First Meeting of ACP Ministers in Charge of the Development of Mineral Resources
Donald Selby
December 2010
Introduction

Rail ideally suited to transporting bulk ores from the mine
head to port and the world market

Low operating costs particularly over long distances and
volume capacity

Mine developments are often constrained because of the
lack of an operating railway to the coast

Existing networks often in disrepair and not performing

Rehabilitation and new construction expensive

Despite the costs, rail undergoing a resurgence around the
world
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Introduction

Incentives can stimulate investment

Public Private Partnerships (PPPs) have changed the face of
infrastructure development

Offers a means of rehabilitating existing systems and/or
constructing new lines and port facilities to support the
mining sector

Various models suited to rail development BOOT,
Concessioning, etc Private sector require adequate return!

Need serious planning to be effective
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Mining Railways

Consider a number of examples from West Africa of Mineral
railways with different gauges, ownership structure and
operating conditions.



Bauxite in Guinea
Manganese & Bauxite in Ghana
Iron Ore in Mauritania
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Guinea
1086 kilometre network, four lines with a mix of gauges and ownership
structures.
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Guinea
Line
Gauge
Ownership
Ore
Condition
130km
Sangaredi to
Kamar
Standard
CBG
Mining Joint
venture
(Government
49%)
Bauxite
12MT
Operating
662km
Kankan Conakry
Metre
State Railway
Co
ONCFG
General
Needs
rehabilitation
143km FriaConakry
Metre
Mining Co
Rus Al
Bauxite
1MT
Operating
105km
KindiaConakry
Standard
State Mining
Co SBK
Bauxite
1.2MT
Operating
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Ghana
Western Line network: Takoradi port to Kumasi 267km and Dunwar to
Awaso branch 73km.
Flow
Gauge
Ownership
Ore
Condition
Nsuta –
Takoradi
Cape (narrow)
State owned
GRC
Manganese
Potential 1-1.5
MT
Not being used
Awaso Takoradi
Cape
State owned
GRC
Bauxite
Potential 1-2 MT
Minimal traffic
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Mauritania
Line
Gauge
Ownership
Ore
Condition
700km Zouerate
- Nouadhibou
Standard
State owned
Mining
Company SNIM
Iron ore 17MT
Operating
Operates some of the
longest and heaviest trains
in the world – 2.5km long,
3-4 locomotives & 200
wagons carrying 84 tonnes
of ore
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Mining Rail Projects
•Iron Ore in Sierra Leone – Africa Minerals Tonkolili Resource
Narrow gauge 76km rehabilitation & 126km new construction. 20-35m tonnes
US$1.5- 2m
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Mining Rail Projects
•
Coal in Mozambique – Vale, Moatize coalfield 11m tonnes
Coking coal & coal to Beira on the refurbished Sena line &
Nacala via a new link through Malawi US$1.3m
•
Iron ore in Guinea - Simandou Mountains. Number of
project, Vale, Rio Tinto/Chinese Potential new port in
Liberia US$5-8 billion
•
Phosphates in Mauritania - Bofal deposits. New line
US$600m
•
China important partner in mine & railway development
projects everywhere.
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Stimulating Investment in
Railway Infrastructure

Railway and port rehabilitation and new construction
expensive

New railway US$1.5-5m per km (reasonable road US$1m)

Worldwide Rail infrastructure PPP projects 1985 – 2004 over
US$150 billion.

Concessions, BOOT, etc - need for adequate return!

Incentive for private investment: land provision, port
facilities, rail and mining concessions and/or extensions, tax
incentives, traffic guarantees, etc
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Alice Springs - Darwin
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Alice Springs - Darwin
Lines
New
Construction:
Alice Springs to
Darwin 1420km
Standard gauge,
single track
Existing line:
Tarcoola – Alice
Springs
824km
Standard gauge,
single track
Ownership
•Built by
Consortium Asia
Pacific Transport
– Freightlink
(Kellogg Brown
& Root)
•Bought by
Genesee &
Wyoming earlier
this year
Ores
•Manganese
800km to Darwin
•Iron Ore 210km
to Darwin
•Cooper-gold
concentrate
2000km to
Darwin
Condition/
comments
•Cost A$1.2
billion (govt
$400m & existing
line)
•50 year
concession
•Very successful
operationally, but
failed to meet
debt repayments
•Runs 1800m
trains with 4000
tonne trailing
loads
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PPP Pros & Cons
PROS
CONS
DELIVERS FUNDS WHERE
CONSTRAINTS RESTRICT PUBLIC
SECTOR INVESTMENT –FASTER
IMPLEMENTATION
BENEFITS FROM PRIVATE SECTOR
MANAGEMENT, COMMERCIAL SKILLS
& ACUMEN
TRANSFERS RISK TO THE PARTIES
BETTER EQUIPPED TO MANAGE THEM
FINANCING COSTS HIGHER
FOCUSES ON OUTPUT – SERVICES
PROVIDED NOT THE ASSETS
DEPLOYED. PERFORMANCED BASED
EXPERIENCE SUGGESTS PPPs MORE
LIKELY TO BE FINISHED ON TIME &
ON BUDGET
ENABLES PUBLIC SECTOR TO
CONCENTRATE ON CORE BUSINESS
LOSS OF CONTROL TO THIRD PARTIES
HIGHER TRANSACTION
COSTS/PROCESS TAKES LONGER
REQUIRES EFFECTIVE POST
CONTRACT MANAGEMENT &
ADMINISTRATION TO MONITOR
PERFORMANCE
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Conclusion

Acceleration of Infrastructure provision-PPPs enable
governments to benefit from Private sector management
expertise and funding to undertake projects that would
otherwise not have been completed a

Governments are encouraged to consider them seriously as
an option

Involves serious capacity building and planning to set up a
realistic PPP framework

Coupled with incentives to encourage investment can lead
to an improvement in the Transport infrastructure for
exporting bulk ores.
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Thank
You!
D F Selby © 2010
selbycons@clara.net
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