Maersk Targets Ports in Africa Expansion Push

Photo credit: APM Terminals

By Mike Cohen

(Bloomberg) — A.P. Moeller-Maersk A/S, owner of the world’s largest shipping container line, is seeking to win contracts to build and upgrade ports in Nigeria and Kenya as the Danish company expands its African operations.

Maersk is awaiting a final sign-off on a contract to help build a new port in Badagry in Nigeria’s southern Lagos state, according to Lars Reno Jakobsen, the company’s senior vice president for Africa.

“That project, once it’s been finalized, could be more than $2 billion in terms of investment,” he said in an interview at the World Economic Forum in Cape Town on Friday. “Hopefully we can start some time this year. It will provide capacity, not only for containers, but also for oil, break-bulk and offshore.”

Maersk employs almost 10,000 people in more than 40 African nations and generates about 10 percent of its sales in and around the continent. Besides its shipping business, the Copenhagen-based company supplies oil- and gas-related services. The company’s APM Terminals unit operates 10 West African ports.

“We are actively looking in East Africa for opportunities,” Jakobsen said. “There is an ongoing tender process for the port of Mombasa, where APM Terminals has shown interest” in operating two new berths in the Kenyan city.

Maersk is also working on a $1 billion expansion to Ghana’s Tema port in collaboration with the west African nation’s ports authority. The project includes the construction of four new berths and will more than quadruple the port’s capacity.

Africa Sales

In 2013, Maersk partnered with Bollore SA and Bouygues SA to win a 450 million-euro ($500 million) contract to build a second container terminal in Abidjan, Ivory Coast’s commercial capital. The terminal would start operating in 2016, Ballore said at the time of signing the deal.

“That’s progressing according to plan,” Jakobsen said. “It’s in accordance with what has been agreed with the Ivorian government and the port authorities.”

Maersk sales from Africa have been growing at 5 percent to 6 percent a year, tracking the continent’s economic growth, and Jakobsen expects the trend to continue. Shipments of agricultural products, textiles and clothing are rising as the continent diversifies its trade away from raw materials, while more electronic and consumer goods are being imported as household incomes rise, he said.

“Africa is moving up in the value chain,” Jakobsen said. “People can now probably afford things they couldn’t earlier on. Underlying sentiment is positive. You are still seeing quite healthy growth.”

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