DP World will build and operate a logistics hub in Mali under a 20-year concession agreement, marking the Dubai-listed port operator’s latest foray to expand its business in Africa.
The 1,000-hectare Mali Logistics Hub will be located outside of Bamako, the West African country’s capital and its largest city, DP World said in a statement on Wednesday. Construction on the first phase will begin in 2019 and take 18 months to finish at an estimated initial investment of $50 million.
“The Mali Logistics Hub will dramatically improve the cost and time of the trade for Mali,” Moulaye Boubacar, Mali’s transport minister said. “The project will provide us with a first-class logistics facility comparable to global standards and will be the largest in terms of capacity.”
In Africa, DP World has operations in Senegal, Egypt, Mozambique, Djibouti, Algeria and Somaliland, according to its website. The ports operator has recently shown increasing interest in the continent, where it has signed agreements for ports and logistics facilities in Congo and Ethiopia this year. The Nasdaq Dubai-listed company signed in May a preliminary agreement with Egypt’s Suez Canal Authority and the Egyptian government to jointly develop a new inland container depot near Cairo as part of efforts to spur the North African country’s economic growth.
“The hub in Mali is a tiny investment and is in line with DP World’s strategy to expand operations, not just in Africa but globally, and going more into logistics hubs rather than container operations,” Ahmed Maher, vice-president of research in the industrials sector at EFG-Hermes, said.
The company is continuing with a push to expand into Africa, undeterred by obstacles to its operations in Djibouti and Somaliland. Earlier this year it announced a $1.2 billion investment in a deep-water port in the Democratic Republic of Congo and a logistics facility in landlocked Ethiopia.
“In terms of legal issues, Africa is riskier to do business in than the UAE or North America but that’s part of doing business and DP World is not putting in significant amounts of investment in Africa that would hurt it significantly,” Mr. Maher said.
The African countries that DP World invests in lack of any major access to freight and the company facilitate their trade with global markets.
“The investments are huge for these countries but small for DP World initially thought it will see these countries growing much faster in the long-term and DP World stands to benefit later on.”
The Mali hub will be located on the main road corridor connecting Bamako to Senegal’s capital Dakar, close to the Dakar-Bamako rail line, with a capacity to handle 300,000 twenty-foot equivalent unit (TEUs) and four million tonnes of bulk and general cargo.
“DP World’s investment will significantly cut processing times for goods and thus facilitate trade,” DP World chairman Sultan bin Sulayem, said. “The Mali Logistics Hub is much needed and will provide the country with a logistics platform that aims to facilitate the import and export of goods via the Port of Dakar, which is operated by DP World.”
The first phase of the project will have an inland container depot and container freight station facility to facilitate the import and export of goods. DP World will also provide Mali with three locomotive trains to increase cargo and passenger traffic along the Bamako-Dakar railway.
On Tuesday DP World revealed global gross container volumes grew 4.8 percent on a reported basis in the first six months of the year compared to the same period in 2017 and 6 percent on a like-for-like basis, which does not include new capacity additions. The ports operator handled 35.6 million 20-foot equivalent units (TEUs) in the first half.
The deal with landlocked-Mali has an automatic 20-year extension, the company said.