23February2017
MrRichardMaude,
HeadofForeignPolicyWhitePaperTaskforce,
DepartmentofForeignAffairsandTrade,
RGCaseyBuilding,
JohnMcEwenCrescent,
Barton,ACT,0221
BYEMAIL:[email protected]
DearMrMaude,
RE:SubmissiontotheAustralianFederalGovernmentforconsiderationinthedevelopment
oftheForeignPolicyWhitePaper
Please find attached a submission from the Australia-Africa Minerals and Energy Group
(“AAMEG”).
AAMEGisthepeakbodyrepresentingAustraliancompaniesengagedinthedevelopmentof
Africa’sresourcesindustry.
The footprint of the Australian resources sector on the African continent is significant.
AustraliaisoneofthetopinvestorsinmineralexplorationinAfricawithover170Australian
companiesdevelopingoroperatingover400projectsacross35Africancountries(AAMEG
research2016).Australia’stwo-waygoodsandmerchandisetradewithAfricahasincreased
over the past decade from around $6 billion in 2004-05 to $8.5 billion in 2014-15. It is
estimatedthat60%ofMiningEquipment,TechnologyandServices(“METS”)companiesin
Australia export their services to African countries, and these services are worth
approximately$15billionannually.
AAMEGwasestablishedin2011tosupporttheAustralianresourcesindustrythatisactivein
manyjurisdictionsacrosstheAfricancontinent.AAMEGsupportsitsmembersby:
•
Beingthevoiceofindustryonmember-drivenissues;
•
BuildingtheAustralianGovernment’sunderstandingofandsupportfortheAustralian
resources sector operating in Africa, and assisting with engagement between the
resourcessectorandgovernment;
•
Building relationships with African governments and providing venues for
collaborationonissuesofcommoninterest;and
•
Creatingaforumformemberstonetworkandshareoperationalexperiencesinorder
tostrengthentheAustralianresourcesindustry’soperationalcapabilityinAfrica.
AAMEGwouldbepleasedtobepartoffurtherconversationsasappropriatetoaddtothe
pointssetoutinthissubmission.
Yourssincerely,
TrishO’Reilly
ChiefExecutiveOfficer
Australia-AfricaMineralsandEnergyGroup
TheEconomicandPoliticalSignificance
ofthe
AustralianResourcesIndustryPresence
acrosstheAfricanContinent
Leveragingofftheresourcesindustryfootprinttodrivethe
Government’seconomic-diplomacystrategy
SubmissiontotheAustralianFederalGovernmentforconsiderationinthe
developmentofaForeignPolicyWhitePaper.
23February2017
AAMEG:Allrightsreserved.Nopartofthisworkmaybereproducedinanymaterialformorcommunicatedbyanymeanswithout
permissionofthecopyrightowner.
TheEconomicandPoliticalSignificanceofthe
AustralianResourcesIndustryPresenceacrosstheAfricanContinent
Leveragingofftheresourcesindustryfootprinttodrivethe
Government’seconomic-diplomacystrategyinAfrica
ThispaperhasbeenpreparedbyrepresentativesoftheAustralia-AfricaMinerals&EnergyGroup(“AAMEG”)toassist
the Federal Government in understanding the important role that the Australian Resources Industry plays across the
AfricanContinentandtosupporttheFederalGovernmenteffortsindevelopingaForeignPolicyWhitePaper.
GeneralBackground
Australia and Africa are custodians of great resource endowment. Australia has a well-developed and
technically mature resources industry, which has been exporting its capabilities and competitive strengths
overseasforthelast25yearsandestablishingasignificantglobalfootprint,notablyontheAfricancontinent.
The resources industry in Africa, with the exception of that in South Africa, is at a much earlier stage of
development, as a result of historical political unrest and generally unattractive foreign investment
conditions.
Favourable changes in the political and legislative landscapes since the early 1990s, combined with the
historically low levels of exploration activity, have more recently made many African countries attractive
investment destinations. This situation has been further advanced by the degree to which the multilateral
institutions (UN, IMF and World Bank) have engaged with African Governments, and the degree to which
WorldBankagencies(MIGAandIFC)haveengagedwithresourcecompanies.Nevertheless,inAfricathere
are great differences to be found in the maturity of the industry from one country to another which is
reflected in the political and social conditions, the willingness to conform with internationally accepted
normsofgovernance,andhowthebenefitsflowtothevariousstakeholders.Ofthe54Africancountries,35
arestilllisted1asLeastDevelopedCountriesandyetAfricaisgenerallyacknowledgedashavingsome30%of
theworld’smineral,oilandgasreserves.
Resource development has been a major contributor to Australia’s economic progress, and it is now also
contributing substantially to an improving economic outlook for many of the countries of Africa. Over the
past decade, real per capita incomes have increased by more than thirty percent and three of the top ten
world’sfastestgrowingeconomies2arelocatedinAfrica.
