Infrastructure deficit thwarting investment [Africa] – by Pimani Baloyi ( – July 11, 2014)

A lack of infrastructure in several African countries continues to hinder investment in new mining projects and efficient operations at existing mining operations, says multidisciplinary mining and engineering consulting firm SRK Consulting.

Company chairperson and corporate consultant Roger Dixon tells Mining Weekly that the lack of infrastructure on the continent has affected the start-up of several coal and iron-ore projects, as mining companies consider effective materials-handling infrastructure as an imperative precondition for the viability of mine operations.

“When mining companies consider whether to start a mining operation, the cost of a rail line and a port to transport . . . will often outweigh the cost of the mine itself.

“For mines that have been established despite inadequate infrastructure – that is, when a mine has to generate its own electricity or transport its ore by road instead of rail – operating costs are usually much higher than what they would have been, had there been adequate, well-run infrastructure,” Dixon explains.

This exposes mining operations in Africa to economic risk and reduces the operations’ expansion opportunities, as well as their opportunities to impact on the economies of their host countries. Dixon adds that host communities and governments expect mining companies to improve the socioeconomic conditions of host communities.

“However, as governments represent their citizens and mining companies represent their shareholders, there will always be differing priorities in this aspect. In recent years, governments have become more assertive about the need for the industry’s benefits to be more widely spread within host countries.

“Therefore, it is to be expected that governments and mining companies will need to consider the broader needs of the social, economic and natural environments when making decisions,” he advises.

Dixon believes the onus is on both sides to find common ground. He points out that the mining industry in Africa has been criticised for creating “islands of prosperity in a sea of poverty”, when they do not make concerted efforts to embed themselves in their host communities to spread the benefits of their operations.

He states, however, that governments can better leverage the positive impact on mining operations by collaborating closely with investors on how projects are planned and executed. This ensures that it meets investors halfway and extends the mine-related infrastructure to host communities, where possible, adds Dixon.

He highlights, however, that there have been milestones on a diplomatic level in terms of finding common ground, citing the endorsement of the African Union’s (AU’s) African Mining Vision (AMV) as an example.

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