Raw materials exports, many of which are essential to the global energy transition, underpin many African economies and continue to generate project logistics activity. Turbulence in Europe has benefitted the continent too, writes Megan Ramsay.
Copper is an indispensable resource – the most conductive of the non-precious metals – and has myriad industrial applications. Consumption currently stands at roughly 25.26 million tonnes annually and is steadily increasing at around 2-3 percent per year.
While Africa may not boast the reserves of Chile, which produces a quarter of the world’s copper, there is plenty to be had in the continent, the Democratic Republic of the Congo in particular.
At the recent Mining Indaba in South Africa, the overall sentiment was “very positive”, according to Dominik Keller, head of global development at Fracht Group. He added: “2024 will be a more challenging year but the outlook for 2025 is already looking very interesting. On the copper mining side [of the business] we estimate a boom in prices and as such in its mining as from 2025.”
Increased demand for copper ups the need for mining equipment and supporting infrastructure projects, and is just one area in which the project logistics industry is vital to Africa’s economies.
There are various positive developments that are stimulating project activity. According to global supply chain company Agility: “Africa has a young and rapidly growing population forecast to reach 2.4 billion by 2050.” Urbanisation of this population is driving demand for infrastructure including roads, ports, airports, digital infrastructure, power generation and water distribution.
Examples of large-scale work currently under way to support the continent’s changing demographics include the Trans-African highways projects that will link Algeria, Tunisia, Mali, Niger, Chad and Nigeria.
Tanzania, too, is seeing its fair share of infrastructure development. In June 2023, the Tanzania National Roads Agency (Tanroads) awarded contracts for the construction of seven new roads totalling 2,035 km. These include the 160 km route from Mnivata-Newala to Masasi, which will be completed by two Chinese companies.
In addition, the French Development Agency is supporting the progress of a power line between Geita and Nyakanazi, which it said will facilitate the extension of the power grid in northwest Tanzania and the grid connection to the Rusumo hydro power plant.
On the question of investment in Africa, Agility’s Emerging Markets Logistics Index 2024 highlighted a renewed global interest. It said: “Indeed, there is plenty of evidence for increased engagement and investment commitments made by major global powers in Africa.
Sustainable projects
“For instance, the UK has announced plans to invest USD2 billion in sustainable projects across Africa, while the USA has pledged an initial USD200 billion for its partnerships for the Global Infrastructure Initiative. These initiatives are expected to create an influx of multinational corporations into major cities across Africa.
“South Korea has also pledged to extend USD6 billion in financing for African projects, in a move to reduce its heavy reliance on China for core minerals and contain China’s influence in the global manufacturing supply chain.”
Thomas Vestergaard, ceo of Denmark-based UPF Group, commented: “Africa is a growing market for a combination of reasons: it is not quite so exotic nowadays, plus people are being forced to do something as Europe is declining.”
2024 will be a more challenging year but the outlook for 2025 is already looking very interesting… we estimate a boom in copper prices and as such in its mining.- Dominik Keller, Fracht Group
UPF’s focus on Africa covers the triangle from Mombasa to Douala to Cape Town. Its Africa network includes Dar es Salaam, Harare, Luanda, Johannesburg and Maputo, with Beira soon to be added. Vestergaard noted that the company’s Johannesburg office serves mainly clients based in South Africa who export to Mozambique and Angola, rather than the South African market per se, as “the market in South Africa is rather competitive and you need to find your niche”.
As for the sectors UPF supports, he said: “We tend to be involved with second or third-tier oil and gas service suppliers, transformers and various other general and project cargo – supporting mainly European forwarders with transport from the ports to the hinterland.”
Among recent project work, UPF delivered cargo on behalf of the Great Zimbabwe Hydro Power Company, which is constructing a 5 MW hydropower plant at Lake Mutirikwi. It has also moved more than 8,000 cu m of breakbulk and over 75 containers from Mozambique to Djibouti for further transport to Ethiopia. “Our plan this year is to look into Namibia, where oil and gas is slowly starting to develop,” Vestergaard added.
Fossil fuels versus renewables
Both Shell and TotalEnergies have discovered offshore oil and gas in Namibia of late, and these developments could generate years’ worth of work for the project sector – once they get under way.
Also in Namibia, and in Kenya, green hydrogen projects are in the final phase of study or first phase of testing, Keller said. “Even if the economic viability of these investments remains to be proven, the potential and will to develop these projects is massive,” he observed.
Elsewhere, in DRC, Angola and Senegal, Fracht is supporting the development of hydropower projects (which offer an excellent return on investment for backers), while solar farms are being built faster in Africa than anywhere in Europe. “So green projects are not only hot – they are also happening,” Keller said.
Still, oil and gas projects remain very lucrative in Africa – hence the interest in Namibia’s potential.
East Africa Pipeline
Countries with substantial resources include Uganda and Tanzania, where the East African Crude Oil Pipeline project (EACOP) is being constructed. This pipeline will transport oil produced from Uganda’s Lake Albert oilfields over 1,443 km to the port of Tanga in Tanzania, from where it will be sold on the global market. EACOP is slated to begin operating in 2025.