Lookingfurtherahead,resourcesdevelopmentwillremainacornerstone,ifnotthecornerstone,ofAfrican
economicdevelopmentfortheremainderofthetwenty-firstcentury-andperhapswellbeyond.TheAfrican
Union(“AU”)hasrecognisedthisrealityinlaunchingitsAfricanMiningVision(2009)3andActionPlan(2011),
tosupportAUmember’seffortstouse“transparent,equitableandoptimalexploitationofmineralresources
tounderpinbroad-basedsustainablegrowthandsocio-economicdevelopment”.Resourcecompanieshave
an obligation to support this worthy aspiration, enabling the people in the local communities surrounding
their operations to be engaged meaningfully and reach their full potential. Such an approach is becoming
widelyacceptedinAustralianandWesterncompaniesasfundamentallygoodforbusiness.
In response to the Federal Government’s call for public submissions for its Foreign Policy White Paper,
AAMEG offers the following comments which are intended to respond to aspects of items 1, 2, 4, 5 and 6
listedonthewww.dfat.gov.au/whitepaperwebsite.
1
http://www.un.org/en/development/desa/policy/cdp/ldc/ldc_list.pdf
https://www.weforum.org/agenda/2016/04/worlds-fastest-growing-economies/
3
http://www.africaminingvision.org
2
2
AustralianResourcesIndustryEngagementinAfrica
ItisnotsurprisingthattheAustralianresourcesindustryhasfounditswaytoAfrica,ledbytheminers,and
followed by oil and gas companies and major service industry providers. Australian mining is genuinely
entrepreneurial with a “can do” attitude and a capability in assessing, and a preparedness to take on,
unfamiliarrisks.
Australianresourcecompaniesgenerallyunderstandthat,tobesuccessfulinAfricainamannerthatwillbe
sustainable,theymustbeabletodealwithanumberofnon-technicalriskissuesincludingpoliticalandsocial
risk,institutionsthatoftenlackthecapacitytofunction,securityandhealthissues,povertyandtheadverse
behaviour it encourages, bribery and corruption, the occasional unpredictable actions of host-country
securityforces,andmanyotheroften-unfamiliarrisks.TheminingindustryhasledthewayinAustralia’sreengagement with Africa since the 1990s, and it has done so with notable success (see Figure 1) as
demonstratedbythenumberofAustralian-operatedminesthathavebeenbroughtintoproduction,aswell
asthemannerinwhichlocalcommunitiesandhostgovernmentshavebeenappropriatelyandmeaningfully
engaged.
Sub-Saharan Africa has the highest concentration of Australian resource projects in the world, with some
36%ofthetotalnumberoutsideAustralia,comparedwiththatintheAsia-Pacific(22%),LatinAmerica(17%)
and USA/Canada (14%).4 Sub-Saharan Africa also accounts for 48% of all Australian resource projects in
developingcountries.ThefootprintoftheAustralianresourcesindustryinAfricaisverysubstantial.
The long history and scale of the Australian mining industry, coupled with its focus on innovation has
resultedinworld-leadingexpertiseinminingandminingservices.Thisstrengthshouldnotbedismissedas
being part of Australia’s “old economy”. Rather it should be embraced for its global technical leadership
acrosstheboard,inresourcescienceandallassociatedtechnologies,projectdevelopmentandsustainability
practice. It has also provided the means to enable the commercialization of large low-grade mineral
deposits,whichwerepreviouslyconsidereduneconomic.
The Australian Mining Equipment, Technology and Services (“METS”) sector comprises a diverse range of
companies that produce technologically advanced, globally competitive products and services for mining
companiesworld-wide.TheMETSsectorisonagrowthtrajectory,havinggrownfive-foldinthelastfifteen
years and now exporting to virtually every corner of the globe. Some 84% of the companies in the METS
sectorareAustralianowned.
During2012,itwasestimatedthatthesectoremployedmorethan385,000people,spentinexcessof$1.6bn
on research and development (“R&D”), and earned revenues of almost $90 billion, including $15 billion in
exportsderivedfromthemineralsandminingbusiness5.MuchofthisAustralian-sourcedexpertiseprovides
theAustralianMETSsectorwithacompetitiveadvantageandisavailableforthediscoveryanddevelopment
ofmineraldepositsinthecountriesofAfrica6.
ThefootprintoftheAustralianresourcessectorontheAfricancontinentissignificant.Australiaisoneofthe
topinvestorsinmineralexplorationinAfrica.Therearecurrentlymorethan170AustralianStockExchangelisted mining and other resource companies operating over 400 projects in some 35 African countries
(AAMEGresearch2016).Australian-listedcompaniescontrolmorethan90miningoperationsinAfrica.The
range of minerals is extensive and the scale of exploration, extraction and processing involves current and
potentialinvestmentworthmorethan$40billion.Inaddition,therearehundredsofAustralianbased,nonASX-listedcompaniesinvolvedinexploration,operationsanddevelopmentprojectsinAfrica.Furthermore,
about one in twenty companies listed on the Australian Stock Exchange has an investment in Africa.
NowhereelseintheworlddoAustralianminingfirmshavesomuchinvested.
