Maputo Port Development: Deeper channels improving the bottom line

The strategic economic significance of ports across Africa remains undiminished, particularly in the context of globalisation. That puts huge onus on infrastructure of course – and in the case of Maputo Port Development Company (MPDC) is a source of national pride.

MPDC operates as a national private company, which results from the partnership between the Mozambican Railway Company (Caminhos de Ferro de Moçambique) and Portus Indico, comprised by Grindrod, DP World and local company Mozambique Gestores.

PM-08-Terminal-carvão-12On the 15th of April 2003 MPDC was given the concession of Maputo’s Port for a period of 15 years, with an extension option of another 15. In June 2010, the concession period was extended for another 15 years, with an option of an additional ten years of operations after 2033.

MPDC holds the rights to finance, rehabilitate, construct, operate, manage, maintain, develop and optimize the entire concession area. The company also holds the powers of a Port Authority, being responsible for maritime operations, piloting towing (tugboats), stevedoring, terminal and warehouse operations, as well as port’s planning development.

That is a huge responsibility for a port which is absolutely crucial to the economy of Mozambique, serving as a transit port, with lots of minerals transported from South Africa, Swaziland Zimbabwe and Botswana. Maputo Port handles mainly bulk minerals such as coal, magnetite iron ore, nickel which contribute nearly 84 per cent of total throughput.

At a time when competition is rife, maintaining and enhancing port infrastructure remains a top priority for the stakeholders involved at MPDC.

During the war in Mozambique, the Port went through tough times but the concession in 2003 brought about a change in Maputo’s fortunes and by 2008 Grindrod and DP World had become involved in its development.

In the intervening decade Maputo underwent huge ongoing investment in equipment to rehabilitate the Port’s infrastructure and MPDC has created a 20 year Masterplan which is already underway.

In February of this year news came through that Grindrod was set to invest in the Port of Maputo, the Richards Bay coal terminal and African rail projects.

Speaking at the company’s annual results presentation, Grindrod CEO Alan Olivier said that the company was set to help finance an estimated $100 million project to dredge the port to allow access for fully laden Panamax vessels with a draft of 14.2 metres.

The project should be completed by the middle of next year, with the Mozambican government providing assistance by waiving its concession fee for 7 years to pay for its part of the dredging costs, according to Olivier.

He said that the aim of the project was to “make Maputo more competitive from a pricing point of view” and indicated that the port was starting to reach its capacity, while price pressure in commodity markets also required the port to become more efficient.

Olivier believed enhanced efficiency was achievable through loading and offloading ships faster, and by allowing bigger ships into the port. Maputo port volumes were up 14 per cent in 2014 compared with 2013, to 19.5 million tons.

The following month, news came through from Khaleej Times that DP World is to dredge Port of Maputo. The decision was announced by the Mozambique News Agency.

PM-01-Vistas-gerais-13The Maputo Port Development Company, or MPDC, the consortium that holds the lease on operating the port of Maputo, Mozambique, and in which Dubai’s DP World holds a major stake, said that it is in the process of selecting the company that will dredge the port access channel, increasing its depth from the current 11 metres to 14 metres.

DP World holds a 30-year concession to operate the container terminal at Maputo Port until 2033, with an option to extend this for a further ten years. According to AIM, the dredging will begin in the third quarter of this year, and, when complete, it will allow ships of up to 80,000 tonnes to enter the port.

MPDC chief executive officer Osorio Lucas said that the dredging “is a strategic decision which will not only allow us to reach our target of handling 40 million tonnes of cargo a year by 2020, but will have a multiplier effect on the Mozambican economy”.

Dredging operations to maintain the docks in the port of Maputo were initially set to begin last September, under the terms of a contract signed in the port of Durban by the MPDC and the Transnet National Ports Authority, a division of Transnet Limited responsible for managing South Africa’s 8 commercial ports.

The agreement to use Italeni, a vessel equipped with a grab dredger with a capacity of 750 cubic metres, was part of the memorandum of understanding signed with TNPA in June 2013, in which the two institutions agreed to strengthen their relations, Mozambican daily newspaper Notícias reported.

The memorandum with TNPA resulted in employee training employees at the TNPA Maritime School of Excellence, acquisition and refurbishment of the Ntwanano tug (already underway in Maputo), and this dredging work, with Italeni setting off for the Port of Maputo.

The financial benefits of dredging are keenly felt and the Port of Maputo management company in 2013 dredged the port’s access channel and some mooring docks. This work increased the depth of the port from 11 to 13.7 metres, allowing ships weighing over 65,000 tons to enter the port.

The net effect of this was that the Port increased its operating efficiency and exceeded the 17 million tons of cargo that had been set as a goal for 2013.

Towards the end of last year, Osório Lucas, chief executive of the Maputo Port Development Company (MPDC), underlined the importance of deeper channels whilst looking ahead to 2015 and what was in store for the Port.

He indicated that the company would continue with work to deepen the port’s access channel, which will allow the port to increase its capacity, thus becoming more competitive on a regional and international level.

“In the current climate, lower costs at the port are imperative for survival,” said Lucas.