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Mozambique Infrastructure Report Q3 2012
Business Monitor International, May 2012, Pages: 60
The Mozambique Infrastructure Report provides industry professionals and strategists, corporate analysts, infrastructure associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Mozambique's infrastructure industry.
BMI View: Mozambique’s construction sector is the most dynamic in the southern African region and the country’s huge mining and export hub potential is driving investment into transport and electricity infrastructure. Projects are being developed by deep-pocketed mining companies, meaning they are more likely to progress than in other parts of the region that are dependent on development funding or government backing. With projects worth a combined US$25bn planned or under way, we are forecasting average annual growth of 7.7% over the medium term (2012-2016).
A strong medium-term project pipeline will sustain strong growth. A number of projects were announced in late 2011 and early 2012, which will drive expansion into 2012 and 2013. The industry will benefit from sustained demand for Mozambique’s exports, primarily coal demand from India. However, with Mozambique's infrastructure sector so directly linked to mining activity, our forecasts are predicated on a number of factors:
- The primary driver of growth in Mozambique's infrastructure sector has been coal mining, with Indian demand sustaining significant investment. Insatiable demand for electricity in India is leading to huge investment in coal power plants, and Indian power companies are looking further afield for coal resources. While we expect demand for coal across the developed world to decline over the medium term, we do not anticipate a slowdown in India's consumption of thermal coal, which should sustain investment in Mozambique.
- Transport infrastructure has benefited from a number of investment pledges, with efforts concentrated on the Nacala and Sena transport corridors (linking the mining regions to the ports of Nacala and Beira). Mining companies are leading the way in terms of investment in railways and ports; this was demonstrated in January 2012, when Vale signed a US$1bn agreement to build the Malawian section of the 900km Nacala corridor (which links the Moatize mines with the Nacala Port).
- Electricity generation has also garnered considerable investment, with mining companies once again taking on an active role. Vale, Riversdale Mining and Jindal Power & Steel have all announced one gigawatt (GW) of coal-fired power plant projects in an effort to tap the growing domestic market. At the same time, Mozambique is planning to expand capacity at the Cahora Bassa dam. Eletrobras announced plans to build a 1,500MW hydropower plant in the country, as well as two 1,500km transmission lines, worth a combined US$6bn.
- A major threat to our forecast comes in the form of government revenues, which are insufficient to meet the infrastructure funding gap, and thereby highlighting the importance of external financing. Consequently, multilaterals like the World Bank and African Development Bank (AfDB), as well as state credit agencies, remain an important source of funding for infrastructure in Mozambique. Increasingly, investment into freight transport and electricity infrastructure is being supported by private finance, with cash-rich mining companies executing a build-yourown strategy with regard to infrastructure. Private finance has therefore become crucial to investment, and any threat to corporate financing or mining companies’ profitability could dent investment in infrastructure.
- While infrastructure investment is primarily focused on supporting the mining sector, demand for passenger transport projects and residential and commercial utilities should lead to rapid expansion – with real GDP growth expected to average 7.5% between 2012 and 2016, and GDP per capita expected to increase from US$628 to US$972. This should generate a rise in electrification and water access rates over our forecast period, necessitating new transmission and distribution infrastructure. Investment into roads will be strong under the second phase of the Programa Integrado do Sector das Estradas (PRISE) Road Sector Integration programme (2010-2014), which is overseeing planned investment of US$1.5bn to improve the quality of the country's road network. Funding has been pledged by a number of development banks.
BMI Industry View 5
SWOT Analysis 7
Mozambique Infrastructure Industry SWOT 7
Market Overview 8
Southern Africa Competitive Landscape 8
Table: Number of Contractors In Southern Africa (ex South Africa) 8
Building Materials 12
Global Overview 12
Regional Overview 15
Cement Forecast 19
Table: Mozambique Cement Production and Consumption Data, 2009 - 2016 19
Table: Mozambique Cement Production and Consumption Long Term Forecasts, 2014 - 2021 20
Industry Forecast Scenario 21
Table: Mozambique Construction And Infrastructure Industry Data, 2008 - 2016 21
Table: Mozambique Construction And Infrastructure Long Term Forecasts, 2013 - 2021 22
Construction and Infrastructure Forecast Scenario 23
Transport Infrastructure 26
Major Projects Table - Transport 29
Table: Southern Africa Transport Projects 29
Energy and Utilities Infrastructure 32
Major Projects Table – Energy and Utilities 36
Table: Southern Africa Energy & Utilities Projects 36
Residential/Non-Residential Construction and Social Infrastructure 38
Residential/Non-Residential Building Outlook and Overview 38
Risk/Reward Ratings 42
Mozambique’s Risk/Reward Ratings 42
Regional Overview 43
Table: Regional Infrastructure Risk/Reward Ratings 44
Industry Forecasts 54
Construction Industry 55
Data Methodology 55
New Infrastructure Data Sub-sectors 55
Capital Investment 57
Construction Sector Employment 58
Infrastructure Business Environment Rating 58
Table: Infrastructure Business Environment Indicators 59