4
http://www.cet.edu.au/knowledge-base/publications/133506_sharing-the-benefits-report
https://www.cmewa.com/policy-and-publications/policy-areas/economic-competitiveness/preview?path=Industry-growth-centres-METSsector.pdf
6
MiningEquipment,TechnologyandServicesReport,AustradeMarch2016
5
3
The use of Australian exploration and mining software and other technologies in these discoveries and in
ongoingmineoperationshasalsobeenimportant.Somesixtypercentoftheworld’sexplorationandmining
software has been developed in Australia. This sector generates $600 million a year of mining related
revenuesandmorethan$240millioninexports7.
The Australian pipeline of investment and prospective investment in Africa remains substantial – and
companies involved range from the largest (BHP Billiton), to medium (including Resolute Mining, Paladin
Energy,andPerseusMining)andsmallersized(suchasTigerResourcesandRegalResources)companies;the
greatmajorityofwhichhavetheirheadofficesinPerth.Thepotentialforfuturegrowthisdemonstratedby
thefactthatjust5%ofcurrentminingprojectsareproducingassets,withthebalanceinvariousstagesof
exploration and development (source – AAMEG research 2016). Should even a small portion of these
developmentassetsmoveintoproduction,thescaleandimpactofourAustralianfootprintinAfricawillbe
exponentiallylarger.
Importantly, in bringing the requisite capability to the development of Africa’s “new economy” and with a
large and expanding footprint, the Australian mining industry provides a unique platform for the efficient
progressionoftheAustraliannationalinterestinAfrica.
AAMEG–Australia-AfricaMinerals&EnergyGroup
The Australia-Africa Minerals & Energy Group (“AAMEG”) was established in 2010, followed by formal
incorporation in April 2011. AAMEG currently represents and supports almost 100 Australian mining, oil &
gas,exploration,serviceandsupplycompaniesactiveinAfrica.
AAMEGhasbeenworkingtobuildstrategicrelationswithGovernments(bothinAustraliaandAfrica),NGOs,
industryandacademia,andencouragingmorecollaborativeapproachestoresources-drivensocio-economic
development, including the establishment of effective Public-Private Partnerships to promote common
AustralianpoliticalandstrategicinterestsinAfrica.Werecentlyproducedanupdateddocument–“Australia
and Africa: Assessing the scale and potential of Australian engagement in Africa”, 2017 (located on the
AAMEG website and attached as an Appendix) which highlights the importance of the Australia – Africa
relationshipandbegsthequestionregardingfutureAustraliangovernmentengagement.
AAMEG is engaged in ongoing discussions with the African Development Bank and Australian Heads of
Mission based across Africa, to identify possibilities for an AAMEG contribution, including through AAMEG
members running or participating in training courses. Domestically, AAMEG is partnering with our local
universitiestodevelopandpresenttrainingmodulesforAustralianresourceindustrycompaniesoperatingor
contemplatingoperationsinAfricaandalsoforAustralianAwardsparticipantscomingtoAustralia.
AAMEGhasundertakeninvestmentclimatereviewsofGhanaandLiberia,providingtheindustryfindingsto
boththeAustralianandthehostcountrygovernments.
AAMEGisengagedwithChathamHouse(CentreonGlobalHealthSecurity)andUSAID(EmergingPandemics
ThreatsProgram)intheIDRAMInitiative(theExtractiveIndustriesInfectiousDiseasesRiskAssessmentand
ManagementInitiative).Activitiesaroundextractiveindustryoperationsintropicalhotspotsfrequentlybring
humansandanimalsintoclosercontact,whichcanpotentiallymodifyvirustransmissionpatterns.Thereis
currentlynoestablishedframeworkforevidence-basedriskassessmentandriskmanagementofoutbreaks
withpandemicpotentialrelatedtohumanactivitiesintropicalhotspots.IDRAMwillcontributeastudyon
theseissuesasseenfromminingdevelopmentactivityinAfrica.
AAMEG conducts workshops addressing a variety of issues including foreign bribery and corruption, cyber
security, personnel security, and has actively promoted amongst its members support for the OECD
ConventiononCombatingBriberyofForeignPublicOfficialsinInternationalBusinessTransactions(ratified
MiningSoftwareandSpecialisedTechnologiesReport,AustradeSept2013
7
4
by Australia in 1999), the Extractives Industry Transparency Initiative (“EITI”) (implemented by Australia in
May2016)andtheVoluntaryPrinciplesonSecurityandHumanRights(“VPSHR”)aswellastheSustainable
DevelopmentGoals(“SDGs”)8,particularlyGoal8,to“Promoteinclusiveandsustainableeconomicgrowth,
employmentanddecentworkforall”.
AAMEG has coordinated working sessions for its members that have included representatives from the
FederalAttorney-General’sDepartment,theAustralianFederalPolice(“AFP”)andtheBusinessLiaisonUnit
oftheAustralianSecurityIntelligenceOrganisation(“ASIO”).
