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The political will IS there Most of Africa’s railway line networks have less than 10% of the road transport market share. It is vital that this statistic changes or the mining industry’s growth and development on the continent will be stunted, writes Laura Cornish. I t is undeniable fact that an efficient, fully functioning railway line is superior to road in bulk freight transportation, says Grindrod Rail divisional chief executive James Holley. Railway lines are therefore the most viable solution to meeting the African mining sector’s pit-to-port needs to ensure sufficient volumes are moved quickly and effectively. “Up until recently, the construction of new railways and expansion and upgrade of existing railways has not been financially viable because there has been no strategic drive by governments to move volumes from road to rail. This is rapidly changing however with governments’ increased understanding and appreciation that heavy load-bearing trucks are destroying local road networks, which is leading to substantial cash requirements for maintenance. Together with regional stability, improved economic growth and mining investment, railways are becoming financially viable and are back on the table,” Holley outlines. But while the political will to move from road to rail is apparent, Holley believes that delivery and expectation requirements are too high on the continent. “Compared to Australia for example, African countries are dealing with lower volumes (millions of tons as opposed to hundreds of millions of tons) and the amount of upfront capital investment for rail needs to be taken into consideration. Technology advancements can cater to smaller volume railways,” Holley notes. “Governments must realise that they don’t need to start developing first world railway line systems. The real solution is to start with low cost, fit- for-purpose requirements and then grow slowly from there. Investment in ‘Rolls Royce’ locomotives, for example, is unnecessary, as long as they perform the job to their specifications and requirements. Upfront overcapitalisation will take the continent back to the same situation it historically dealt with – financially unviable railways. You must sweat what you’ve got, then unlock the bottlenecks which will allow you to move to the next growth step.” Railways are however 100% dependent on volume to be effective because they are unsubsidised by government, unlike the roads. This means that the only way to compensate for the huge fixed costs on railways is through sufficient volumes. In addition to size or volume constraints, railway lines in Africa are accompanied by additional unique sets of challenges which the rest of the world is not familiar with. The biggest, Holley points out, is the number of countries a line must pass through from start to finish. The United States and Australia for example don’t have multi-jurisdictions which their big heavy haul railway lines must contend with. “In Africa, when you move from one country to the next, you move from one railway to the next and this adds legislative and operational complications.” ISSUE 6 2014 MINING REVIEW AFRICA 41 PIT TO PORT From road to rail