Shared-use mining infrastructure: Why it matters and how to achieve it

Abstract

This article considers the cases for and against ‘open access’ regulation of rail and port logistics infrastructure used by ‘bulk’ mining operations, arguing that host governments should proactively impose and then enforce such regulation in almost all cases. The logistics infrastructure needed for this type of mining activity is of critical importance. The costs and potential inefficiencies involved in duplicating such infrastructure confer a significant competitive advantage on its owner in the absence of effective access regulation. In particular, where a first mover develops an ‘integrated’ project incorporating a mine and associated infrastructure, a failure to impose access regulation discourages third-party investment in mineral exploration and development in the region serviced by the infrastructure, due to the risk of hold-up by the first mover. An unregulated first mover can also use its infrastructure advantage to capture the state's share of resource rents from the mineral endowment of the region. Open access regulation further benefits host countries by enabling broad-based economic development through the shared-use of mining infrastructure with other sectors (e.g., agribusiness). The article highlights contrasting experience with access regulation in Australia: the Pilbara iron ore region has seen protracted disputes involving mining firms and policy-makers and very few examples of third-party access, while in the coal region of central Queensland an extensive multi-user, multi-purpose railway network operates independently of mining firms. The authors urge governments in sub-Saharan Africa (in particular) not to underestimate the internal capacity and other challenges associated with developing and enforcing open access regulation of mining infrastructure in a manner that protects their national interests.
Citation

Collier, P. and Ireland, G. (2018), Shared-use mining infrastructure: Why it matters and how to achieve it, Development Policy Review, Volume 36, Issue 1, January 2018, pp. 51–68