VZCZCXRO3994
RR RUEHMA RUEHPA
DE RUEHAB #0037/01 0161600
ZNR UUUUU ZZH
R 161600Z JAN 08
FM AMEMBASSY ABIDJAN
TO RUEHC/SECSTATE WASHDC 3909
INFO RUCPDOC/USDOC WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUEHZK/ECOWAS COLLECTIVE

UNCLAS SECTION 01 OF 03 ABIDJAN 000037 
 
SIPDIS 
 
SIPDIS, SENSITIVE 
 
DEPARTMENT FOR AF/W PLUMB, AF/EPS 
DEPARTMENT PASS TOQTR C.HAMILTON 
COMMERCE FOR RIVERO 
DAKAR FOR MORRISON 
AMSTERDAM FOR USCG D.SCHNIEDER 
 
E.O. 12598:  N/A 
TAGS: ETRD ECON ECIN ELTN EWWT IV
SUBJECT: COTE D'IVOIRE'S PORTS PLAN AMBITIOUS EXPANSION AS POLITICAL 
CRISIS FADES 
 
REF: Ouagadougou 1079 (2007) 
 
¶1.  (SBU) SUMMARY.  The Port of Abidjan is West Africa's largest 
deep-water port, and the second largest port on the continent. 
According to Maersk officials, it is also one of the more efficient 
ports in the world.  Cote d'Ivoire's second port, San Pedro, exports 
10 percent of the country's export volume, but over 17 percent of 
the export value, due to its importance in cocoa exports.  While the 
Port of Abidjan is still recovering from the toxic waste scandal of 
2006 and several years of political instability in Cote d'Ivoire, 
overall traffic has continued to steadily increase during the years 
of the political crisis and expansions are underway.  Both ports 
have ambitious expansion plans that are dependent on large-scale 
outside financing and which is not a sure bet.  END SUMMARY. 
 
Exports Slowly on the Rise 
---------- 
¶2.  (U) Overall cargo traffic through the Port of Abidjan was up 1 
percent to 18.8 million tons in 2006, up from 17.1 million tons in 
2001, the last full year before the outbreak of civil hostilities in 
August, 2002.  45 percent of the increase was due to a solid rise in 
exports of oil products (Cote d'Ivoire imports and export oil and 
petroleum products, but production at a large Ivorian oil field 
recently came on stream, boosting oil exports).  Coffee and cocoa 
still represent the largest exported commodities, with a total of 
almost 30 percent of all of the exports of the Port of Abidjan. 
 
¶3.  (U)  As of 2006, the Port of San Pedro handled 1.2 million tons 
annually, and it is responsible for over 70 percent of the country's 
cocoa exports.  San Pedro has seen its overall volume fall from 1.4 
million tons -in 2000, largely due to a fall in export volume. 
Officials of the Port of San Pedro told Emboff that rampant illegal 
transshipment through Ghana of cocoa in order to avoid high Ivorian 
taxes and illegal road levies and to benefit from Ghana's higher 
prices have caused up to 200,000 tons of cocoa traffic in 2005 and 
2006 to be lost to the Port of San Pedro. 
 
Abidjan's Port: Integrating the Region's Economies 
---------- 
¶4.  (U)  Since the Ouagadougou Political Agreement was signed on 
March 4, 2007, Cote d'Ivoire and its ports have looked to 
neighboring landlocked countries to revive and boost 
trans-shipments.  Over 97 percent of goods transshipped through the 
Port of Abidjan come from Burkina Faso, Mali, and Niger, and consist 
mainly of rice, fertilizer, chemicals, cotton, and oil products.  In 
July 2007, the port of Abidjan chose a Burkinabe national to be its 
representative in Burkina Faso.  The Port hopes to work with its 
Burkinabe partners to improve infrastructure to allow more goods to 
pass through Cote d'Ivoire from Burkina, allowing for the creation 
of a more integrated sub-region.  During recent trips to northern 
Cote d'Ivoire, Ivorian president Laurent Gbagbo has called on 
businesses in Burkina, Mali and Niger to use Cote d'Ivoire rather 
that the ports in Ghana, Benin and Togo.  As reported by Embassy 
Ouagadougou (reftel), Ivorian Prime Minister Soro recently brokered 
a deal for a caravan of trucks carrying certified organic cotton to 
pass through northern Cote d'Ivoire unmolested by pervasive illegal 
checkpoints run by various military formations en route to the Port 
of Abidjan.  Transshipment statistics show a strong return to 
pre-crisis levels for the Port of Abidjan: after plummeting more 
than 80 percent from 2002 to 2003, transshipment volumes in 2006 
were only 20 percent lower than those from 2002. 
 
Port of Abidjan's High Shipping Prices 
----------- 
¶5.  (U)  Abidjan's port has some of the most expensive costs of 
shipping in all of Africa.  Maersk's regional chief executive said 
that the Port of Abidjan's shipping fees are two to two and a half 
times higher than competing ports in Lome, Cotonou, Dakar, and Tema 
(Ghana).  The Port of Abidjan justifies these higher rates through 
its efficiency - its infrastructure is extensive and robust, is 
capable of handling a number of deep-draft, large vessels, and Cote 
d'Ivoire's road network (despite degradation over the past five 
years and under-investment in maintenance) has some of the best 
infrastructure in the region, allowing for much more efficient 
combination land-water shipment involving neighboring landlocked 
countries. 
 
