Interview with Agostinho Langa Junior, PCA of CFM

19 May Interview with Agostinho Langa Junior, PCA of CFM

GI: Could you tell us about the history and evolution of the company, as well as the recent results in recent years? What is the focus for 2023 and what prospects do you have for Mozambican rail and port development for the coming years?

Agostinho Langa Junior (ALJ): CFM is a public company, with a long history of existence of over 128 years. In the beginning, we were the only company in Mozambique that operated the rail and port systems. It was like this until around 1998 when there was a need for investment in the sector. CFM suffered a lot during the civil war, but after independence whatever infrastructure remained it was destroyed. It was necessary to invest in building the system. That was the priority of the Mozambican state government. Railway and port activity was considered a lucrative activity that could easily attract private investment. In 1998 the Mozambican government decided to start granting new concessions. This is how the Port of Maputo, Beira, and Nacala were concessioned. As a result, cargo volumes in these ports have risen exponentially. There was an attempt to manage the central railway in Beira with an Indian company, but unfortunately, this concession did not give good results and the system was once again operated by CFM, the same happened with the port of Nacala. CFM is currently operating the Port of Nacala, Pemba, and the downtown rail system. Large investments had to be made in the road system in the north of the country to transport coal to Nacala, which is why this concession was granted to the Indian company. And since then, we have witnessed great advances in terms of traffic, infrastructure, and equipment. We serve both Maputo and Beira ports.

We have invested in increasing the capacity of our railway lines, and locomotive equipment and wagons with greater capacity, and consequently increasing the capacity of the railway line through the construction of new bridges to increase the weight per axle of our compositions. Today we make lines with a capacity of up to 27 tons per axle. Due to these investments, we saw a lot of growth in volumes both in the ports and in the railroads. Last year, for example, we had a growth of around 6% in the port sector, and in the railway sector a growth of 12%.  We continue to invest in the modernization of the rails and the use of computerized digital management systems for both ports and railways. Today we have a train command system that is operated via satellite, which allows us more safety and fewer accidents. We have also been working with neighboring countries that are major users of our infrastructure and ports. We are planning together with a Mozambican electricity company to use the electric rail system instead of diesel, which would have a huge positive economic impact. We are planning on increasing the line capacity of the rail lines.

We are studying new technologies and we are thinking of building new lines, in addition to improving what already exists and training a skilled workforce, this is essential for us to achieve our goals.

GI: What were the main damages caused by this storm and what was the key role in the recovery of the affected assets? What are the main problems influencing rail expansion in Mozambique and what efforts are CFM together with the Government of Mozambique developing to overcome these obstacles?

ALJ: Climate change has indeed greatly affected our infrastructure. We are slowly learning to live with these changes, and that is why we work together with the government to create more resilient infrastructures. We need to sensitize the population that lives very close to the railway lines, as this makes the ground very fragile. The Beira-Moatize line was closed for about 36 days, as we had about 3 km of rail lines were damaged, and some bridges were affected, but fortunately, we managed to fix and reopen the line. In the meantime, our engineering team is working on long-term solutions, and these solutions initially consist of mapping all areas of the potential risk of flooding that are close to rivers. What we want to do at these points is to build hydraulic passages of greater capacity to allow the water to circulate without major difficulties. Our estimate of the damage from Cyclone Freddy and other rains that happened earlier in the year was around USD 30 million. There is no way we can fight against nature, we need to adapt, and we must invest in engineering to facilitate the water circulation.

GI: What benefits came from the abolition of the railroad border between the two nations? What are the prospects for facilitating international rail connections between Mozambique and other African countries, and what agreements are being developed to facilitate rail and port transport of goods across borders?

ALJ: Relations between Mozambique and neighboring countries that use the railway system are regulated by what we call a Business Agreement. It is a relationship between companies. One of the benefits of the Business Agreement is that it does not make logistics very expensive, countries must allow cargo to circulate in shorter stretches so that goods can reach markets with more competitive prices. This does not always happen, as it is also necessary for CFM to be able to transport many goods and for the Port to be able to have this capacity as well. That’s why we entered into this agreement with South Africa because Maputo already has the capacity to receive more goods. The benefits that we expect from these partnerships are to make these import and export processes more flexible, the route will be faster, the cost of logistics will decrease, and we will be able to increase the volume of cargo. We hope that this experience with South Africa will also be replicated in Eswatini, Zimbabwe. Zimbabwe still needs to improve many things on its railways. We are working with Malawi to connect the line that connects Beira to Moatize, here on our side of Mozambique we have already completed 44 km that go to the border, and Malawi is a little late, but they are already working on it. It will also facilitate the control of cargo at customs, as this control can be done here at the port, the port is also a border. We see good results for the coming years and an increase in the number of cargoes passing through our port.

