Republic of Mozambique & Republic of Malawi / Loan Insurance for Rail and Port Infrastructure Project
(First African Rail and Port Construction Project Supported by NEXI)

November 28, 2017

Nippon Export and Investment Insurance

Nippon Export and Investment Insurance (NEXI; Chairman and CEO: Kazuhiko Bando) has decided to provide its insurance to support loans for a rail and port infrastructure project in the Republic of Mozambique and the Republic of Malawi. This is the first time that NEXI has supported a rail and port construction project in Africa. Also, as a US Dollar-denominated insurance (in which both premium and claims are paid in the US dollar), it is going to be the second insurance contract for NEXI.

Under this infrastructure project, Mitsui & Co. (“Mitsui”) and a global mining company Vale S.A. construct and operate a new railway through their four railway and port joint venture companies. The new 912 km railway will run from Moatize coal mine, located in northern Mozambique, through Malawi to the Mozambique port of Nacala. The project also develops and operates a coal export terminal in Nacala.

The Moatize mine, in which Mitsui has also invested along with the project, has large coal reserves with competitive advantages. While part of the coal produced from the Moatize mine is expected to be exported to Japan, insufficient transportation capacity of the existing railway and port remains a challenge. The development of a new transportation infrastructure under this project will improve the coal transportation from the Moatize mine, eventually leading to more diversified and stable coal supply sources for Japan.

In contrast to rapid economic growth in southern Mozambique including capital Maputo, it has often been pointed out that the northern area is left behind. As for Malawi, this landlocked country also needs transportation infrastructure development to achieve the continued economic growth. As this rail and port infrastructure project is planning general freight transportation besides coal transportation, the northern Mozambique and Malawi can expect significant economic benefits.

For Japanese companies, this is the first railway and port construction and operation project in Africa. The continent’s huge infrastructure needs along with the economic growth are receiving increased attention from Japanese companies. The project is expected to give added impetus to Japanese entry into the African infrastructure business market.

The loans for this project take the form of co-finance, amounting to approximately USD 2,700 million. NEXI’s insurance will support USD 1,000 million loans provided by commercial lenders: Sumitomo Mitsui Banking Corporation, Mizuho Bank, Ltd., Standard Chartered Bank Tokyo Branch, Nippon Life Insurance Company, The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Sumitomo Mitsui Trust Bank, Limited. The project is also supported by Japan Bank for International Cooperation, Export Credit Insurance Corporation of South Africa and African Development Bank.

The Japanese government has led the Tokyo International Conference on African Development (TICAD) since 1993. Last August, the sixth meeting (TICAD VI) was held in in Nairobi, Kenya, and the TICAD Ministerial Meeting took place in August this year in Mozambique. This infrastructure project will contribute to “quality growth” and “human security” in African countries which have been promoted by the Japanese government through TICAD.

As a financial institution implementing Japan’s policy, NEXI will continue to support Japanese infrastructure exports.

Insured Sumitomo Mitsui Banking Corporation, Mizuho Bank, Ltd., Standard Chartered Bank Tokyo Branch, Nippon Life Insurance Company, The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Trust Bank, Limited
Insured amount USD1,000 million
Tenor 14 years
Covered risks Political Risk 100%, Commercial Risk 90%

Contact: Natural Resources Group II, Structured and Trade Finance Insurance Department
    Tel: 03-3512-7744