MAURITANIA RAILWAY MODERNISATION

The project concerns the capacity expansion of the railway line owned and operated by SNIM, linking the iron ore mining area of Zouerate with the port of Nouadhibou, an extension of the line to new mining sites of El Aouj and Atomai (42 km of new railway lines) to meet the transport needs generated by these two mining sites. The promoter's investment programme includes the acquisition of rolling stock (locomotives and wagons) and equipment for infrastructure maintenance, as well as the extension of maintenance facilities.

The aim is to increase the quality, capacity, availability and reliability of rail operations in Mauritania and contribute to SNIM's competitiveness. It is expected to generate time and vehicle operating cost savings, reduce the maintenance costs of the infrastructure and improve railway safety. This will prevent the modal shift from rail to road and, thereby, present climate, environmental and road safety benefits.

The operation will support a coherent logistic capacity expansion program of SNIM, the second largest African iron ore producer, allowing to progressively increase its export capabilities and secure end-to-end performance of its mine-to-market value chain. Robust infrastructures (being implemented efficiently and sustainably) to connect remote mines to markets requires significant financing to accommodate future sustainable growth and is an essential ingredient to unlock SNIM greener diversification strategy.

Moreover, the project offers a strong business model, allowing the promoter to maintain and gain critical size and strengthen its established position as integrated regional competitive iron ore producer. The project contributes to creating a more dynamic and sustainable private sector, and is also supported by sound governance and capabilities of the Promoter.

Fully aligned with the objectives of the Paris Climate Agreement and yielding good economic returns, social and environmental benefits and employment, the operation contributes to the Bank's lending priority objectives for Transport (Rail) as well as to the EU priorities in Mauritania. The strategy of the promoter involves core aspects of the EU Global Gateway Strategy and operationalises the EU-Mauritania Partnership and its overall objective of supporting Mauritania's low carbon transition, resulting in a policy value rated 'very good' under the Bank's Transport Lending Policy (TLP).

The EIB loan will have significant value added for SNIM due to: (i) its long tenor typically not available on the market, (iii) a grace and availability period that suits the company's needs and strategy, (iv) an attractive pricing, (v) the strong signal that the decarbonisation of the mining sector is an activity supported by the EIB, crowding in other financiers.

The project will be implemented mostly on the existing alignment of the railway and within the existing right of way; therefore potential negative environmental and social impacts are likely to be minor. The project was subject to an environmental social impact assessment (ESIA) in accordance with the national legislation. The compliance of SNIM environmental and social policy and the associated management systems (policies, procedures and resources) with the EIB Group Environmental and Social Sustainability Framework and the EIB Environment Framework will be further assessed. The assessment of the environmental, climate and social impacts and risks will be carried out for any underlying investment of the project and the associated facilities, thereby ensuring that the project is in compliance with national law and in line with the principles and standards of relevant EU environmental legislation and meet the EIB environmental and social principles and standards.

The promoter will take all requisite measures to ensure that contracts for implementation of the project will be tendered in line with the EIB's Guide to Procurement.

Under EFSD+ Guarantee