Lessons for SA in Lobito
On his way back to the White House from last week’s Mining Indaba in Cape Town, US President Joe Biden’s senior adviser on energy and investment, Amos Hochstein, stopped off in Lusaka for a gathering that was arguably more significant and tangible than the one in Cape Town.
This was the Partnership for Global Infrastructure and Investment’s (PGII) Lobito Corridor Investment Forum. The PGII was started by the Group of Seven a couple of years ago to fund infrastructure projects in developing nations. The Lusaka investor forum brought together 250 business and government leaders from Angola, the Democratic Republic of Congo (DRC), Zambia, the EU and the US, as well as global investors. The aim was to hasten private investment in the Lobito Corridor — the rail corridor that will carry critical minerals from the central African copper belt to global markets via the Angolan port of Lobito.
The giant infrastructure project involves refurbishing more than 1,000km of railway line between Lobito and the DRC and constructing hundreds of kilometres of new line to extend it, in phase 2, into Zambia. At the forum, the US International Development Finance Corporation committed $250m to the Africa Finance Corporation, which is spearheading phase 2 of the project.
It’s all part of an effort by the US to win back influence in Africa that has been lost to China, which has been building infrastructure and buying up critical mineral resources on the continent for years. For the US and Europe, securing supplies of these minerals is now a priority. The Lobito project, which aims to develop infrastructure and industry across the region, is key to that.
It has big lessons for SA, as well as some implications. Governments and development finance agencies are backing it, but private sector concessions and finance are at the heart of the project. A private consortium, the Lobito Atlantic Railway, led by Trafigura, is refurbishing and operating the existing line. Revenue is already being locked in via agreements with miners such as Ivanhoe, which in January began to trial shipping copper concentrate from its huge Kamoa-Kakula copper project in the DRC on the line. Ivanhoe expects the Lobito route will be cheaper and greener than trucking product out via Dar es Salaam or Durban.
SA would do well to learn that encouraging the development of new mines, as Zambia and DRC are doing, can bring investment in infrastructure and development that goes way beyond mining. SA might do well to note too that in the rest of the world private sector players can and do operate and build crucial railway lines and that other governments encourage this.
And SA does stand to lose out directly as a result of the Lobito project though not as much as it would have a decade ago, when the Port of Durban was decent and trucking in SA was a safer bet.
Lobito offers a route to Europe and the US via the Atlantic, rather than via the Indian Ocean, but the plan ultimately is to connect east and west. SA, meanwhile, will end up more marginalised than ever as its neighbours pull ahead.