Home News Africa must spend $50 bln to tap mineral wealth: Study

Africa must spend $50 bln to tap mineral wealth: Study

Published on 30/01/2013

African nations will need to spend more than $50 billion in the next ten years on new rail networks to meet growing demand for mineral resources, Standard Bank said on Wednesday.

The continent’s largest bank said a lack of sufficient freight rail infrastructure was limiting the economic potential of African nations and acting as a brake on the booming commodities sector.

“Africa will need to spend more than $50 billion in the next decade on building 4000 kilometres of additional rail infrastructure to unlock the bulk mineral resource potential that the continent holds,” the bank said.

In recent years, African countries have begun exporting more minerals like iron ore, manganese and coal.

But companies operating in the continent have over the years raised concern over backlogs caused by transportation delays.

“As mining activities in key regions expand, mining output is starting to exceed existing rail capacity despite ongoing efforts to upgrade and maintain these rail links,” said David Humphrey, who heads the banks Power & Infrastructure division.

He said that inadequate rail networks were limiting economic potential particularly in West Africa and Mozambique.

“Despite this enthusiasm, the ability to fully exploit these recourses is limited by infrastructure constraints.” Humphrey said in a statement.

Earlier this month global mining giant Rio Tinto made a $3 billion (2.2-billion-euro) write-down on its Mozambican assets owing in large part to problems transporting coal from mines in Tete.

The disclosure forced the resignation of the company’s chief executive.

Standard Bank says Mozambique’s high quality coal reserves of more than 35 billion tons and its proximity to large markets like India and the Far East will require investment.

Plans are on the table to boost rail links, but previous projects have spluttered along.

Five southern African countries recently unveiled a plan to coordinate their rail services to bolster trade through the port in Durban, South Africa.

Railways companies in the Democratic Republic of Congo and landlocked Zambia, Zimbabwe and Botswana plan to streamline existing rail infrastructure to facilitate transport to South Africa’s Indian Ocean port.