AAMEGisanactivememberoftheUNGlobalCompactNetwork-Australiaandinthiscapacity,werecently
assisted the Department of Foreign Affairs and Trade (“DFAT”) with the development of a set of model
clausesundertheVPSHR(ratifiedbytheVPSHRPlenarySessioninJune2016),forindustrytouseinsecurity
agreementsbetweenGovernmentSecurityForcesandcompaniesintheextractivessector.
AAMEGhastakenaleadroleinrespondingtocurrentsecurityconcernsacrossAfrica.Wehavecoordinated
a Security Working Party, with support from DFAT and ASIO to address these issues. In February 2017,
AAMEG launched a package of initiatives to assist in responding to security concerns, including the
development of a security application available to members that will track recent security incidents or
concerns in the areas where their workforces, including Australian expatriates, are operating (further
informationregardingthisinitiativeislocatedontheAAMEGwebsite).
AAMEG members have been responsible for the development of a 55-page Social Aspects Management
Handbook(July2015),whichincludesaforewordwrittenbyAustralia’sForeignMinister,andincollaboration
withMIGA(WorldBank),aVPSHRImplementationToolkitforMajorProjectSites9.AAMEGhasalsoprovided
two submissions to the Federal Government (Dec 2011 & Aug 2015) addressing Foreign Bribery and
Corruption issues. AAMEG also works closely with the organisers of the Africa Down Under Conference in
Perth where it has conducted workshops and information sessions on a variety of issues relevant to the
challengesofoperatinginAfrica.
AAMEGhasdevelopedanAssociateMembershipcategoryforAfricanGovernments.Thisinitiativeprovides
theopportunityformeaningfulengagementandlearningsacrossanumberofissues.Wearecurrentlyusing
thisplatformtodiscusssecurityissuesandthekindofresponsethatneedstobedeveloped.
AAMEG has regular liaison with DFAT in relation to progressing areas of common interest. While this has
resulted in a number of successful initiatives, there is mutual recognition that significantly more can be
achievedtothebenefitofAustralia’snationalandeconomicinterestswithanexplicitlyintegratedstrategic
approachtoengagementwithindividualcountriesinAfrica.
TheRoleforGovernmentasaPartneroftheResourcesIndustry
Notwithstanding the strength of Australian private resources sector engagement in Africa, Australian
governmentsupportandengagementisvitallyimportant.Australia’smaincompetitorsintheAfricanmining
space often do have substantial government backing (particularly the Canadians, British and Chinese) and
withmodelsmoreintegratedwithindustry,inwhatisrecognizedasachallengingandoftenunpredictable
operatingenvironment.TheAustraliandiplomaticandtradenetworkinAfricaplaysavitalroleinsupporting
Australianbusinessesontheground,includingthroughtheirhonest-brokerrolewithhostgovernments,but
muchmorecouldandshouldbedone,giventhesizeofthefootprintofAustraliancommercialinterestson
the African continent. Australia is considered a global leader in resource governance, which also enhances
thereputationandinvestmentclimatefortheAustralianresourcesindustrybackhome.
8
http://search.dfat.gov.au/s/search.html?collection=dfat&form=simple&query=SDGs&profile=dfat
http://www.miga.org/documents/VPSHR_Toolkit_v3.pdf
9
5
TheminingsectorhasappreciatedtheopportunitytopartnerwithGovernmentincapacity-buildingefforts
(throughtheDirectAidProgram)andtosupporttechnicalassistanceprograms(investmentclimatereviews
andrevisionsofminingcodes),butthereismuchopportunitytoexpandthiscollaboration.Thebenefitof
such cooperation to business is that it adds to the standing of Australian companies locally, as well as at
centralgovernmentlevel.Australianindustrybenefitsfrommorestableoperatingandlegislativeconditions,
therebyimprovingreturns.Inaddition,significant politicalcapitalcanaccruetoAustraliaasaresultofthe
typeofengagementthatisviewedasa“helpinghand”toahostcountryanditscitizens,whichinturnresults
inagreaterwillingnessofhostgovernmentstoacceptgovernment-to-governmentadviceandguidance.Too
often in the past, aid has been viewed as a “hand out”, with the inevitable “sense of dependency” that
attaches to that approach. The required focus now is more on collaboration amongst the various
stakeholders,capacity-building,sharedvaluesandsharedbenefits.
Africangovernmentswantthedevelopmentofresourceprojectstocontributeto,ifnottokick-start,broader
basedeconomicdevelopmentandarelookingatmeaningfulgovernment-to-governmentrelationstobethe
facilitator for improvements in the investment climate and attractiveness to direct foreign investment
(“DFI”).
Australian companies in Africa have a well-deserved reputation for ethical dealing and a well-developed
sensitivity to Social Licence to Operate issues. When that is set alongside Australian technical resource
industry expertise, Australia becomes a very desirable partner for many African governments – in fact a
“partnerofchoice”andan“employerofchoice”.
