1 : Commodities transport demand Workshop in Lilongwe, 29th of July 2010, Capital Hotel Lilongwe Malawi Transport Sector Multimodal Development and Potential PPP Study 8/6/2010 1 REPUBLIC OF MALAWI Ministry of Transport and Public Infrastructure Safege Consultants for the European Union and the World Bank Ministry of Transport and Infrastructure Agriculture in Malawi • Contributes over 35% to national GDP, • Employs over 80% of the labor force • Contributes over 80% of the export earnings 8/6/2010 2 About Tobacco • Most valuableproduction in Malawi (230 000 tons in 2009, 2/3 of exports in value) • actual logistics Fertilizers Green leaves Collection of bales Auction floors Lilongwe (50%) Limbe Mzuzu Satellite depot Secondary auction floors Warehousing of wet Tobacco in railway stations Intermediate buyers to collect, group and sell Factories (Processing) Lilongwe or Limbe Fumigation containerization Break Bulk to Joburg Where it is fumigated and sealed in containers for Durban Nacala Beira Durban Export (June to november) 8/6/2010 3 $1.75/kg $ PACKING MODE : BALES 232 140 TONS 279 TONS MODE ROUTES WEIGHT % ORIGIN DESTINATION GROUPING PT TIME (days) COST $/TON $/T/Km Road to fob Sea freight Road & Sea BEIRA 162498,70 70% Central Region Germany Road to fob Sea freight Containerised DURBAN 69641,30 30% Kasungu,Dowa Poland Beira Route 35 US$79/t/km US$70/t/k m Lilongwe, The USA 35 US$79/t/k m US$85/t/k m Dedza Belgium 50 US$79/t/k m US$107/t/k m Mchinji The Netherlands Durban Route 35 US$120/t/km US$72/t/k m Northern Region Russia 35 US$120/t/km US$72/t/k m Rumphi, Spain 45 US$120/t/km US$80/t/k m Mzimba Egypt 30 US$120/t/km US$75/t/k m Southern Region Turk ey 25 US$120/t/km US$70/t/k m Mangochi Austria 30 US$120/t/km US$75/t/k m Liwonde 40 US$120/t/km US$120/t/k m PACKING MODE CONTAINERS 40' high cube containers 232 140 TONS 279 TONS MODE CORRIDOR WEIGHT % ORIGIN DESTINATION GROUPING PT TIME (days) COST $/TON $/T/Km Road to fob Sea freight Road & Sea BEIRA 162498,70 70% Central Region Germany Beira Route 35 US$79/t/km US$70/t/k m Containerised DURBAN 69641,30 30% Kasungu,Dowa Poland 35 US$79/t/k m US$85/t/k m Lilongwe, The USA 50 US$79/t/k m US$107/t/k m Dedza Belgium Durban Route 35 US$120/t/km US$72/t/k m Mchinji The Netherlands 35 US$120/t/km US$72/t/k m Northern Region Russia 45 US$120/t/km US$80/t/k m Rumphi, Spain 30 US$120/t/km US$75/t/k m Mzimba Egypt 25 US$120/t/km US$70/t/k m Southern Region Turk ey 30 US$120/t/km US$75/t/k m Mangochi Austria 40 US$120/t/km US$120/t/k m Liwonde NOTES: Malawi is 60% dependent on tobacco exports for its non aid foreign earnings. The expected growth rate for 2020 is not that great due to Anti Smoking lobby in Western markets. Malawi has diversified into other major cash crops such as Sugar,Tea,Cotton, Coffe and pulses The discovery of Uranium in Karonga at Kayerekera will also boost the economy. Mining already in progress and exports comenced in December 2009 INTERNATIONAL PART RECENT EXPORTS EXPECTED EXPORTS 2020 PRODUCT : TOBACCO SPECIAL CONDITIONS : PERISHABLE LOCAL PRICE INTERNATIONAL PRICE NATIONAL PART RECENT PRODUCTION EXPECTED PRODUCTION 2020 8/6/2010 4 Nacala Chipata Dar Es Salam Mbeya Chiwawa Beira Moatize Luzaka Chinde Tete Mtwara Harare Nsanje Port Durban Joburg Kanona 162,000n ton (70%)s Germany, Poland, USA, Belgium, Russiia, Spain, Egypt, Turkey