(Source: Standard Bank, edited by Issa Sikiti da Silva). Africa will need to spend more than $50-billion in the next decade on building 4000km of additional rail infrastructure to unlock the bulk mineral resource potential that the continent holds, David Humphrey, global sector head for power and infrastructure at Standard Bank, said this week in Johannesburg, South Africa.
“Infrastructure will continue to be the main challenge in exploiting the continent’s vast deposits of bulk commodities, particularly iron ore, manganese and coal deposits,” Humphrey said.
“As mining activities in key regions expand, mining output is starting to exceed existing rail capacity despite ongoing efforts to upgrade and maintain these rail links. Inadequate rail networks are limiting the economic potential of some of these commodity hot spots on the continent.
“There is a lot of enthusiasm about new coal, iron ore and manganese discoveries in West Africa and Mozambique. Despite this enthusiasm, the ability to fully exploit these recourses is limited by infrastructure constraints.”
The bulk commodity mining sector in West Africa and Mozambique in particular, which hold significant reserves of iron ore, manganese and coal, is expected to drive further investment in railways in these areas in the next decade, he said.
However, Humphrey said governments faced the challenge of overcoming legacy infrastructure problems, adding that overcoming this remains vital for success, particularly when looking to enable complex projects.
“The quantity of iron ore discovered in West Africa is enormous and could potentially attract $25 billion of infrastructure investment in the next decade. In Mozambique, rail and port infrastructure will likely attract investments of more than $20 billion in the next ten years.
“High quality coal reserves of more than 35 billion tons, the area’s proximity to large markets like India and the Far East will require investment in high volume rail links to maximise the economic potential.”
According to Humphrey, the continent’s vast mineral resources are largely under-explored and under-exploited. A key factor for all commodities mining companies to consider is the route to market and ensuring that this is economically viable.
He said port and market access are one of the first considerations to make when investing on the continent and in determining project viability and profitability.
Humphrey said commodities mining companies require the development of appropriate investment infrastructure models to unlock their lucrative resource potential.
He pointed out that that enabling regulatory and policy frameworks need to be developed according to the various country requirements to attract appropriate investment.
“Miners want to get the product out quickly and countries with these resources want economic development. Hence, finalising the financing package and structure for the required roads, rail and ports remains the primary challenge.”
*Photo by Zimbabwean.co.uk. Chinese-built Sifang type diesel-electrical units operated by Namibia’s TransNamib.