Transnet, this will include upgrade of the lines in the Waterberg area (Stage 4) which will unlock mtpa. Secondly, the Multiple Purpose Terminal (MPT) in the port of Richards Bay will have to be upgraded to ensure port capacity to accommodate Botswana volumes. For Botswana Railways, this will include upgrade of the line from Morupule Coal Mine to Mmamabule (140 km), including building new crossing loops to accommodate additional volumes from the mine. The Mmamabule-Lephalale Rail Link will be operated as one seamless service with no stopovers at the South Africa/ Botswana border. Proposed approach Botswana Railways and Transnet intend to develop the Mmamabule-Lephalale Rail Link as one single project encompassing the work in Botswana and South Africa. The upgrades of the railway network in Botswana and in South Africa will be executed separately under the management of Botswana Railways and Transnet respectively. The development of the Mmamabule-Lephalale Rail Link project is supported by the Government of Botswana and the Government of South Africa. Botswana Railways and Transnet intend to develop the rail link in partnership with the private sector and other interested parties. Transnet and Botswana Railways are seeking interested and capable partners to develop the project. In order to minimise the risks of the project to potential partners, Transnet and Botswana Railways have committed to support the project by completing the pre-feasibility study of the project, obtaining their respective governments’ support for the project, and acquiring the land in Botswana only. The service provider will be required to acquire the land in South Africa. Lending their expertise to the project as logistics operators. [/ihc-hide-content]

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Unpacking the P4bn Mmamabule-Lephalale rail link project

Plans to develop the Mmamabule-Lephalale rail link date as far back as 2011 when Botswana Railways concluded a pre-feasibility study of the section of the project in Botswana

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Unpacking the P4bn Mmamabule-Lephalale rail link project

Plans to develop the Mmamabule-Lephalale rail link date as far back as 2011 when Botswana Railways concluded a pre-feasibility study of the section of the project in Botswana

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