Tobacco exports in 2009 232 000 tons 69,641 tons(30%) Liwonde Mangochi Rumpi Mzimba Germany, Poland, USA, Belgium, Russiia, Spain, Egypt, Turkey 8/6/2010 5 Criteria of choice of an export transport chain for Tobacco Criteria for exports Processing and packaging Conditions At Port Time of arrival Pricing of land leg Long Term contracts Current Choice of corridor Exports Tobacco (1 st Logistic Chain) Green leaves in Bulk Fumigation at Joburg then sent to Durban Good storage and handling facilities Very important Less that sea leg X Road to Joburg Tobacco (2 nd logistic Chain) Fumigation at the factory Limbe or Lilongwe In 1000 kg sacs then containerised Idem Very important X Road to Beira Nacala rail corridor Use of Nacala Rail Corridor Use of railwayfrom Auction Floorto factories Conditions of a possible transferto Nacala’scorridor (in 2015) Railwayin good conditions betweenLilongwe and Nkaya 8/6/2010 6
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1 : Commodities transport demand
Workshop in Lilongwe,
29th of July 2010, Capital Hotel Lilongwe
Malawi Transport Sector Multimodal Development and Potential PPP Study
8/6/2010 1
REPUBLIC OF MALAWI
Ministry of Transport and
Public Infrastructure
SafegeConsultants for the European Union and the World Ba nkMinistry of Transport and Infrastructure
Agriculture in Malawi
• Contributes over 35% to national GDP,
• Employs over 80% of the labor force
• Contributes over 80% of the export earnings
8/6/2010 2
About Tobacco
• Most valuable production in Malawi (230 000 tons in 2009, 2/3 of exports in value)
• actual logistics
Fertilizers Green
leaves
Collection
of bales
Auction floors
Lilongwe (50%)
Limbe
Mzuzu
Satellite depot
Secondary auction floors
Warehousing of wet
Tobacco in railway stations
Intermediate buyers to
collect, group and sell
Factories (Processing)
Lilongwe or LimbeFumigationcontainerization
Break Bulk to JoburgWhere it is fumigatedand sealed in containers for Durban
• Road = unique transportation mode for processed maize
Possibilities
Criteria for
regional
distribution
Processing
and packaging
Points of
processing
Time of
arrival
Price of
transport
Choice of the corridor
Within Malawi In sacs ,
limited exports
Blantyre silos
Eastwards and
Southwards
Not very
important
Very sensitive Distribution around the lake
to Northern cities and to
Monkey Bay
Reginal exports In sacs ,
limited exports
idem Not very
sensitive
Very sensitive Use of railways (to Zambia,
Tanzania, Mozambique, …)
8/6/2010 21
About MaizeTrends in domestic gaps
In February 2008, the price of maize had more than doubled from
MWK21 per kg in the previous year (Feb 2007) to MWK43 per kg.
From January 2008 to March 2008, the price had increased by 10%,
with March representing the peak of the lean season.
The maize harvest period which started in March in some parts of
the country did not result in the weakening of the prices, as expected.
As such, maize prices have kept on an upward trend, currently reaching
over MWK60 per kg. The high volatility of prices between the harvest
(March – June) and lean season (October – February) is typical of thin
Maize markets. Farmers are compelled to engage in distress selling at
low prices during the harvest period, only to buy back the maize during
the lean season at much higher prices. Over 80% of the smallholder
farmers end up being net food buyers.
