West African Rail Projects Progressing
BMI View : We believe that improving the quality of railways in West Africa is crucial in opening up new mines and improving the region's transport network for greater movement of people and goods. At present, the region has limited rail capacity, but a couple of projects are moving forward. With the promise of mining riches, the financial incentive to build these projects should see them progr ess into the construction phase .
Two major rail projects in West Africa have made progress in August 2013. Both will help better connect the West Africa region, link landlocked countries to port access on the coast.
Niamey (Niger) - Abidjan (Cote d'Ivoire) Railway
A railway linking Niger and Cote d'Ivoire via Burkina Faso is hoped to enter construction in 2014, according to reports in mid August. The project has been in the works for years, and is aimed at unlocking resource rich parts of Niger and Burkina Faso with port access in Cote d'Ivoire. The Abidjan port in Cote d'Ivoire is currently undergoing an expansion project, and serves as a key regional trade hub. The port will be well placed to cope with increase demand from the import and export side. This is because investment is taking place at the existing terminal, and the concession for a second container terminal at the port was awarded in April 2013.
The project would extend an existing rail line which connects the Burkinabe capital of Ouagadougou to Tambao, an active manganese mine on the border with Niger, to the Nigerien capital Niamey. A 1,150km rail line already exists between Ouagadougou and Abidjan, and is currently used to import goods and export commodities from Burkina Faso - more than 60% of the country's trade passes through the port of Abidjan. The project would also involve rehabilitating and upgrading this existing rail line.
The right to develop the railway has been granted to Pan African Minerals. This company is part of the Timis Corporation, which is owned by Romania's Frank Timis and has operations in infrastructure and mining across the region. Timis Corporation was awarded the rights to the Tambao manganese deposit in Burkina Faso in 2012. It is unclear where funding will come from, though a number of development institutions have been involved in the project feasibility over recent years.
The railway will initially service only cargo; however, the second phase will also service passenger transportation.
|Derailing Export Potential|
|Competitiveness Of Rail Infrastructure, Selected West African Countries (Score out of 7)|
West Africa Railway
Meanwhile, in West Africa, a railway project linking Benin, Togo, Cote d'Ivoire and Ghana is also make progress following the approval of technical studies by the Economic Community of West African States (ECOWAS) in early August. Consulting work was carried out by Canada's HammcoBTB Engineering International Incorporated. Funding for the project has yet to be determined, and is likely to be the major obstacle. We believe there is the potential for private investors from resource companies to support the project, if it helps unblock transport bottlenecks in commodity production and export. The railway will service both goods and passengers.
China Slowdown Presents Risks
Major new rail projects supported by commodity export demand are exposed to risks in the current climate. With China's economy slowing and transitioning away from a capital investment driven model, we see potential for weaker demand to make the costs of developing associated infrastructure to access remote mines prohibitive and economically unfeasible.