by FREDDIE DAWSON [email protected] Strangely, when talking about development in African countries, Cameroon has not been the home of massive, rapid growth. Between 2007 and 2012, the country posted sub-par growth rates averaging 3.4%. Africa, as a whole, has averaged over 5% during that same period, according to the African Development Bank.
But that looks set to change. Growth in the central-west African country is on the up and a new iron mining project could transform the country’s prospects.
It could be that Cameroon was preparing for future growth during its down years, says David Cowan, economist and managing director at Citi Bank. The country has been working to put the bricks and pieces required for future growth in place. The process is not complete but it helps that it has taken its time in preparation, he adds.
“You can think about Africa as at a tipping point or a turning point when it comes to growth,” Cowan says. “If you think it’s a tipping point then growth is inevitable. If you think it’s a turning point, then you think you need to go the things that are right to grow substantially growing forwards.”
This includes investment in areas such as education, infrastructure and policy framework, he adds. Cameroon has seen some of this investment and slow development. One major project in particular has the potential to really change Cameroon’s economy and create growth opportunities.
Sundance Resources, an Australian company, is attempting to construct a major iron ore mining operation that stretches over the Cameroonian-Democratic Republic of Congo (DRC)border. The projected 35m tonnes per annum Mbalam-Nabeba Iron Ore Project will also be connected to a brand new deepwater port on the Cameroon coast through the construction of a 510km railway.
The project has some interesting parallels to Guinea where the Simandou project is looking to do a very similar thing: mine a large, untouched deposit of high quality ore further in the interior, send it to the coast on a purpose built railway and then ship it to buyers primarily in China through a newly constructed deep-water port.
For Sundance and Cameroon, the Mbalam-Nabeba project represents a massive opportunity – particularly around the railway, which – like in Guinea – can be used for multiple purposes and will help to create economic opportunities elsewhere in the country. One of the considerations when building the railway was sustainability, says Giulio Casello, managing direct and chief executive officer of Sundance Resources. This includes ensuring that there is a social and economic upside that leaves a long-term legacy in place, he adds.
The construction of the railway itself is not particularly challenging. It runs for 400km along a fairly level plateau before descending to the sea. “There’s only 640m of bridges in the 580km of line [including a 70km spur in the DRC],” he says. “There are no tunnels, no huge bridges over valleys – in of itself it’s not difficult.”
Similarly the port should be fairly easy to construct. It does not require a breakwater and a 1km jetty gets out to a depth of 16.5m, meaning it should be able to service Cape Size vessels (ships too big to go through the Suez or Panama Canals – typically over 150,000 tonnes in capacity) with only minimal dredging, Casello adds.
In June, 2014 Sundance hired Mota-Engil Africa, the African subsidiary of the Mota-Engil Portuguese construction firm, to build the port and railway at an estimated cost of £2.2bn ($3.5bn). Construction is expected to start in 2016, with the first shipments coming in 2019.
Currently Sundance is looking to complete financing for the project – expected in the middle of 2015. “There is a large appetite in the Western world for funding this kind of project,” Casello says. Sundance is working with development banks to secure funding and has support from organisations such as the IFC (International Finance Corporation) and the World Bank. “The project has the potential to change many people’s lives,” he says. “It generates change in at least two countries and the funding strategy is very much related.”
And with the potential to scale iron ore exports up to 100m tonnes per annum and the ability to service other projects in the area, it is also definitely a project that can create other opportunities for interested businesses.
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