“Vast [oil and gas] resources are still being discovered and old projects are being brought forward,” Keller said. “The reason for this is quite logical: there is still more money in oil and gas compared with green projects – if you look at the percentage invested by oil and gas majors into renewable energies projects compared with the total invested in oil and gas projects, you will be surprised how small [the former] actually is.
“Secondly, the short-term return on investment and the local usage of oil and gas are often more attractive to short-term political players – which leads sometimes to opportunistic decisions.”
The funding required to transition Africa’s reliance on fossil fuels to renewable energy sources is substantial. McKinsey estimates an additional USD2 trillion is needed for climate financing in developing countries, which will need to come from both external and domestic sources.
The Green Climate Fund (GCF) received a boost at COP 28; total pledges now stand at USD12.8 billion from 31 countries, with further contributions expected. While these pledges fall far short of the sums required, the energy transition has at least begun in Africa. Kenya, for example, generates more than 70 percent of its energy from renewable sources like geothermal, hydro and wind energy.
In Mozambique, everyone is waiting for the big LNG projects to restart. Insurgents disrupted activities at the USD20 billion Mozambique LNG project, where doubts still remain as to whether the security situation has truly improved. TotalEnergies and Eni have suspended works at Afungi since 2021.
In Mozambique… we are remobilising the contractors and I think we are not far off from having everything lined up with them. -Patrick Pouyanne, Total Energies
However, hopes are raised that it could restart this year. Patrick Pouyanné, chairman and ceo at TotalEnergies, said: “In Mozambique, we get security reports and human rights reports. Right now, we are remobilising the contractors and I think we are not far off from having everything lined up with them.” The company is now re-engaging with financiers, but a keen eye is being kept on security. “What I want to avoid at all costs is to decide to bring people back onsite and then have to get them all out again. That would be a very complex situation to handle.”
Duel Investment
Demonstrating the dual investment in fossil and renewable fuels, Mozambique will also see the construction of a new USD5 billion dam on the Zambezi River. The Mphanda Nkuwa hydropower project will be built by a consortium led by French power company EDF; the first phase will generate 1,500 MW of power with the first turbine expected to begin operating in 2031.
The dam will increase Mozambique’s available electricity production capacity by more than 50 percent, EDF said.
Other renewable energy projects in Mozambique include a 400 MW solar plant at Mtambo (still in its early stages) and a 120 MW wind farm at Namaacha (expected to begin operations this year).
Further north, Ethiopia and Somaliland offer many opportunities for development, according to Dale Calkeld, managing director of ALS Worldwide. There are projects like hydro dams and mining, among others, he said.
Currently, he said: “ALS Worldwide is focusing on Berbera port in Somaliland due to the newly built DP World Port and improved road infrastructure leading directly to Ethiopia. The new bridges have made this one of the safest routes into Ethiopia,” he added, noting that ALS has its own stand-alone free zone in Berbera.
ALS Worldwide intends to expand its services across Africa. The company recently partnered with Lowther-Rolton to offer integrated services throughout the continent. Together, the two companies will offer engineered solutions, preparing bespoke logistics packages for project cargo shipments. “Our partnership with Lowther Rolton has only just begun, and we are already working together on some projects,” Calkeld confirmed.
Training centre
ALS Worldwide also signed a memorandum of understanding (MoU) with the Somaliland government. As reported by HLPFI in November last year, the agreement will enable the company to establish a government-approved training centre in Somaliland for drivers and machine operators. It will also allow ALS Worldwide to set transport rates for Ethiopia and East Africa and put in place a tracking system for all freight to provide clear data on the cargo’s destination.
Over on the West Coast of Africa the flow of cargo, while not high, is fairly consistent at present, with growth in oil and gas cargoes – especially to Mauritania for the Greater Tortue Ahmeyim (GTA) offshore LNG project located on the maritime border between Mauritania and Senegal, said Yusuf Yusufoglu, senior trade manager MPP services at Breadbox.
This project is generating more activity than anywhere else in West Africa, although cargo flows into Nigeria, Ghana and Ivory Coast have also been regular over the past year or so.
The mining industry is another key source of business for Breadbox, whose main trade is Europe to West Africa as well as the eastern Mediterranean/Black Sea region into West Africa and coastal services between Mauritania and Nigeria.
South Africa (ex Durban and Cape Town) is always of interest too, Yusufoglu said. “For many years, we had up to six sailings from South Africa to West Africa for breakbulk and project cargoes. Over the past year this has declined but we hope to see an uptick this year. Projects such as oil and gas or mining mean earthmoving equipment has to be transported from South Africa to West Africa.
We have got all six trucks operating on the Nouport project at the moment. We are moving ultra-long blades at a rate of two turbines a week.- Bryan Hodgkinson, Vanguard
“We are seeing more enquiries about moving semi-finished products like steels from South Africa to West African destinations too.”
South Africa is investing in wind power at the moment, one big project being the Noupoort wind farm that Vanguard is working on using its RBTS units acquired last year. “We have got all six trucks operating on the Noupoort project at the moment,” said Bryan Hodgkinson, Vanguard’s director. “We are moving ultra-long blades at a rate of two turbines a week. That means each unit is covering 500 km a week. The target date to complete is September.” Hodgkinson is confident that wind power-related work is “here to stay” in South Africa until 2026, when there is likely to be a pause between auctions.
