Sharing Transport (Road, Port, Railways)

At a Glance
  • Shared use of transport infrastructure can be divided up into “multi-user” shared use (which describes infrastructure shared with other extractive industry companies producing the same commodity), and “multi-purpose” shared use (which describes infrastructure shared with non-extractive sector users).
  • For railways, roads, and pipelines, the ‘right of way’ or servitude refers to the land area granted as part of the transport infrastructure.
  • Best practice is for the government to retain ownership of the right of way even when outsourcing infrastructure ownership. This ensures that other types of infrastructure can be installed and benefit from economies of scope.
  • Road infrastructure investments may be required both to provide an extractive industry project with inputs and to deliver the outputs.
  • Pipelines may have some potential for multi-user access given that other commodities will not be transported in the pipeline.

‘Shared use’ or ‘open access’ of transport infrastructure refers to leveraging extractive industries’ demand and investments in transport infrastructure to benefit other users. Transport infrastructure for extractive industries refers to road, rail, port, and pipeline investments for both mining and oil and gas projects.

Shared use of transport infrastructure can be divided up into “multi-user” shared use and “multi-purpose” shared use. The former describes infrastructure shared with other extractive industry companies producing the same commodity, and the latter describes infrastructure shared with non-extractive sector users. For example, a railway line may be multi-user by servicing two or more iron-ore companies, or multi-user if other services such as passenger trains run on the line.

For railways, roads, and pipelines, the right of way, or servitude, is an important concept. This is the land area granted as part of the transport infrastructure. Best practice is for the government to retain ownership of the right of way even when outsourcing the ownership of the infrastructure assets. This ensures that other types of infrastructure can be installed in this area and benefit from economies of scope.

The types of transport infrastructure investments required to make an extractive industry project viable are very context and commodity-specific. Coal and iron-ore may involve railway investments given that these commodities are bulky and have a high weight-to-price ratio with transportation making up a significant proportion of total costs. Furthermore, in the past, these commodities have provided investors sufficient margins to consider high up-front capital expenditures. While railway investments are more capital-intensive than road infrastructure investments, operating costs are lower. The economics of railway investments as compared to road investments improve with increasing distance between point of production and point of delivery.

Road infrastructure investments may be required both to provide an extractive industry project with inputs and to deliver the outputs. In most cases, road infrastructure outside of the concession area of the extractive industry project will have to allow for multi-user and multi-purpose access. This is not the case for railway investments, where the large majority of projects financed by mining companies are not shared.

Port investments are also very context specific. The largest potential for greenfield port infrastructure investments by extractive industry companies come from large-scale coal and iron-ore mines that are distant from existing ports. Similarly, liquefied natural gas (LNG) projects provide an opportunity for greenfield port infrastructure investments. The plans of such projects can foresee multi-user access or multi-purpose access. Where mining/LNG projects are located close to an existing port that can cater large vessels (or can be expanded to do so), companies may only need to invest in port superstructure, which is the infrastructure needed for a particular type of cargo including terminals, storage facilities, stackers and reclaimers.

Pipeline investments are particularly relevant for the petroleum industry to transport the output from production to distribution points. They are also used by mining companies to transport inputs such as water to the project site and to transport the output via slurry pipelines. Pipelines may have some potential for multi-user access given that other commodities will not be transported in the pipeline.

While the transport solution choice and relevance for shared use is context specific, there are a few general principles:

  1. Shared-use transport infrastructure can be of regional significance, servicing not only the project host-country but also neighboring countries. See the Creating Resource Corridors subtopic for more information.
  2. The importance of shared-use infrastructure will span from project planning to post-project closure. It is of utmost importance to include shared-use infrastructure discussions during the very earliest phases of the project to ensure that various options are studied during the pre-feasibility and engineering studies. Retrofitting transport infrastructure post-construction is complex, costly, and may disrupt operations. Infrastructure such as roads and ports may be used during the construction phase, while pipelines and railways will only be used during operations. If the infrastructure is to serve other stakeholders’ post-closure of the anchor project, a handover plan needs to be put in place.
  3. There is the least resistance to open access in the case of roads. This is followed by pipeline and port infrastructure. Railways are generally the most difficult transport infrastructure to create shared use solutions. This is due to a combination of factors such as the cost, the additional costs related to shared use, the likelihood of transport disruptions due to shared-use, the competitive nature of extractive industry companies being able to use infrastructure to gain an advantage over competitors in the region, and how common it is for countries to allow companies not to share. The two railway case studies in the Key Resources for this section show the inherent complexity and challenge of shared use rail infrastructure.

Key Resources

See more resources

Cross-Border Oil and Gas Pipelines: Problems and Prospects

This document focuses on cross-border pipeline investments and explores ways through which possible conflict and disruptions can be ...

Investment Promotion Agreement

This investment agreement between the Ivanhoe Mines Mongolia Inc. LLC, Ivanhoe Mines Ltd., Rio Tinto International Holdings Limited and the ...