WorleyParsons tapped for Mozambique rail project

584 km railway will link up Vale's coal mine to port.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A new project located in Mozambique was awarded to professional service provider WorleyParsons (ASX: WOR) to plan and oversee the management of the Nacala Rail Corridor Project being constructed by Corredor Do Desenvolvimento Do Norte.

In addition, Corredor Logístico Integrado de Nacala awarded the company with the contract to design the maintenance complex and rail facilities at Nacala. Both awarding companies were established by Vale Mozambique, a subsidiary of Vale (NYSE: VALE), and are working together with the parastatal authority known as Portos e Caminhos de Ferro de Moçambique, which oversees the country's railway system and connected ports.

A great amount of mining development is occurring in southeast Africa for coal and iron, but the infrastructure to carry ore to the ports is not developed enough to handle the expansion, so many mining companies like Vale and Rio Tinto (ASX: RIO) have to build rail lines over hundreds of kilometres to deliver it to waiting ships.

This new project will span 584 km from Vale's Moatize coal mine to the port of Nacala, located in northeast Mozambique.  It is projected to have the capacity of transporting 18 Mt/annum.

Worley Parsons is diversified across the seven continents, offering engineering design and maintenance services to the industries of oil and gas, mining, infrastructure and environment. Its revenues are for the most part divided equally across the world regions except for a larger proportion in Canada, and 68% of its earnings are from the oil and gas industry.

In August, it released its 2013 annual report showing an 8.8% drop in net earnings of $322.1 million on $8.81 billion in revenue. The profit decrease came mostly from the infrastructure and environment, as well as power business segments.

Foolish takeaway

As mining companies search for regions rich with natural resources like iron and coal that also offer low cost production, they have to contend with the  problems of non-existent or underdeveloped infrastructure in those countries. Australia has well-developed infrastructure, but the high cost of mining ore in a time of weak commodity prices makes regions like southeast Africa appealing.

The Mining Resource Rental Tax started under the previous Labor government was another hindrance to miners and explorers because the total cost of how much they would pay was not clearly set out. That uncertainty makes them looker harder and longer at doing business overseas in cheaper regions.

Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."

More reading


Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »