Local and international financial institutions have expressed interest in financing the US$125 million Manhize-Mvuma railway project, with discussions expected to focus on a funding structure that spreads financing risk among participating lenders, Mining Zimbabwe can report.
By Rudairo Mapuranga
The 54-kilometre railway project, being developed by Grand Railway Solutions (GRS), a unit of Dinson Iron and Steel Company (Disco), is being implemented under a strategic cooperation agreement with the National Railways of Zimbabwe (NRZ).
GRS Director and Founder Linos Masimura said five local banks, including CBZ Bank and Ecobank, as well as the African Finance Corporation (AFC), had expressed interest in participating in the project.
“We have an expression from African Finance Corporation, which is an international bank, and we have also sent out expressions to other banks,” Masimura said.
“We have not yet broadcast that we require investors, but they just got to know about the project and started expressing interest. We have five local banks that have already expressed interest, including CBZ and Ecobank. We also have international banks.”
The interest comes as GRS plans to finance about 60% of the project’s US$125 million construction cost from its own resources, leaving approximately US$50 million to be raised externally.
Masimura said the bulk of the external financing would be directed towards imported equipment and materials, while GRS would meet much of the cost of civil works and local infrastructure from its own resources.
The financing structure is expected to be developed through discussions between the project developers and participating financial institutions, with the objective of spreading exposure among lenders rather than placing the entire financing requirement on a single institution.
The approach was also highlighted by CBZ Bank’s managing director, who said local financial institutions were prepared to collaborate on the project and determine an appropriate funding structure.
The model would be similar to arrangements used in financing large infrastructure and mining projects, where several institutions participate to distribute project and repayment risks.
Construction of the railway is expected to take about 12 months once the project is fully mobilised.
The line is expected to provide a dedicated rail connection between Manhize and Mvuma, strengthening the logistics chain supporting Zimbabwe’s steel and mining industries.
Once operational, the railway is projected to move about 600,000 tonnes of cargo annually, including coking coal and coke from Hwange to the Manhize steel plant and finished steel products from Manhize to domestic and export markets.
For the mining and steel industries, the project is expected to reduce reliance on road haulage for bulk commodities while improving the movement of high-volume cargo.
NRZ Acting Chief Executive Officer Ainah Dube-Kaguru said the partnership would also address some of the railway operator’s longstanding capacity constraints, particularly shortages of wagons and locomotives and the need to rehabilitate sections of its network.
“There is very much that you can do in terms of investment, and we will be able to repay the banks,” Dube-Kaguru said.
She said greater investment in rail infrastructure would allow the sector to handle substantially more bulk cargo while improving the efficiency of Zimbabwe’s logistics system.
Dube-Kaguru also highlighted the difference in carrying capacity between rail and road freight, noting that a rail wagon can carry about 54 tonnes of cargo compared with approximately 33 tonnes for a truck.
The shift of bulk cargo from road to rail is expected to reduce pressure on Zimbabwe’s road network while lowering the number of heavy trucks required to move industrial commodities.
Benson Xu, a director of Disco, said the partnership brings together the respective strengths of the three parties, with NRZ providing its railway infrastructure and expertise, GRS bringing investment and rolling stock, and Disco providing a significant cargo base through its steel operations.
The development is particularly significant for Manhize, where the growth of steel production is expected to generate substantial demand for reliable bulk transport.
The railway could also support wider development of mineral and commodity logistics infrastructure by improving the reliability of cargo movement between production centres, warehouses and markets.
GRS also intends to develop local capacity to maintain and refurbish rolling stock. Masimura said the company planned to repurpose a workshop used during construction of the Manhize steel plant for wagon refurbishment and, ultimately, the manufacture of new wagons locally.
The initiative could help address Zimbabwe’s longstanding shortage of functional rolling stock while creating additional industrial capacity around the country’s railway and mining sectors.
For financiers, the project’s potential cargo volumes and the involvement of an established industrial producer provide an important basis for assessing the project’s ability to generate revenue and service external financing.
However, while several financial institutions have expressed interest, the financing structure has not yet been finalised, meaning the project remains at the stage of lender engagement and financial structuring rather than a completed US$125 million financing package.
