Resource information
The purpose of this study is to serve as
a guide on developing Greenfield transport infrastructure
(rail and port) primarily used to support mining operations
('mining-related infrastructure'), through
Public-Private Partnership (PPP) schemes and on a project
finance basis. The focus is on key financing issues and
considerations, as well as recommendations for governments
and private-sector participants, specifically in the context
of sub-Saharan Africa and similar regions. Over the past
decade, the rapid economic growth in newly industrialized
markets has fueled a strong demand for various commodities
(such as iron, coal, bauxite and copper), with significant
impact on their prices. The last ten years have seen an
unprecedented rise in the price of mineral commodities
worldwide. From the mid-2000s through the early 2010s, the
world's largest mining companies embarked in the
planning of numerous and often very large mining projects to
satisfy what was seen as an ever growing double digit demand
for minerals (iron ore, coal, bauxite, copper, etc). A
number of these mining projects are located in frontier
countries (e.g. Mongolia, Guinea, Afghanistan, Sierra Leone
and Mozambique). This 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. From an ownership and financing structure
perspective, there are three traditional forms of ownership
models: public-sector led, mining company-led or third-party
investment. Given that most frontier host governments simply
do not have the ability to fund these infrastructure
projects on a purely public basis (including with the
assistance of multilateral development banks), this report
focuses on the latter two ownership arrangements. In terms
of financing models, the size of such investments often
rules out corporate financing as a viable option for
external investors. Thus project financing is the most
feasible and most adapted form of debt financing for
Greenfield multi-user/multi-client mining-related
infrastructure, assuming project bankability can be
demonstrated to lenders. Lastly, public authorities might
have to accept that multi-usage demands made to transport
mining infrastructure operators might have to be initially
or permanently restricted to secure, first and foremost, the
delivery of an efficient mining transport system at the
lowest possible cost to its anchor user/client.
