Mozambique has secured a 25-year extension for the operation of its largest port, Maputo, by a consortium of companies led by DP World Ltd. and Grindrod Ltd.
The $2 billion investment plan will increase the port’s cargo handling capacity and competitiveness, and challenge the dominance of South Africa’s congested trade infrastructure.
The extension, which was approved by the Mozambican Council of Ministers on Tuesday, will allow the port operators to continue running the port until 2058.
The agreement also involves investments of nearly $1.1 billion by 2033, when the original concession was due to end, and another $900 million by 2058. The investments will be used to upgrade and expand the port’s facilities, including the coal terminal in Matola, the container terminal, the general cargo terminal, and the access channel.
Maputo’s port capacity is expected to grow from 37 million tons per year in 2024 to 54 million tons per year in 2058. The container terminal’s capacity will almost quadruple from 260,000 TEU (twenty-foot equivalent unit) to one million TEU over the same period.
Maputo port is strategically located at the mouth of the Indian Ocean, and serves as a gateway for the trade of Mozambique and its landlocked neighbours, such as Zimbabwe, Zambia, Malawi, and Botswana.
The port has been growing rapidly in recent years, reaching a record volume of 31.2 million tons in 2023, a 16% increase from the previous year.
Mozambique is diversifying its economy by reducing its dependence on the volatile mining sector, which accounts for more than half of its exports. The country is also developing its natural gas resources, which are expected to transform it into a major energy producer and exporter in the coming years.
The port’s development is also seen as a challenge to South Africa’s trade infrastructure, which has been struggling with inefficiencies, delays, and disruptions.
South Africa’s state-owned rail and ports company, Transnet, has been facing a backlog of maintenance, ageing equipment, and frequent strikes.
Transnet’s main port, Durban, handles about 60% of South Africa’s cargo, but has been operating at overcapacity and below standards.
As a result, many exporters and importers in South Africa and the region have been opting to use alternative routes, such as Maputo, to avoid the bottlenecks and costs associated with Durban.
Maputo offers shorter transit times, lower tariffs, and better service quality than Durban. Maputo also has the advantage of being closer to the industrial and mining hubs of Gauteng and Mpumalanga provinces in South Africa.
DP World, a Dubai-based global ports giant, said it was proud to be part of the port’s success story, and that it would leverage its expertise and experience to deliver world-class service and value to the port’s customers and stakeholders.
Grindrod, a South African logistics company, said it was delighted to extend its partnership with DP World and the Mozambican government, and that it would continue to invest in the port’s growth and sustainability.