The economic potential of Africa’s mineral resources will remain untapped unless the rail infrastructure around the continent is developed, according to Standard Bank.
The Bank estimates that at least $50 billion must be spent on rail infrastructure across Africa, if the continent’s rich mineral resources are to be exploited for economic benefit.
Infrastructural deficiencies will in particular place obstacles in the way of iron ore, manganese and coal enterprises.
“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,” advises David Humphrey, global sector head of power and infrastructure at Standard Bank.
“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 resourses is limited by infrastructure constraints,” Humphrey goes on to explain.
With the mineral resources of Africa largely under-exploited to date, Standard Bank warns that mining sector players will be forced to develop ways of connecting with the market if the resources are to be viably exploited, with transport methods and ports the most pressing aspects of infrastructural development.
However, the Bank also predicts that the continent will see a wave of investors flocking to Africa in a bid to renew and expand the railway sector, advising that governments across the continent should be prepared to focus on facilitating this infrastructural expansion in the name of economic development, by implementing appropriate regulatory and policy frameworks to accommodate infrastructure investors.
“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,” comments Humphrey.
“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,” he concludes.
