BULK raw materials and non-perishable products, especially high mass goods, need to be moved by rail to keep costs manageable and pricing competitive.
So as Zimbabwe presses forward with an industrialisation strategy that will see a growing percentage of primary and heavy industrial goods, the rail network needs to be upgraded and extended so these move readily and at lowest cost to domestic and export markets.
When Tsingshan Holding Group, a major global steel maker based in China, was looking for a site for its proposed multiphase Zimbabwean investment and a steelworks to be built and operated by its local subsidiary Dinson Iron and Steel, Manhize ticked the most boxes.
The large deposit of good grade iron ore in the area, plus local supplies of limestone and nearby mining of chrome and other metals needed for future alloys, meant most raw materials were on site or round the corner.
The principle raw material that was some distance away was coke, and the coal from Hwange. Although trucks could be used in the initial stages, at least for transport to and from the nearest railhead for coke and coal coming in and steel going out, Disco made it clear from the start that a rail link to the railhead at Mvuma was essential as production rose.
Steel is a product that combines bulk and high mass, and trucking steel long distances is not really a long-term economic option, especially as volumes of product rise.
Disco is already exporting steel at competitive prices, as well as supplying local markets with construction steels and billets, and the rail line would ensure that Disco remains highly competitive.
Tsingshan has proved to be a remarkably clear-sighted investor, being prepared to expand its investment into infrastructure and other development to make sure its steelworks would flourish.
It built its own coking plant and power station at Hwange. Then in the first infrastructure deal formed a joint venture with Zesa to run an extension of the core high-end national grid from near Kwekwe to Manhize.
While Disco supplied the initial capital for this link, and made the giant pylons to carry the cables, the investment was to be recouped over several years.
In effect Disco paid Zesa upfront for several years of transmission fees as its power was cycled from Hwange to Manhize. This made everyone a winner with no one, especially Disco and Zesa, losing out.
The same readiness for developing the required infrastructure was seen this week when detailed negotiations with the National Railways of Zimbabwe culminated in a deal for a Disco subsidiary, Grand Railway Solutions, to fund the construction of the 54km line from Manhize to Mvuma, and to upgrade the line between Mvuma and Gweru to mainline SADC standards and so able to handle the heavy rail wagons that the main lines already cope with.
The line will obviously be extremely useful for downstream manufacturers in the Manhize area, and Disco is keen on other industrial businesses wanting to turn its steel into products to move in.
Already a large residential area and an industrial park have passed the planning stages, so the development will be orderly.
Among the downstream manufacturers will be Disco’s own Grand Railway Solutions, which sees potential for a rail wagon manufacturing unit.
While wagon bodies can be made by almost any heavy engineering company, the wagon wheels and axles require exceptionally high-grade steels and specialist manufacturing tooling.
Obviously Disco reckons it produces the required quality of steel, and manufacturing wagons and replacement axle sets will find markets across Southern Africa, opening another export business.
But the Zimbabwean market itself will be growing. Besides NRZ there are likely to be other primary rail users who want their own wagons, in some cases carrying containers of bulk goods, such as lithium salts, and so the local market will include both general wagons and the specialised wagons rail customers want.
NRZ is also to be complemented on accepting innovative solutions involving what is likely to be the largest single customer of the railways.
This will also be a precedent for others involved in heavy engineering and bulk goods and who need or desire an extension of the rail network to where they will be mining, processing and manufacturing. Having an already mapped solution on hand makes it easy to include others on other lines later.
So the NRZ-Disco group deal needs to succeed and move smoothly forward, with NRZ fulfilling its role as the operator of all lines efficiently so that Disco materials move in and the steel and other Manhize products move out very smoothly.