TheAustralianGovernment’sengagement,particularlyinrecentyears,hasgreatlystrengthenedthehandof
industryandaneffectivegovernmentroleremainscrucialintheperiodahead.Overall,anincreasingnumber
of African governments want what the Australian resources industry has to offer, including the training
opportunities at both technical and governance levels. However, dramatic fluctuations in AID funding and
technicalassistanceprograms,aswehavewitnessedinrecentyears,havethepotentialtodevelopasense
ofskepticismfromforeigngovernmentsastotheactualintendedpurpose.Asteadyandsustainedlevelof
effortandengagementislikelytodeliveramuchbetterresult.
CurrentSituation&FutureOpportunities
AAMEGhasbeencloselyengagedwithgovernmenteffortstouseresourcedevelopmenttopromotebroader
basedsustainabledevelopmentinAfrica.AreasofaidfocusinAfricaincludingminingskillsdevelopmentand
mininggovernanceareareasinwhichAustraliahasexpertisetoshareandwherebothAfricanGovernments
andbusinessseeopportunitiesforeconomicgrowthanddevelopment.
AAMEGhasalsoworkedactivelytoengagetheWAGovernmentoncooperationforminingrelatedactivityin
Africa.PremierBarnett’s2014visittoLusakaandhismeetingswithMinistersandseniorofficialsofCOMESA
(theCommonMarketforEasternandSouthernAfrica)whichculminatedinthesigningofaMemorandumof
Understanding, followed by his attendance at the Investing in African Mining Indaba Conference are also
indicationsoftheWAGovernment’sgrowinginterestandinvolvementintheAfricanminingscene.
AAMEGbelievesthatitisideallyplacedtoaddgreatersubstancetoresourceindustryskillsdevelopmentand
capacity-building programs in Africa. AAMEG members have already participated in and supported
governmentfundedminingstudytourevents,butunfortunatelysofarthishastendedtobeonasomewhat
adhocbasis.
AAMEGhasthecapacitythroughitsmemberstoorganiseworkexperienceplacementsbothinAfricanand
Australian-basedofficesformining/engineeringstudentsandresourcegovernancepersonnel.Therehasalso
beendiscussionaboutparticipationintheAustraliaAwardsScheme;however,thereiscurrentlynoprocess
forsubstantiveindustryinvolvement.
Itisfeltthatalackofin-depthunderstandingoftheextenttowhichtheAustralianresourcesindustryhas
establishedanenviablebeachheadontheAfricancontinenthasresultedinwidefluctuationsinthelevelof
6
engagement and policy decisions that are not supported by well-informed discussion. The Australian
resources industry, including its METS sector, is clearly world class not only in terms of technical
achievements,butalsointermsofitsfocusonresponsiblecorporatebusinessconduct.Thepositionthatthe
Australian resources industry has developed during the last 25 years on the African continent provides a
wonderfulbeachheadfortheFederalGovernmenttoleverageitseconomic-diplomacyinitiative.
Recommendations
1. Industryknowledgeandunderstanding
ItisrecommendedthattheAustralianGovernmentengageadatacollectionservice,well-versedandactive
in the Australian resources sector, to collect the data necessary to have a better appreciation and
understandingofthescopeanddepthoftheAustraliaresourceindustry’scomparativeadvantageglobally,
andthescaleofitsinvolvement ontheAfrican continent, compared with that in other parts of the world.
This research should include an assessment of the economic benefit generated for the Australian
government,employeesandcompanies.Thiswouldprovideabetterbasisforpolicydecisionsandleadtoa
moresteady,sustainableandproductivegovernment-to-governmentengagement.
2. Supportfortheresourcessectorcomparativeadvantage
It is recommended that the Australian Government develop a level of engagement with the countries of
Africa, consistent with the Australian resources industry’s commercial engagement and level of operating
challenges, recognizing that the Australian resources industry probably has the greatest comparative
advantage of any Australian industry, in becoming a truly global player. The opportunity to establish an
integrated strategic approach to engagement with individual countries in Africa which both leverages and
reinforcesAustralianresourceindustryactivities,isconsideredsignificant.
3. Economicdiplomacy
It is recommended that the Australian Government and industry engage more collaboratively on capacitybuilding initiatives (resource policy, administration training, governance, health and security), in order to
takeadvantageofobvioussynergies,reducetheoverallcostsofspecificinitiativesandbettersupportboth
theGovernment’sandindustry’soverlappingdiplomaticandsocio-economicinterests.
A current pilot is being undertaken in Kenya, Ethiopia, Zambia, Zimbabwe, and Nigeria. This is a cost
effective, capacity-building program that is conducted in-country and is a good example of the Australian
Government,theWesternAustralianGovernment,AfricanGovernmentsandindustryworkingtogetherfor
positiveoutcomes.Thisprogram,forlimitedcosts,hasthepotentialtoexpandandAAMEGwouldbekeen
tobepartofthisprocess.
4. Targetedsupport
It is recommended that Australian Government focus initially on those resource-rich African countries in
which the Australian resources industry already has a substantial interest and involvement. By working
collaboratively with industry, a better understanding of the issues that negatively impact host-country
investment climates can be achieved, leading to better-directed capacity-building initiatives that not only
benefitAustralianresourcecompanies,butalsoimprovetheoverallattractivenessofthehostcountryasa
foreign investment destination for all potential investors. Industry members have first-hand knowledge of
local issues and are well placed to assist in planning outcomes. To this end, the addition of industry
representativesonGovernmentpanelswouldbeadvantageous.
