At a Glance
The potential benefits of shared use include: creating economies of scale, unlocking extractive projects that may otherwise be unviable, promoting the development of non-extractive industry (if projects involve multi-purpose access), enhancing regional integration, and improving service delivery.
The potential costs of shared use include: higher capital costs; a loss of efficiency; limited access to finance; delays in negotiations; and, where oversight capacity is limited, the added time and costs involved in setting up and operating a regulatory body.
- A Framework to Approach Shared Use of Mining-Related Infrastructure (Nicolas Maennling, Alpa Shah, Sophie Thomashausen, Perrine Toledano)
- Fostering the Development of Greenfield Mining-Related Transport Infrastructure through Project Financing (International Finance Corporation)
A cost-benefit analysis should be undertaken to decide the relative priority of transport infrastructure. Benefits of shared use could include:
- Economies of scale, as it is cheaper to build one transport solution with a relatively large capacity than separate, smaller ones.
- Unlocking extractive industry projects that may be unviable without multi-user infrastructure access.
- Non-extractive industry development, if projects involve multi-purpose access.
- Regional integration, where infrastructure solutions lead to greater cross-border trade.
- Improved service delivery if the local population has improved access to markets and service delivery points due to multi-purpose shared use (this is particularly relevant for road investments).
On the other hand, the costs of shared use could include:
- Higher capital costs if shared use requires additional capacity—or infrastructure investments— to cater to users’ specific needs.
- Loss of efficiency, as operating one vertically integrated customer is easier than if several users need to be accommodated (for a mine-rail-port system, shared use can lead to an efficiency loss of a magnitude of 10-20%).
- More limited access to finance, given that banks prefer a single-use model that reduces the risk of the loan not being repaid.
- Delays in negotiations if shared use is against the interest of the extractive company with the anchor investment for the infrastructure.
- Time and costs related to setting up and operating a regulatory body to monitor shared-use requirements.