Lessons learnt from the Lobito Corridor development

In the race between the global “East” and “West” to secure the critical raw minerals required for technologies such as renewable energy projects, battery energy storage, aerospace and defence technologies, the US and EU recently teamed up to fortify support for the development of a vital Southern African railway line, the Lobito Corridor in Angola. With that they gained a much-needed foothold in the supply chain of critical raw minerals from Southern Africa. 

The Lobito Corridor stretches from the port of Lobito across Angola and the Democratic Republic of the Congo (DRC) to the city of Ndola in northern Zambia. The US-EU partnership is set to further expand the corridor from Angola to Zambia, facilitating bulk mineral transport for mining companies in the Copper Belt and across the Southern African Development Community region. 

In line with global initiatives for a clean energy transition there is a rise in demand for critical raw minerals from the DRC and Zambia, and there are significant exploration projects in Angola and Namibia, while Zimbabwe already has at least four major lithium projects in production, bringing with them renewed investment in the Southern African mining industry. The industry is renowned for its abundance of critical raw minerals such as cobalt, copper, lithium, manganese and nickel.

While China has had a stronghold on the critical raw minerals supply chain, particularly from Africa, Covid-19 and the Russia-Ukraine war, among other geopolitical pressures, have caused a disruption in the global critical raw mineral supply chain and have caused the EU and US to reprioritise developing their own supply chains. As a result, the EU and US have firmly set their sights on “derisking” by investing in critical raw mineral supply chains and strengthening diplomatic and trade ties with Southern African countries. 

China’s Belt & Road initiative, a colossal infrastructure project originally devised to link East Asia and Europe through physical infrastructure, has since its inception in 2013 expanded vastly into Africa and beyond. A total 147 countries are signed on to Belt & Road projects, or have at least indicated a willingness to do so. Most of the African continent, including Angola, the DRC, Zambia and SA, have signed on to the initiative.

Gain access

The development of the Belt & Road initiative in Africa provides China with considerable trade influence throughout the African continent, thereby bolstering Chinese export markets and access to critical raw mineral supply chains, developing new trade linkages and exporting China’s excess productive capacity.

On the Western front, the US, through its Partnership for Global Infrastructure & Investment, has invested billions of dollar into infrastructure development in Southern Africa and other low-income countries. It is through this programme that the US committed to the development of the Lobito Corridor at the G20 summit 2023 in India. Infrastructure and bulk logistics are one of the most important enablers of mining, and the US-EU investment in the Lobito Corridor should ensure that they gain access to Southern Africa’s commodities and critical raw minerals.    

Rail transport often offers the most economic route in transporting minerals from mine to port. As the road transport network in Africa is mostly underdeveloped and poorly maintained, rail transport offers the most cost-effective and fastest means of land bulk transport. It bypasses congested African freeways and border posts, thereby significantly reducing transport time.

The Lobito Corridor is envisioned to reduce travel time from 30 days to eight days. Considering the volatility of commodity prices, the ability to transport minerals from mine to port where they can be exported in as little time and for the lowest possible cost, is crucial in ensuring that these commodities fetch the best possible price at the right time, which is in turn crucial to the survival of the mining sector and the Southern African economy.

The dire condition of SA’s port and rail infrastructure, particularly its bulk rail transport infrastructure, is a significant contributor to the lack of investment in the mining industry in SA. According to the Minerals Council SA, logistics and energy constraints have reduced SA’s GDP growth over the past five years.

Boost confidence

Considering that about 60% of SA’s GDP is derived from the import and export of goods and services (according to data obtained from the World Bank for the 2022 fiscal year), a functional bulk rail transport system with a direct line to SA ports is critical to the country’s economic growth in general and the survival of the mining sector in particular.

SA could benefit significantly from investment in its rail and port infrastructure along similar lines to the US-EU partnership on the development of the Lobito Corridor, if it is able to boost investor confidence. Government could do this by collaborating with the private sector, the mining industry in particular, to reform and revitalise the country’s ports and freight rail network.

In a developing country such as SA, where the freight rail network and ports are largely monopolised by state-owned enterprise Transnet, which is on the verge of a downgrade by global ratings agency Moody’s, private sector participation may be the only viable option. The government appears to be open to private sector participation in the railway sector. In its National Rail Policy released in 2022 government envisions collaboration between different spheres of government, state-owned entities and the private sector to revitalise the bulk rail infrastructure and bolster the country’s ability to export minerals. 

In the official joint statement from the White House on September 9 the US-EU partnership promised that the upgrade to critical infrastructure across Angola, the DRC and Zambia would help create local jobs, improve local economies, decrease the carbon footprint of these countries, and ultimately help unlock the enormous potential of the region.

Apart from partnering with the private sector to revitalise its rail and port infrastructure, perhaps SA could also turn to its partners in the EU and US for a project similar to the Lobito Corridor. SA has the rocks and the skills within our mining sector; it urgently needs to find a way to move all of those commodities so that it can reap the benefits. 

• Nupen is cofounder and head of environmental & mining, Moyo foreign qualified mining & construction lawyer, and Stander candidate attorney, at commercial law firm NSDV.