Resource- rich countries can’t miss the opportunity

of mining – related infrastructure !

1 Source Reverse the curse: Maximizing the potential of resource-driven economies, McKinsey Global Institute, December 2013 :

$1.3 tn / year

Resource-driven countries need

$2tn (cumulated)

Extractive industries will invest

Resource - driven countries have a huge funding gap that extractives industries can

help fill

Could meet 9%

of the funding

gap !

By 2030:

3

Closer look to SSA: Funding gap at $31bn / year….

US $ billion annually

Source: World Bank

4

….While in the context of iron-ore mining alone, private investment

expected: $45 bn

, 2013

“Shared-use” can result in a win-win situation

Infrastructure gap in a

resource-driven country

Onerous infrastructure development

for mines

Shared use allows

parallel development of

both the mine and

the host country

Opportunities for: Economies of

scale Economies of

Scope Developmental

impacts

5

6

Whereas the traditional enclave model is costly for all

Country

7

Example: Power self-supply is a loss for all

Adequacy of National Supply

Reliability of Supply

Cost of Grid Power

Extent of Trans.

Infrastructure

Min

e se

lf s

uppl

y is

a

loss

to

all In Africa:

Source: WB- VCC7

8

Of course nuances are needed: costs for sharing infrastructure vary

Costs/benefits of a range of shared infrastructure projects

1= low, 2= medium, 3= high

While sharing is generally beneficial, the associated costs vary substantially between projects

SOURCE: Vale Columbia Center; McKinsey Global Institute analysis

3,0

2,0

0

1,5

2,5

Inf. class Rail Port Pipelines Water Power Power Power

Type of industry Bulk Bulk Gas Bulk Bulk Base Precious

Number of projects assessed 7 4 1 1 2 2 2

Range of costAverage cost

Range of benefitAverage benefit

8

9

Of course nuances are needed: not all commodities present the same opportunities

1 Source Reverse the curse: Maximizing the potential of resource-driven economies, McKinsey Global Institute, December 2013 :

70% shareable between operators

30% shareable between mining industry and other users

Taking all those nuances into account, the potential for shared use is tremendous !

Extractive industries will invest

$2tn (cumulated) by 2030

10