Election instability
Hodgkinson noted that South Africa has an election year coming up and that markets are notoriously very unstable at such times. Also, he said: “The government is non-performing in certain areas. For example there is the demise in efficiency in managing South Africa’s ports. There are hassles at Durban, Richard’s Bay and Cape Town, to the extent that we are seriously considering moving a large part of our operations to Namibia [Walvis Bay] or Mozambique [Maputo].
“On a broader scale, the export of fruit has been dramatically affected by Cape Town’s inefficiency and farmers are moving fruit by road to Walvis Bay, which creates delays. So the problem is not just localised at Durban anymore. There are talks about privatising some ports but there is a lot of red tape.”
Against this rather discouraging backdrop, Vanguard is looking to broaden its horizons. Hodgkinson said: “We are bidding in Namibia and there is potential in Mozambique. We are hearing of things as far north as Ethiopia, but we are focused on the southern region for the moment.
“Our involvement in the motor industry and press installations business is buoyant as electric vehicle production is increasing. There is a lot of talk of manufacturers expanding northwards, such as Volkswagen in Rwanda.”
South African problem
In Hodgkinson’s opinion, noticeable improvements in other countries suggest Africa is not sitting on its hands; it is slowly moving forwards. “The problem now is South Africa, which is a massive own goal,” he said.
There are major changes afoot in terms of cargo flows across Southern Africa, according to UPF’s Vestergaard. There is a major port expansion in Lobito, and companies are considering the option of exporting from Lobito instead of East Africa, once rail links into the Angolan hinterland are developed. The reason? “There is so much congestion on the roads,” he stated.
The USD450 million Lobito Atlatic Railway will provide a quicker western route to market for metals and minerals made in the Democratic Republic of Congo. - Trafigura
“It can take 60-70 days to transport cargo for the mines in the DRC before you are back in Dar es Salaam with a return load of copper. And Maputo is attracting more and more coal and chrome from South Africa that used to be exported from Richards Bay, so Maputo Port will now invest heavily in port expansions to accommodate more cargo flowing via the Maputo corridor,” Vestergaard added.
The USD450 million Lobito Atlantic Railway “will provide a quicker western route to market for metal and minerals produced in the DRC and represents a major new trade route between the Congolese Copperbelt and the Atlantic Ocean”, according to Trafigura, part of the consortium developing the link.
A further USD100 million will be invested on the other side of the border in the DRC, to improve the railway line and rolling stock there.
But the general sentiment is that this year “will not be fantastic”, especially compared with the market of two years ago, Yusufoglu said. “Multipurpose rates were sky high and there had to be a correction; this happened last year and is continuing.
“Additional challenges have come in too, such as the Russia-Ukraine and Israel-Gaza conflicts, which impact the routeings of shipping lines [especially the container lines]. There is also the situation with the Panama Canal.
“These developments should push up the market so it should get firmer. Shipowners’ earnings could rise because of the challenges, as multipurpose rates follow rising container rates. But the congestion and delays we saw during Covid-19 were on a different scale, so it may not be to the same extent.”
Congestion issues
According to Yusufoglu, congestion has always been the main issue in West Africa, especially in countries like the Ivory Coast or Ghana during the rainy season, when vessels back up while waiting for berths. But this has eased somewhat in the past year or so.
Port, road and rail infrastructure are improving, “although not enough compared with the potential and the size of the continent”, in Keller’s view. “I do not think that the trans-African highways are the biggest driver for these improvements,” he said. “It is just in general that more and more project cargo is sent to Africa, and this enables investors to make better business plans and to invest in certain assets.”
While events around the world have their effect on investments, projects and logistics in Africa, Keller believes that the biggest political factor comes from within Africa itself.
He remarked: “In 2023 Africa suffered a large number of coups and near-coups – a plague that is not new for Africa, unfortunately. The series of coups, sometimes coupled with anti-Western endeavours and very often coupled with security instability, are most likely the biggest threat towards big project investments in Africa.”
Political unrest has been on the up across northwest Africa during the last 12 months and coups have taken place in Burkina Faso, Niger and Mali. In this last case, goods used to be brought in via Dakar in Senegal, but political developments have made transport operations increasingly difficult in the region.
“Africa is often also the materialisation of macro-geopolitical power changes; look for example at the power that China is acquiring in Africa or the influence that Russia tries to acquire in certain unstable states,” Keller pointed out.
And then there is the risk of piracy, especially in the Gulf of Guinea. Many shipowners are still excluding this as a trading area and both insurers and regulatory bodies are imposing restrictions that have a negative impact on business; Nigeria, Angola and Equatorial Guinea have all suffered from the rise in piracy this past year.
East Africa has also been “a hot area” for a long time, said Yusufoglu, but the risk of attack from both sea and land there is higher than ever these days.
“We have started seeing pressure on East Africa because of the surge in piracy arising from the Gaza–Israel conflict. Vessels are choosing to divert via South Africa, West Africa and Gibraltar,” he said.
