Italy pledges $320 million for Africa's Lobito corridor under G7 infrastructure plan

Italy has announced a commitment of $320 million (Eur298 million) to the Lobito corridor project, a US-backed initiative aimed at upgrading and extending the existing rail corridor connecting the copper and cobalt-rich areas of northern Zambia and southern DRC to the Port of Lobito in Angola.

Italian Prime Minister Giorgia Meloni made the announcement during a meeting at the 2024 G7 Leaders' Summit on June 13 in Borgo Egnazia, Italy, which focused on the Partnership for Global Infrastructure and Investment (PGII).

The PGII, established in June 2022, is a collaborative effort by the G7 to finance infrastructure projects in developing countries and is seen as a response to China's Belt and Road Initiative (BRI).

In partnership with Angola, the DRC, Zambia and the African Finance Corporation, the US and the EU have mobilized nearly $1 billion for the Lobito railway project through the PGII. This project is expected to act as a catalyst for growth and investment in Africa, while also addressing the logistical bottlenecks that have hindered copper and cobalt exports from the region.

Under a public-private financing arrangement, the Lobito Atlantic International (LAI) consortium, comprising Trafigura (49.5%), Mota-Engil Engenharia e Construcao Africa (49.5%), and independent rail operator Vecturis (1%), has agreed to invest over $450 million in the railway and associated infrastructure in Zambia. An additional $100 million will be allocated to upgrading the railway line and rolling stock in the DRC.

Operations along the railway are set to increase in the coming months, with the Kamoa-Kakula copper complex having committed to utilizing 10,000 mt of allocated capacity during 2024.

Meanwhile, China is planning to upgrade the TAZARA railway, which runs from Kapiri Mposhi in Zambia to the port of Dar es Salaam in Tanzania.

China has proposed a $1 billion refurbishment project for TAZARA, with China Civil Engineering Construction Corporation (CCECC) expected to assume operational control of the railway at the request of the Tanzania-Zambia Railway Authority.

China is well ahead of the US and the EU with respect to its investment and diplomatic engagement on the African continent. Much of this effort has been concentrated on Africa's mineral wealth, with Chinese companies ahead of their western counterparts in terms of establishing and solidifying their supply chains for cobalt, lithium and other critical minerals.

Platts assessed the Chinese copper import premium at London Metal Exchange cash minus $10/mt, CIF China, June 14, showed S&P Global Commodity Insights data. LME-registered normal brands of electrolytically-refined cathode were assessed unchanged on the day and down $4/mt on the week.

The top ER brand differential was assessed at $5/mt and the solvent-extracted/electrowon differential was assessed at minus $10/mt.