The Lobito Corridor, a Route to African Development?
In this article, Veronica Bolton Smith makes the case that the participating countries in the Lobito Corridor need to do more to become part of the $60 billion Electric Vehicle (EV) battery supply chain.
The stakes are high for Africa as the EV battery market is anticipated to more than double in size to $141.6 billion by 2032, according to Apollo Research.
A primary goal of the Lobito Corridor initiative is to improve and expand the existing railway and supporting infrastructure to allow efficient flows of critical raw materials from mines in Zambia and the DRC to Angola’s port city of Lobito.
Presently, the minerals mainly travel eastward via trucks towards ports in South Africa, Tanzania, and Mozambique. Poor road infrastructure leads to delays and traffic jams, and once at port further delays are not uncommon due to them being overwhelmed, mismanaged, or lacking in capacity.
The Lobito Corridor establishes a westward path for the minerals providing optionality to producers and easier access to markets in the United States and Europe.
The United States, the EU Commission, the African Development Bank, and the African Finance Corporation have all pledged significant funds towards the project.
The Lobito Corridor is an ambitious public-private-partnership to develop infrastructure linking the copper and cobalt mines of Zambia to key markets in Europe and the United States.
Made possible through multi-stakeholder agreements, the venture has been hailed by the governments of Zambia, the DRC and Angola as crucial for future generations and economic growth.
Alongside the fanfare and big dreams, however, it is important to understand where the greatest value of the Corridor may lie, who stands to benefit the most, and how impact might be measured against expectations.
What is the Lobito Corridor?
Officially termed the Lobito Atlantic Railway Corridor, this is an agreement between Zambia, the DRC and Angola, and a consortium of three companies (Trafigura, Mota-Engil and Vecturis) to allow for the construction of a railway and all its support infrastructure, so as to transport materials from the mines in Central Africa to a point as close as possible to the markets in the USA and Europe. This point is the Angolan port city of Lobito.
The Corridor will be used as the route to transport critical raw materials (CRMs), strategic minerals and products of the EV battery value chain.
As demand for CRMs increases, EU and US markets need to access these quicker, more reliably and competitively.
An Atlantic port significantly shortcuts the current Indian Ocean ports of Beira, Dar-es-Salaam and Durban. Currently trucks transport these materials, placing shipments at risk of hijacking, border delays, capricious political delays and under-performing unloading at overwhelmed ports.
The railway, which exists historically and has already completed a trial journey, will still require further development.
What are the planned benefits?
While it primarily seeks to deliver critical minerals to western markets, the knock-on effect within the countries of the DRC, Zambia and Angola will foreseeably be increased employment in the region and infrastructure improvements.
It is expected that SMEs will flourish along the railway routes thereby spurring economic growth at the local level. Furthermore, critical sectors should benefit from the railway, including logistics and transportation, CRMs supply chains, and even agribusinesses that may be able to take advantage of the better transportation facilities.
At the G20 meeting in September 2023, both the US and EU announced a feasibility study on activating the corridor. An initial load of over 1000 tons of copper from Ivanhoe Mines was delivered along the railway in December 2023. It is currently estimated that the entire project will be complete in 2029, pending the outcome of the feasibility study.
SOURCE:lobitocorridor.org