¶6.  (U)  Many shipping companies consider the Port of Abidjan as the 
most efficient in Africa, even more so than those in South Africa, 
Morocco, Algeria, and Egypt.  Maersk even claims Abidjan's port is 
more efficient than a number of southern European ports.  However, 
as noted above, these efficiencies don't translate into lower costs. 
 
ABIDJAN 00000037  002.2 OF 003 
 
 
 Port of Abidjan officials believe (and market performance largely 
bears out) that their comparative advantage surpasses other 
countries in the region, thus justifying the higher costs. 
 
Key Players 
---------- 
¶7.  (SBU)  The main actors involved in cargo traffic through Cote 
d'Ivoire's ports remain Danish-owned MAERSK Corporation and French 
SDV-SAGA.  MAERSK retains 30 percent of the whole Abidjan shipping 
market.  Safemarine, a MAERSK subsidiary, specializes in the Abidjan 
- New York traffic, and dominates Cote d'Ivoire-U.S. shipments of 
cocoa and timber.  SDV-SAGA and Maersk together own the Port of 
Abidjan's most modernized pier terminal, and together could, 
according to Maersk's regional representative, operate a scanner in 
order to comply with new U.S. scanning requirements, due to come on 
line in 2012. 
 
¶8.  (SBU)  SDV-SAGA handles more than 30 percent of the Port of 
Abidjan's traffic.  They are willing to pay the higher prices in 
anticipation of benefits they expect to receive commensurate with 
the port's planned modernization and increased capacity. 
 
¶9.  (SBU)  While traffic in and out of African ports has mainly been 
intercontinental, Maersk is actively working on a commercial plan to 
engage the intra-African shipping market with smaller container 
ships.  Maersk reports that a potential challenge to this new 
approach is the growing demand for empty containers in Asia. The 
international market is centered on sending empty containers to be 
loaded with Asian exports headed to Europe and North America.  The 
resulting global shortage of containers has contributed to the 
increase in shipping prices in Africa. 
 
¶10.  (SBU)  Maersk made a recent proposal to the Port of Abidjan 
that would increase the company's shipping volume in and out of the 
port in exchange for lower fees.  In theory, port revenue would 
remain steady - if not increase - because of the additional traffic. 
 However, according to Port authorities, the Port of Abidjan remains 
hesitant to accept the offer and negotiations are ongoing. 
 
Port Expansion 
---------- 
¶11.  (SBU)  The Port of Abidjan has global ambitions to be one of 
the world's leading ports.  It plans to expand the port area to 
encompass a largely vacant island adjacent to Abidjan while also 
increasing its capacity through the associated construction of new 
quays, warehouses and roads.  Future projects include the deepening 
of the port's main canal to accommodate even deeper draft, bigger 
ships.  The estimated overall cost of the port's expansion project 
is $247 million.  Port of Abidjan Director General Marcel Gossio 
(who was accused of lassitude during the 2006 toxic waste scandal) 
has recently been active courting foreign investors during trips to 
Europe to finance the expansion plans, but to date, Embassy has not 
seen concrete investment announcements. 
 
¶12.  (SBU)  The Port of Abidjan is courting a slew of new investors 
to support new economic activity to be associated with the port 
expansion.  Recently a Chinese delegation, led by the company COFCO 
- the largest oils and food importer and exporter in China - was 
recently in Abidjan to discuss a partnership plan with the port.  In 
September 2007, two U.S. companies announced preliminary plans to 
invest USD 1.4 billion to build a new refinery on an island near the 
Port of Abidjan in the context of the planned expansion.  To date, 
however, Embassy has not seen follow-up activity on the refinery 
deal. 
 
¶13.  (SBU)  The Port of San Pedro has equally ambitious plans for 
expansion.  Emboff attended the December 2007 ceremony marking the 
35th anniversary of the founding of the Port.  At the speech 
commemorating the ceremony, the Port Director, Desire Diallo, 
outlined a plan to transform the facility into a major nickel and 
iron ore export platform for mines the government hopes private 
investors will establish in western Cote d'Ivoire and eastern 
Liberia and Guinea.  Diallo also called for Cote d'Ivoire's 
neighbors to look to San Pedro for transshipment, and asked 
President Gbagbo (in attendance) for help in sourcing the capital 
needed to upgrade the road network serving San Pedro to make the 
plan viable.  Several well-placed sources in the shipping industry 
indicated that actual expansion of the Port of San Pedro would be a 
simple, low-cost affair (as low as USD 60 million), using 
breakwaters to segment adjacent deep-water into usable shelter, and 
that financing would be easy to find should additional regional 
demand growth be evident.  However, President Gbagbo, in his own 
address at the anniversary celebration, declined to offer funding 
 
ABIDJAN 00000037  003 OF 003 
 
 
for the 30-40 million in upgrades the region's road network urgently 
needs to deliver such increased volume to the port, and pointedly 
suggested that the EU, whose top representative in country was 
present, provide financing for the road network in the form of 
development assistance. 
 
¶14.  (SBU)  COMMENT.  As the Ouagadougou Political Agreement 
continues its uneven progress towards ending Cote d'Ivoire's 
political crisis, the Ports of Abidjan and San Pedro will likely see 
continued, gradual expansion of volume and additional interest from 
outside investors.  Major expansion and modernization of the ports' 
facilities, however, will probably depend on the substantial 
capitalization that will come with the definitive cessation of the 
political crisis (probably through successful elections) and 
significant investments in the country's road network that would 
make the investments viable.  Continued prosperity in Cote 
d'Ivoire's port sector could be a major economic boon to regional 
economic integration as Sahelian industries develop and the 
trans-shipment of goods continues to rise.  END COMMENT. 
 
AKUETTEH