GI: Could you explain to our readers the current phase of the port, the capacity prospects and the benefits arising from this rehabilitation project? What synergies did you see from the partnership with the Japanese capital organization, and what other opportunities are there for Japanese investors to cooperate in the rail and port industries in Mozambique?

ALJ: I was director of the port of Nacala for 20 years, I know the port very well. It is a port with unique characteristics in Mozambique, with very deep waters and a 60 m deep access channel that does not need dredging. It is a natural port with characteristics that can still be explored. The Japanese investment is coming at a good time and the project is almost finished. Its capacity will be increased from 100 thousand containers to 250 thousand containers. I see that the port of Nacala has the capacity for much more. It will be a more modern, cheaper port that will attract more traffic. With the export of tobacco, for example, tobacco cannot stay closed in the container for too long, so with this modernization of the Port of Nacala there will be more flexibility for drivers, they will be able to arrive and then board the ships. The ships will also have more capacity to transport goods. Port will certainly create more business opportunities, and thus generate more jobs for the community. This partnership with Japan is a very interesting experience and there is still a lot of room for investment. On the railways, our objective is to improve the infrastructure and think about how to modernize and electrify the system, which today is completely diesel. We also want to increase passenger capacity. Currently, we use the same railway line to transport goods and passengers, but ideally, they would be separate lines, and this is something that Japan can also help us with, as they have a lot of experience in this area. We also want to modernize the maintenance areas, in the workshops, maintenance of the railway line, and the implementation of new technologies.

GI: Could you give us a brief summary of your professional career? As President of CFM, what are the priorities you have set for the state company for the next 5 years?

ALJ: I studied electrical engineering at Eduardo Mondlane University and taught at the university for 3 years. Then, in 1991, I moved to CFM to help in the Port of Nacala. At first, I worked for a while in the maintenance area. And because of that, I took a training course in port management in Rotterdam, Holland, and in Israel. From 1995 until 2015 I worked as Director of the port of Nacala. Then, in 2015, I became the executive Board director of CFM. In 2020 I was appointed as Secretary of State for Technical and Profession Education, and until today it is an activity that I share with great passion. I realized the importance and lack that technical education is for our country, so even though I am here with CFM, I will continue to give a lot of support to technical education. We are a company that focuses on education.

We see many young people with higher education, but they do not have the technical knowledge and experience, and this is sorely needed. CFM’s priority is to modernize its railway and port infrastructure. We want to increase capacity, computerize management systems, and invest in equipment. In recent years we have purchased new locomotives, wagons and passenger coaches including DEMUs for various purposes. We need to improve a lot our level of maintenance both for the equipment and for the railways, and for that reason, there is a big bet on the requalification of our workshops, and on the training of the workforce, to be able to meet all these investments that we are making.

We are renovating the railway line that connects Beira to Machipanda, increasing capacity from around 800 thousand tons to 3.5 million tons. We are duplicating the Ressano Garcia line, we will be able to increase the capacity of the line, which today is around 15 million to 24 million tons. We have the challenge of increasing passenger transport capacity. For long-term projects, we want to have a direct rail line from North to South, which would connect all the systems, without having to pass through any neighboring country. CFM also wants to get into the oil and gas business, and the Mozambican government has proposed this challenge to us so that we form partnerships with the big shipping companies, to carry out the maritime transport of the gas that is produced in Mozambique. Perhaps Japan can also be a good partner in this new venture. In order not to interfere with railway and port activities, we are creating an SPV, called CFM Logistics, and this company will take care of these new oil and gas businesses.

GI: Why should investors choose Mozambique as a place to do business?

ALJ: Mozambique is excellent in terms of railways and ports. It is a country surrounded by countries producing large quantities of minerals. And we have 2,470 km of coastline. Mozambique is also a country that has high potential in terms of minerals and agriculture. Today we have not yet begun to exploit even a fifth of our agricultural capacity. The world will need food more and more, as the world’s population is increasing, especially in Asia, and we can be a great market and supplier to Asian markets in terms of agriculture and raw materials.

We have a young population that can also become qualified, who can either work here in the country or offer their services in European or Asian industries. Our ports are very close to the Asian market, and our location on the east coast of Africa puts us very close to the Asian market. It can be said that the ports in South Africa are already becoming overloaded and we can serve as an alternative in this regard, we are still a new country that has a lot of potential to be explored.