Afreximbank confirms interest in Mmamabula-Lephalale funding

Mbongeni Mguni | Tuesday April 22, 2025 09:20

The link will run for about 120 kilometres from Mmamabula to Lephalale in Limpopo, before linking up with existing lines to run to Richard's Bay port terminal, with a possible future expansion to Mozambique.

The latest available figures indicate that the initial phase would involve developing 7.8 million tonnes per annum capacity with the associated rolling stock leading an estimated cost of $627 million. The second phase would involve an expansion to 18 million tonnes per annum at a cost of $1.13 billion (P15.6 billion).

BusinessWeek is informed that Afreximbank, which boasts assets of about $40 billion, was one of 13 bidders who recently confirmed their interest in funding the project. Botswana Railways and Transnet, together with the governments of Botswana and South Africa, are seeking private funding of the project.

“I can confirm our significant interest in financing the planned Mmamabula-Lephalale railway link between Botswana and South Africa,” Humphrey Nwugo, Afreximbank’s director of Regional Operations, Southern African Office, told BusinessWeek exclusively. “This project aligns perfectly with the bank’s strategy of facilitating both intra- and extra-African trade. “This link is particularly critical for the evacuation of bulk commodities, especially minerals, to nearby ports – primarily Durban. “The project is therefore vital for Botswana, a landlocked country whose goods must traverse regional networks to reach the nearest port.”

The Mmamabula-Lephalale railway line has been in the works since at least 2011 and the delay in its construction has frustrated developers along the country’s eastern coalfields. In the intervening years, producers of copper and iron ore, as well as oil importers, have joined the quest to see the line developed.

Botswana and Transnet recently held an investment conference in Gaborone to lay out the project’s technical and financial specifications as well as to gauge investor appetite. The two railway utilities are due to jointly issue a Request for Proposals soon, allowing investors to formally indicate their interest.

“Afreximbank has not only expressed interest in funding the project but is also willing to invest significant resources in its support,” Nwugo said in emailed responses to enquiries. “Whilst $1 billion may seem a substantial amount, it is worth noting the capacity and interest expressed by funding partners who attended the investment conference in Botswana and indicated their willingness to finance the project.”

Nwugo said Afreximbank views the rail link as a clear demonstration of the need to establish efficient regional connections, as outlined in the SADC transport master plan. The Mmamabula-Lephalale rail link is amongst key SADC trade corridors, which would facilitate east-west traffic.

“We are in similar discussions with neighbouring countries to explore how the bank can support them in not only improving their rail infrastructure but also enhancing its efficiency. “This is important since it helps commodity-based countries like Botswana to maximise their potential by leveraging their natural resources. “Beyond this, the bank is focused on encouraging countries and companies to intensify the beneficiation and value addition closer to the mines,” Nwugo said.

Speaking at the recent investment forum, Transnet SOC Limited general manager for Business Development, Wilson Mogoba, said studies had shown that the planned rail link was highly viable and would be supported by volumes from producers.

He said interest had already been noted in funding of the line, although some investors requested additional commitments from the two utilities and governments.

“The respondents said they would want to see the two governments committing to the project, together with Botswana Railways and Transnet. “That commitment is certainly there. “Others said the governments should consider providing tax concessions or holidays for the investors,' he said. “A critical one is that they said that whilst the market understands that we are setting up the rail link, what is necessary is to get down to the port of Durban. “The markets want to be guaranteed capacity at Richard’s Bay,” he added.

South Africa is undertaking rehabilitation of capacity along the lines leading to Richard’s Bay and at the terminal itself, whilst for Botswana, much of the investment required will be entirely new railway lines.