Australia companies are also well placed to consider internships, mentoring programs and input into the
contentoftheAustraliaAwardsprogram,particularlytheAustralianAwardsshortcourseprogram.Builtinto
theethosofthisprogramisprivatesectorengagement,howeverweneedtomakethisaworkingreality.
7
5. Moresteadyhost-countryengagement
ItisrecommendedthattheAustralianGovernmentendeavortoachieveasteadylevelofengagementwith
host governments underpinned by a well-informed, long-term strategy, rather than an approach which
fluctuateswildly.Dramaticfluctuationsinlevelsofengagementcanleadtoskepticismastotheunderlying
purposeofthatengagement,damagingthereputationofboththeAustralianGovernmentandtheAustralian
industry.
ConcludingComments
We strongly believe that trade and the development of good business practices will assist in alleviating
povertyacrossthecontinentofAfrica.
Wealsobelievethattheresourcessectorisuniquelyplacedtofacilitaterelationshipbuildingandinnovative
programdevelopmentinvolvingGovernments,theprivatesector,not-for-profitsandacademia.Closerand
more effective cooperation and collaboration amongst these key sectors can enhance the achievement of
common objectives in a cost-effective way. We support working with innovative agents of change for true
changetooccur.
InmanypartsofAfrica,sustainableeconomicdevelopmentisalreadyunderway,underwrittenbyresource
industry development, with the Australian mining sector playing a very significant role. The way remains
open to forge a more active and balanced Public-Private Partnership between the mining industry and
Governmentinthepursuitofcommonsustainabledevelopmentobjectives,includingpovertyreduction.
Australia is uniquely placed to benefit from Africa’s economic potential through its active involvement in
resource development. Australia supports African governments in their efforts to unlock the growth
potentialofthecontinentanddoingsoinasociallyandenvironmentallyresponsiblemanner.Thebenefits
provided to the people of African nations include the jobs creation, skills development and “opening the
doortoopportunities”thatresultfromdirectforeigninvestment.
Lookedatfromabroaderperspective,AustraliaalsohasimportantsecurityandstrategicinterestsinAfrica.
Thesewillbeaddressedinarangeofcontexts,butthefactisthatmanyofAustralia’sinternationalsecurity
interests in Africa and elsewhere can be advanced via transformative (and sustainable) economic
development,whichinturncanbestbeachievedonlythroughactiveengagementwiththeprivatesector.
Australia has a far-reaching footprint in Africa with investment and trade increasing significantly over the
past 25 years. However, the development of Africa’s mineral potential has really only just begun, and
Australia should aim to have its resources sector play an ever-increasing role. Australia is recognized as a
global leader in resource industry investment overseas, technical competence, managerial capability and
ethicalbusinessconductasevidencedbythedegreetowhichithassuccessfullyexporteditscapabilitiesto
the world over the last 25 years. We must work collaboratively to position ourselves commercially and
diplomaticallytoplayakeyroleasthisAfricancenturyunfolds.
Movingforward,AfricaisanimportantpartnerforAustraliaandwebelievetheresourcessectorisuniquely
placedtofacilitatethefuturedevelopmentandgrowthofthispartnership.
oOOo
8
Figure1:LocationofAustralian-operatedexplorationandresourceprojectsinAfrica,2013.
Source: Sharing the benefits: enhancing Australia’s global leadership in mining value chain, Centre for
ExplorationTargeting,July201610.
10http://www.cet.edu.au/secure-pdf/133506_sharing-the-benefits-report.pdf
9
Appendix
AustraliaandAfrica
Assessingthescaleandpotentialof
AustralianengagementinAfrica,Feb2017
10
February 2017
Australia and Africa
Assessing the scale and potential of Australian
engagement in Africa
Why Africa?
Across the world Africa is seen as a rising continent with an increasing trend of economic growth. In the last decade, the
gross domestic product of the 11 largest countries in sub-Saharan Africa increased by 51% - more than twice the world
average of 23%.1
According to the African Development Bank’s (AfDB) African Natural Resources Center (ANRC), the continent is home
to 30% of the world’s known mineral reserves and 10% and 8% of oil and gas reserves, respectively. Additionally, in 2012,
mining, oil and gas accounted for 28% of the continent’s GDP. Africa has the world largest cobalt, diamond, platinum
and uranium reserves. Overall, in 2012, natural resources accounted for 77% of total exports and 42% of
government revenues.2
For those who are willing and able to seek out its opportunities, Africa represents the world’s latest and potentially
greatest emerging market.
Traditionally, most investment in Africa has centred around the mining, oil and gas industries. More recently, we have seen
investment in the infrastructure and construction industries, as well as telecommunications, agriculture and the
banking sectors.
Like many other nations, Australia stands to benefit from the opportunities that the rising Africa will represent in the
coming decades.
