The cost of developing an Africa-wide railway network in the continent’s current mining- and commodities-price environment is unlikely to happen soon despite the promises, according to a report in TheNational, an Abu Dhabi English-language publication.
“The emergence of an Africa-wide railway network is a dream that will be difficult to fulfil,” said John Welborn, CEO of Australia-based Resolute Mining. He spoke this month in Cape Town at the annual African Mining Indaba, the world’s largest mining investment platform.
Welborn has been active in West African rail developments in a region that could potentially rival Australia’s iron-rich Pilbara area in potential for iron ore, TheNational reported.
Even if funds could be found, laying down railway lines that cross multiple borders is a formidable undertaking. Mining companies are reluctant to share lines with other users over worries it could harm ore shipping schedules.
It costs twice as much to transport goods across many countries in Africa than it does anywhere else in the developing world, according to the African Development Bank.
Transport is a constant and expensive problem in Africa. Missing rail links and potholey roads get in the way of economic growth. Intra-regional trade accounts for just 13 percent of total commerce in Africa compared with 53 percent in emerging Asia, according to The Economist.
Landlocked African countries have it worse than coastal ones. Transport costs can make up 50-to-75 percent of the retail price of goods in Malawi, Rwanda and Uganda.
Shipping a car from China to Tanzania costs US$4,000. Getting it from Tanzania to nearby Uganda can cost another $5,000.
Led by China, the surge in demand for commodities — and the accompanying hype — encouraged hopes that Africa’s infrastructure would rise fast.
Now that commodities and minerals have seen price reductions, “it is unclear whether the enthusiasm to build, build and build will continue. Especially hard hit are locations dependent on mining, which is in even worse shape than the oil and gas industry,” according to TheNational.
“Many good mineral deposits are in remote locations and getting them to market requires rail and port infrastructure – this can cost up to $3.5 billion alone to build, just for one operation,” said Haaris Zafar, the principal mining adviser for Africa at Johannesburg’s Nedbank. “I can’t see this happening in the current commodity climate.”
The Chinese have committed to helping develop a network of railway lines known as the Silk Corridor that will eventually connect Kenya’s north with Ethiopia and South Sudan. The plan was for the network to connect some of Africa’s most remote areas with eastern coastal cities.
Two years ago, Australian company Sundance Resources announced a partnership with China to finance and build a 510-kilometre railway and a dedicated mineral export terminal for a giant iron ore mine planned in a remote jungle area straddling the border of Cameroon and the Republic of Congo.
Chinese Premier Xi Jinping approved the project. In January, China put the project on hold indefinitely after the price of iron ore collapsed.
African countries have insisted that rail lines must be multi-use, not reserved exclusively for individual mining companies, unlike in Australia, where multiple mining operations sometimes have several lines running alongside each other that are reserved for exclusive use, according to TheNational.
The Nacala Corridor railway line in southern Africa was financed mostly by the Brazilian mining group Vale. It goes through two countries — Malawi and Mozambique — and evolved to become the centerpiece of a development corridor that includes agriculture as well as diverse mining projects.
“The Nacala Corridor has ended up going through two different countries carrying several commodities, and that makes it bankable,” said Sujoy Bose, global head of infrastructure and natural resources at the International Finance Corporation in Washington, D.C. “The idea of one country, one railway line and one resource is not practical.”
The Tazara railway connecting landlocked Zambia with Dar es Salaam is still getting China’s support, but other rail projects around Africa will need to look elsewhere to find funding, according to TheNational.
Tazara was built in the 1970s and fell into disrepair, but in 2014 the Chinese government decided to help revitalize the 1,800km route.
New locomotives and coaches were delivered in 2015 and the Tazara line is becoming increasingly popular with tourists who can watch wildlife, according to TheNational.
