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Infrastructure and Mining in Africa

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Speaker: Sarah Thomas
Mining On Top: Africa - London Summit
25-26 June | London

Publié dans : Formation, Business
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Infrastructure and Mining in Africa

  1. 1. Securing Infrastructure for Mining in Africa Key trends and observations Infrastructure Panel Session Mining on Top Summit 26 June 2014
  2. 2. Setting the Scene • Key trends – Interplay between Infrastructure and Mining – Comparison against BRIC & other countries – Chinese Investment in Africa • Practical Examples – South Africa – Mozambique – Guinea • Themes for discussion
  3. 3. Interplay between Infrastructure and Mining Investment • “Africa’s infrastructure deficit is both a potential bottleneck for mining development and a development challenge. There is increasingly an overlay between the geography of mining deposits and where there is lack of available transport, power and water. Multi-use infrastructure can be an opportunity for mining to enhance its development impact on countries and regions for the long term as they serve as critical anchors for road, rail, port, water, power and even telecommunications investment.” Bernard Sheahan, International Finance Corporation (IFC), Director of Infrastructure and Natural Resources for Africa and Latin America (February, 2013)
  4. 4. Interplay between Infrastructure and Mining Investment • Acute demand for infrastructure in the mining and natural resources sectors – 60% of all Capex Expenditure on natural resource projects is infrastructure related – on some new build mining projects this figure can be higher – USD50bn of rail infrastructure investment required if the continent's natural resources are to be exploited for wider economic benefit – Standard Bank has identified 15 major rail network projects, together with roads, ports and power infrastructure that need to be procured to ensure continued exploitation of resource wealth (Standard Bank, January & February 2013)
  5. 5. Interplay between Infrastructure and Mining Investment • Continuing infrastructure deficit – USD 93bn infrastructure gap with other developing regions (AICD, January 2013) – In lower-income countries, infrastructure is a major constraint on doing business, and is found to depress firm productivity by around 40% – The negative impact of deficient infrastructure is at least as large as that associated with corruption, crime, financial market and red tape constraints (World Bank Fact Sheet) – Opportunities for miners
  6. 6. Comparison with BRIC Countries • African economic growth reflected in FDI into Projects • Surpassed Russia and catching up with China and India • Enough to bridge infrastructure deficit and capitalise on mining wealth?(Ernst & Young, Africa Attractiveness Survey, 2012)
  7. 7. Chinese Investment in Africa • Deepening Sino-African trade links: – 2013: USD200bn (forecasted) with 22% y/y monthly increase – 2012: USD166bn – Africa is China's fastest-growing trade partner, accelerating faster than Latin America and Asia (Standard Bank, February 2013) • Continued focus on infrastructure • Developing mining experience – 2011: Jinchuan purchased Metorex, a South African miner listed in Johannesburg – 2013: Jinchuan invested in Wesizwe Platinum's Bakubung mine in South Africa
  8. 8. South Africa (Developed Market – coordinated approach to new infrastructure) • Developed market and home to the biggest names in mining: – Anglo American, Xstrata, Rio Tinto Group and BHP Billiton and AngloGold Ashanti • Transnet to spend USD40bn on rail infrastructure over seven years to encourage further investment • South African Government's National Infrastructure Plan, including 18 Strategic Integrated Projects (SIPs)
  9. 9. South Africa • SIP 1 • Exploit mineral wealth • Build out accompanying rail, road, water, power infrastructure • Urban development and logistics corridor
  10. 10. Mozambique (Developing Market – example of multiple interests) • Developing market well placed for exports to Asia-Pacific • Large untapped deposits of coking coal • Could be producing 100 million tonnes of coal a year after 2015 • Lack of infrastructure inhibiting growth: USD20bn required • Vale Moçambique, Rio Tinto, Jindal, ENRC, Beacon Hill, Ncondezi Coal Mining and Anglo-American all producing or intending to produce coal (Mining Weekly, April 2013)
  11. 11. Mozambique • Sena line currently only export route from Tete • Capacity could be doubled to 12m tonnes by 2018, well short of miners‟ predicted output • Miners have proposed different routes as options • Government wants multi-use infrastructure assurances
  12. 12. Guinea (Developing Market – Integrated Project model) • Simandou Project – An iron ore mine of 95 million tonnes per year at full production – A Trans-Guinean railway of approximately 670 km to transport the ore from the mining concession to the Guinean coast – A new deepwater port south of Conakry in the Forécariah prefecture
  13. 13. Guinea • Simandou Project – Government of Guinea, Rio Tinto, Aluminium Corporation of China and the International Finance Corporation – PPP delivery model for infrastructure – Cost doubled to USD20bn – two times original estimate – Despite recent difficulties in negotiations with the Guinea Government, the project has received praise from the IFC: “The economic effects around such multi-use infrastructure can be enormous, perhaps stimulating as much GDP growth as the infrastructure itself” Bernard Sheahan, International Finance Corporation (IFC), Director of Infrastructure and Natural Resources for Africa and Latin America (February, 2013)
  14. 14. Some themes for discussion • Strategic, integrated planning and cross border co-operation – lack of joined up thinking? • Contract Models – innovative Guinea PPP structure • Access to funding – over-reliance on users? • Exclusive use – security, maintenance, access (Queensland model) • Trickle down effect - local procurement – labour, materials • Social licence and stakeholder issues – resettlement, water, welfare • Environmental and regulatory framework • Differentiate between utilities and transport infrastructure • Length of procurement process, access to different procurement models and capacity building • Rising fuel costs and renewable options
  15. 15. The Panel • Sarah Thomas Partner, Infrastructure & Natural Resources, Pinsent Masons LLP Sarah.Thomas@pinsentmasons.com • Roland Janssens Fund Manager, Frontier Markets Fund Management Roland.Janssens@frontiermarketsfm.com • Manuel Duggal Director, MCD International Energy Solutions manu.duggal@mcdie.com • Andrew Dixon Deputy Director, Mining Services, Parsons Brinckerhoff andrew.dixon@pbworld.com • Dr Gachao Kiuna CEO, Transcentury gachao@transcentury.co.ke
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