Corruption, political instability and civil unrest remain in some jurisdictions but since the turn of the millennium, an
increasing number of African states have experienced prolonged periods of political stability and economic growth, and
have undertaken democratic reforms of security and governance architectures. Systems and institutions are maturing.
Doing business in Africa is not without risk but the trend in investment confidence is showing that these risks no longer
deter commercial interest in the way they once did. The opportunity presented to be part of the African growth story is
compelling and will be to the mutual benefit of the host African nations and Australia, should we seize the opportunity.
Australia has a long history of engagement with Africa and already has a far reaching footprint. AAMEG research in 2016
has identified that this extends to at least 170 Australian companies developing or operating over 400 projects across 35
African countries. AAMEG research highlights a clear shift in focus towards West African nations over recent years, with
four of the top 10 countries now in this region. The quantum of investment over decades is substantial.
The Australian resources industry is well-positioned to play a pivotal role in the development and economic growth of
Africa’s natural resources. This paper seeks to lay the foundations for determining the current level of investment in Africa
and future potential for Australia’s engagement in Africa.
1
2
Herbert Smith Freehills, A Multi-Jurisdictional Review: Dispute Resolution in Africa, Legal Guide Second Edition, September 2016.
African Development Bank (AfDP), African National Resources Centre (ANRC) 2016 www.afdb.org/en/topics-and-sectors/initieatives-partnerships/
African -national-resources-centre.
Australia and Africa 1
The Australia Africa Partnership
Strategy
If Australia is to benefit from the rising Africa’s potential, there is a need for a clearly articulated Australian Foreign Policy
strategy on Africa, a targeted effort to increase the number and effectiveness of private-public partnerships and an
enhanced and consistent visible presence on the ground by the Australian government, focussed on building and
maintaining long-term, mutually beneficial relationships.
Trade is key
Trade and investment, and particularly investment driven by the resources sector, underpins the “Australia Africa”
relationship.
Policy focusing on economic diplomacy and trade, and not merely aid, will position Australia as a key benefactor of Africa’s
economic potential and will demonstrate Australia’s commitment to make a real difference to the socio-economic
circumstances of millions of Africans.
Presence
An increased visibility of the Australian Government and the Australian diplomatic footprint across Africa will demonstrate
Australia’s commitment to support and promote Australian business opportunities across the African continent.
Australia has a long history of engagement with Africa which has largely been driven by historical Commonwealth ties and
the resources boom of the 1990’s. In the mid 2000’s the Australian Government recognised the importance of engaging in
bilateral talks with a number of African countries.
Historically, Australia’s diplomatic footprint has largely extended to Commonwealth, or Anglophone, African countries.
The current Liberal Coalition government under Malcolm Turnbull’s leadership has recently announced its intention to
open a new Australian Embassy in Morocco. 3
Australian Investment and Trade
Recognition of Africa’s enormous potential and significance to Australia is slowly increasing – an example is the 2014
Memorandum of Understanding (MoU) between the Western Australian State Government and COMESA (Common
Market for Eastern and Southern Africa).
In the context of Australia’s historical and contemporary engagement with Africa, this MoU highlights the responsiveness
of the WA Government to the growing Australian investment in Africa. It also highlights the WA Government’s recognition
of Africa’s importance to Australia’s national interests.
Perth, Western Australia has hosted the Africa Down Under (ADU) Conference since 2003. The conference is the single
largest Africa business forum held annually outside the African continent itself. The 2016 ADU conference saw over 800
delegates in attendance, including over 50 exhibitors and media representation from both Australia and Africa. Thirteen
African delegations were represented. The 2016 ADU was the first time the conference was situated within a dedicated
Australia-Africa Week, which is built around the nucleus of Africa Down Under conference and brings together a range of
events – including the Australia-Africa Universities Network Forum, the Africa Oil, Energy and Gas Conference, and the
Australia-Africa Technology and Infrastructure Conference.4
Australia-Africa Week is illustrative of the whole-of-government approach the Australian Government is increasingly taking
to Australian engagement with Africa. It received support from the Department of Foreign Affairs and Trade’s (DFAT)
Advisory Group on Australia-Africa Relations (AAGAR).
A whole of Government approach to engaging Africa within the context of a comprehensive foreign policy strategy is
imperative in moving forward.
3
4
Australia to open an Embassy in Morocco, 2016 www foreignminister.gov.au/releases/pages/2016/jb_mr_161116.
DFAT “Perth to host first Australia-Africa week during ADU conference www.zimbabwe.embassy.gov.au/hare/hare-news.
Australia and Africa 2
Government and Industry Engagement
Over the past decade the Australian Government has recognised the potential of the Australian mining industry’s presence
on the African continent. This led DFAT to suggest regular Government-industry discussions to facilitate a more active
engagement on Africa and the formal incorporation of the Australia-Africa Minerals and Energy Group (AAMEG) in 2011.
