RESOURCES/FEATURED STORIES

Fostering the Development of Greenfield Mining-Related Transport Infrastructure

20 June 2016
Fostering the Development of Greenfield Mining-Related Transport Infrastructure
Over the past decade, the rapid economic growth in newly industrialized markets has fueled a strong demand for various commodities (e.g., iron, coal, bauxite and copper), with significant impact on their prices. In fact, it is widely accepted that the world has been in the midst of a commodity “super cycle”—a “prolonged (decades) trend rise in real commodity prices, driven by urbanization and industrialization of a major economy.” One of the consequences of this “race to riches” has been to improve the financial viability of mineral deposits which, until then, where thought to be either too

Over the past decade, the rapid economic growth in newly industrialized markets has fueled a strong demand for various commodities (e.g., iron, coal, bauxite and copper), with significant impact on their prices. In fact, it is widely accepted that the world has been in the midst of a commodity “super cycle”—a “prolonged (decades) trend rise in real commodity prices, driven by urbanization and industrialization of a major economy.” One of the consequences of this “race to riches” has been to improve the financial viability of mineral deposits which, until then, where thought to be either too distant to market and/or located in countries too risky to be developed.

From the mid 2000s through the early 2010s, the world’s largest mining companies planned numerous and often very large mining projects to satisfy what was seen as an ever-growing double digit demand for minerals. The advent of the 2008/2009 crisis, and the subsequent economic slowdown, including that of China, has exposed serious flaws in the commercial viability of many of the planned mining projects.  New supply is now thought to significantly exceed short- and medium-term demand (e.g., Africa’s known iron ore projects alone would represent an expansion of nearly 60% of iron exports). It now seems inevitable that the development of these projects will be stretched over many years, and that only the most profitable ones will be implemented in the short term.

A number of these mining projects are located in frontier countries (e.g., Mongolia, Guinea, Afghanistan, Sierra Leone and Mozambique). These “first movers” projects present mining firms with specific and often unfamiliar obstacles, including the need to build Greenfield multibillion dollar logistics transport solutions using private capital due to the lack of existing adequate transport infrastructure.

The Fostering The Development Of Greenfield Mining-Related Transport Infrastructure report explores the challenges and solutions associated with the development of Greenfield mining-related transport infrastructure through project financing in frontier countries, including as shared-use assets. The product is a technical guidebook for those interested in developing PPPs to finance Greenfield transport infrastructure (rail and port) that:

  • Explores key financing issues, financing modes, ownership models, and management models
  • Evaluates host government challenges in financing mines and related infrastructure
  • Provides recommendations for governments and private-sector participants in the context of Sub-Saharan Africa and similar regions
  • Reviews legal and regulatory considerations
  • Provides best practices and country-specific case studies