8/6/2010 22
Nacala
Chipata
Dar Es Salam
Mbeya
Chiwawa
Beira
MoatizeLuzaka
Chinde
Tete
Mtwara
HarareNsanje Port
DurbanJoburg
Kanona
Maize local distribution
Use of the lake and railway distribution
systems
8/6/2010 23
About Cassava
Push factors to grow cassava. 2002 drought. Withdraw of input subsidy,. Reduced urban purchasing power and dwindling farm sizes. Pull factors. Relative ease of cassava cultivation, . Utility of ‘sweet’ cassava as an uncooked snack food, . Lower price of the raw roots in urban markets compared to
maize
8/6/2010 24
Alternative Supply Channels in Malawi’sCassava Value Chain
The total cassava production figure is based on the 2007 crop estimate from the Ministryof Agriculture of 3,194,994 tons. Out of the total 26,6% is sold of which 80% as fresh cassava
8/6/2010 25
Transportation of Cassava• From the producing areas to the markets : Land rovers (especially in
Lilongwe) and lorries (3, 7 to 10 tons) - return trips from original trips/places.• A majority of the traders arrange their own transport. • In some cases, especially for smaller markets, a number of wholesalers will
hire one vehicle to transport their produce to a given market.• Sacs (50 or 90 kg) or bulk in the vehicle. • For areas within the vicinity (20-30 kilometers from the city), bicycles are
used to transport cassava. These can transport cassava of up to a 50 kilograms bag.
8/6/2010 26
Chipoka
Salima
Nacala
Chipata
Dar Es SalamMbeya
Bangula
Beira
MoatizeLuzaka
ChindeTete
Route for Cassava and sweet potatoe
mainproduction
area
efficient lakeservices allow
marketing
8/6/2010 27
Chipoka
Salima
Nacala
Chipata
Dar Es SalamMbeya
Bangula
Beira
MoatizeLuzaka
ChindeTete
RICE ALTERNATIVE CORRIDORS
MonkeyBay
Lower
Shire
8/6/2010 28
About Fertilizers• Importation of 369,000 tons of fertilizers in 2008,
• Essential to the development of Malawi’ s agricultural sector
• Most of fertilizer is imported as a finished product but some importers have blending plants
• Imports from South Africa (Joburg), through Beira, Dar Es Salaam (Farmers World)
• Improvements to reduce the cost of imports for the farmers :
– Buy fertilizers in bulk ...with bulk handling on railway as it is cheaper and bagging in Malawi is not
expensive but time consuming
– Obtain a more balanced flow of goods (buffer stock in advance of the season and planning fertilizer
subsidy program in advance to get better prices.
Process and logistics Blending company Regional depots Distribution
Farmers World Liwonde From Liwonde
Optichem (production side) Blantyre Blantyre and Lilongwe From Blantyre and Lilongwe
Yara Traders and agents are selling fertilizers
to farmers
8/6/2010 29
IM P O R T S S T A T IS T I C S
$ 50 k g b a g $
P A C K IN G M O D E B A G S o r C O N T A IN E R S
5 0 k i l o g ra m b a g s
3 6 9 0 0 0 T O N S T ra n s p o rt e d b / b u l k 3 6 9 0 0 0 T O N S
M O D E C O R R ID O R W E IG H T % D E S T IN A T IO N O R IG IN G R O U P IN G P T T IM E (d a y s ) C O S T $ /T O N $ /T /K m
T ra n s i t T i m e F o b B e i ra / L L S e a f re i g h t
R o a d & S e a B E IR A 2 9 5 2 0 0 ,0 0 8 0 % T o L i lo n g w e In d ia /C h in a F O B B e i ra - L L 3 5 U S $ 9 2 / t/ k m U S $ 8 0 / t / k m
C o n t a in e r is e d D a r e s s a la a m 7 3 8 0 0 ,0 0 2 0 % T o B la n ty re U A E & S a u d i / A ra b ia F O B B e i ra - B t 3 5 U S $ 8 5 / t / k m U S $ 6 5 t / k m
F O B D a r - L L 3 0 U S $ 1 2 0 / t / k m U S $ 6 5 t / k m
P A C K IN G M O D E : B A G S
T O N S T O N S
