A Mozambican-incorporated consortium has signed a $2.389-billion contract for the construction of a 500-kilometer single-track, standard-gauge railway for transporting coal from Mozambique's coal fields at Moatize to the new Indian Ocean port of Macuse, 1600 km north of the capital city Maputo.

Thai Mocambique Logistica SA, which in 2013 won the concession for the new Macuse port and railway, signed the construction contract in mid-June 2917 with the 50-50 Portuguese-Chinese consortium Mota Engil-CNCEC—formed by Portugal's construction firm Mota Engil and Chinese company China National Complete Engineering Corporation—which had been picked as the preferred EPC bidder for the project in March this year.

The Mota Engil-CNCEC consortium won the contract after beating Brazil's Andrade Gutierrez, Chinese firms China Railway Construction Corp. and China Harbour Engineering Co. Ltd, Turkey's Yapi Merkezi, and South Korea's GS Group. Thai Mocambique Logistica SA is 60% owned by Thai company Italthai Industrial Co. Ltd. Other shareholders are Mozambique's publicly owned port and rail company CFM and private Mozambican business group Codiza, each with a 20% stake.

"The project, which is part of the logistics channel linking the Moatize mining area to the port of Macuse in Mozambique, will consist of the construction of a railway of about 500 km and will last 44 months," said Luis Silva, Mota Engil's representative for market relations in a statement on June 13.

The new line be shorter than the two it will be competing with directly: the 673-km Moatize-Beira railway line and the 913-km single-gauge Moatize-Nacala line that passes through neighbouring Malawi and carries 22 million tons per year of coking and thermal coal for the Maputo-based coal miner Vale Mozambique, a subsidiary of Brazil's Vale S.A.

An initial project brief says the new railway line, with a design axle load of 32 tonnes, will carry an estimated 25 million to 30 million tons per year of coal between 2019 and 2025. The volumes will gradually be increased to 50 million tons per year in 2026 and 100 million tons per year in 2035, mainly destined for steel mills and thermal power plants in India, Thailand, China and Japan.

Three diesel-powered locomotives will drive 216 wagons carrying 100 tons of coal each, according to the brief. There are also plans for passenger train service using two two-car diesel multiple units for the daily train service in each direction in the first six years that the line will be in operation.

The project also entails construction of a new deepwater port of Macuse that will have depth needed to accommodate 80,000-DWT Panamax vessels. The vessels are too big to dock at the neighbouring Beira port.

The consortium could not immediately confirm how the $2.4-billion financing has been structured and who will provide the funds. Silva hinted that because of the large incorporation of Chinese goods and services, China's export-credit agencies are expected to provide substantial funding for the project.