M O D E R O U T E S W E IG H T % O R IG IN D E S T IN A T IO N G R O U P IN G P T T IM E (d a y s ) C O S T $ /T O N $ /T /K m
R E C E N T C O N S U M P T IO N E X P E C T E D C O N S U M P T IO N 2 02 0
P R O D U C T : F E R T IL IZE R S
S P E C IA L C O N D IT IO N S : N O N E
L O C A L P R IC E IN T E R N A T IO N A L P R IC E
IN T E R N A T I O N A L P A R T
R E C E N T IM P O R T S E X P E C T E D IM P O R T S 20 20
N A T IO N A L P A R T
8/6/2010 30
Nacala
Chipata
Dar Es Salam
Mbeya
Chiwawa
Beira
MoatizeLuzaka
Chinde
Tete
Mtwara
HarareNsanje Port
DurbanJoburg
Kanona
Imports of Fertilizers in 2009
Possibilities in the future (1) and (2)
295200 tons (80%)
73 800 tons (20%)
1
2
(2) Barges on the Shire Zambezi
river
(1) Rehabilitation of the Nacala
Corridor and links to Lilongwe
Conditions
8/6/2010 31
Nacala
Chipata
Dar Es Salam
Mbeya
Bangula
Beira
MoatizeLuzaka
Chinde
Tete
Mtwara
Harare
SalimaChipoka
Nsanje Port
DurbanJoburg
Kanona
Route for Heavy Sands inputs and outputs
necessarypower from
coal
8/6/2010 32
About Clinker• Portland previously mined limestone and manufactured Clinker at Changulume ; this clinker
was ultimately transported by rail to a Cement factory in Blantyre (coal necessary)
• In 2009, importation of 202,000 tons from India/China through Beira (40%) and Nacala
(60%)
• In the years to come, imports (Lafarge) from Zambia (50%) and Zimbabwe (50%)
• Cement industry highly dependant on the transport sector
Opportunities for Malawi
• Reducing the cost of imports including transport cost by producing cement (limestone +
coal => Clinker main raw material for Cement)
• Develop an efficient North-South transportation system for heavy products, including Lake
intermodal facilities and efficient railway
8/6/2010 33
The cement production process
1) Limestone is taken from a quarry. It is the major ingredient needed for making cement. Smaller quant ities of sand and clay are also needed. Limestone, sand and clay contain the four essential elements required to make cement. The four essential elements are calcium, s ilicon, aluminum and iron.
2) Boulder-size limestone rocks are transported from the quarry to the cement plant and fed into a crusher which crushes the boulders into marble-size pieces.
3) The limestone pieces then go through a blender where they are added to the other raw materials in the right proportion.
4) The raw materials are ground to a powder. This is sometimes done w ith rollers that crush the materials against a rotating platform.
5) Everything then goes into a huge, extreme ly hot, rotating furnace to undergo a process called "sintering". Sintering means: to cause to become a coherent mass by heat ing without melting. In other words, the raw materials become sort of partia lly molten. The raw materials reach about 2700° F (1480°C) ins ide the furnace. This causes chemical and physical changes to the raw materials and they come out of the furnace as large, glassy,
hot cinders called "clinker".
6) The clinker is cooled and ground into a fine gray powder. A small amount of gypsum is also added during the final gr inding. It is now the finished product - Portland cement. The cement is then stored in silos (large holding tanks) where it awaits distribution. The cement is usually shipped in bulk in purpose-made trucks, by rail or even by barge or ship. Some is bagged for those who want small quantities.
How to produce
Clinker
8/6/2010 34
About Mining
• Mining in Malawi (Uranium, Rare Earth, Heavy Sands, Bauxite)
• Coal of Tete Region (Moatize Mine with Vale, Riverdale Mine)