In 2011 AAMEG made a submission to the Joint Standing Committee on Foreign Affairs, Defence and Trade, which
reviewed Australia’s relationship with the countries of Africa. AAMEG’s submission outlined how the resources
industry operating in Africa could help foster Australia’s engagement with our western neighbour. In particular, the
AAMEG submission made note of how mining companies are appropriately positioned to deliver social development
assistance through public-private partnerships, as their projects can provide a commercial focus for the management of
such programs.
The 2011 Inquiry endorsed the need for greater Australian Government collaboration with the private sector.
In parallel with this policy development, AAMEG has been actively engaged with the Australian Government to develop
substantive linkages to facilitate the minerals and energy sector’s role in pursuit of Australia’s common objectives in Africa.
Another key achievement by the Australian Government is its ongoing commitment to education and training. During the
2014-15 period DFAT offered over 600 Australian Awards. The Australian Awards program enables the next generation of
African leaders to acquire skills and knowledge in areas critical for Africa’s development – public policy, extractives
governance and agricultural productivity. The program also has a focus on enabling women’s leadership and strategic
management opportunities.
The growth of the diaspora communities across Australia is significant and seen as an important factor in growing positive
relationships. According to the 2011 Australian Census of Population and Housing, approximately 338, 000 African-born
people live in Australia.
Australia and Africa 3
Trade Trends and Growth
Australian trade with Africa has increased significantly over the past 20 years. In 2012 the value of Australia’s exports in
goods and services to South Africa stood at $1.9 billion. Imports were $1.3 billion. Exports to other parts of Africa stood at
$2.6 billion in 2012. Imports from other parts of Africa increased substantially in 2012 to $6.4 billion. This shows that, not
only has Australian trade with Africa been growing, but over the past five years in particular Australia’s interests have
expanded beyond the South African market.
DFAT’s 2014-2015 Annual Report recognises that African economies continued to perform steadily overall. [DFAT]
supported commercial opportunities for Australia in extractives, infrastructure, agribusiness and education. However,
peace and security challenges in parts of Africa continue to undermine stability and good governance.5
The report further highlights that Australia increasingly views itself as an Indian Ocean rim power and that Australia is
committed to strengthening its bilateral and multilateral relationships with African countries.
In 2014, Australia’s two-way trade in goods and services with Africa amounted to approximately $10 billion, which is
‘indicative of the potential of African economies’. 6Overall, the growth of two-way trade between the two continents
highlights that Africa is a key economic and development partner to Australia, as well home to many of the world’s most
vibrant markets. A long-term comprehensive engagement strategy is needed to establish credible and mutually beneficial
partnerships with the countries of Africa.
Australia’s investment footprint
In an effort to obtain the most recent statistics of Australia’s investment footprint in Africa, AAMEG has reviewed over 450
Australian companies who operate in or have substantial economic links with the 54 countries of Africa. Based on this
review, it was established that at least 170 Australian resources companies are currently operating in Africa. Of these,
approximately 150 are publicly listed, while the remainder are private. The vast majority of the public companies are listed
on the ASX – of the 150, all but 8 are ASX-listed.
5 DFAT, Annual Report 2014-15 p 167
6 DFAT Annual Report 2014-15 p.71.
Australia and Africa 4
For the purposes of this review, an ‘Australian company’ has been defined as falling under one or more of the
following criteria:
• A primary listing on the Australian Stock Exchange (ASX)
• Head office based in Australia with executive employees present
• Most of the company’s revenue accruing to Australia or Australian shareholders
While the large majority of companies relevant to this review are listed on the ASX, the several exceptions that do exist. For
example, Sarama Resources is based in Western Australia and is for all intents and purposes an ‘Australian’ company, but is
listed on the Toronto Stock Exchange.
The total estimated market capitalisation of the 150 resources companies exceeds $200 billion. As Table 1 shows,
companies with a market capitalisation over $100 million represent approximately 17% of the sector (25 companies), and
make up 98.5% of total market capitalisation. Less than 10 companies have a market capitalisation over $1 billion.
Approximately 40 companies have a market capitalisation of less than $10 million.
Table 1 – Companies by market capitalisation7
5%
23%
15%
57%
Over $1 billion (5%)
$100 million - $1 billion (15%)
$10 - $100 million (57%)
Less than $10 million (23%)
This research highlights the significant number of mid-cap and junior resource companies who have a dedicated focus on
the African continent. 57% of the companies have a market capitalisation of between $10 and $100 million.
Australia’s footprint across Africa has for the last decade been extensive, consistently operating on the ground in many of
Africa’s 54 countries. Traditionally Anglophone Africa has been the preferred destination of Australian investment;
however, other regions in Africa, particularly West Africa, have seen increasing attention in the last several years.
Currently, over 400 individual projects across 35 African countries are either Australian owned or operated.
7
Source – AAMEG research.
Australia and Africa 5
The ten countries with the most Australian projects are; Tanzania, South Africa, Burkina Faso, Mali, Namibia, Ghana,
Zambia, Botswana, Cote d’Ivoire and Mozambique. The shift in focus by Australian companies to West Africa is clear from
this list.
Table 2 – Number of projects/companies by country
Algeria
Angola
Botswana
Burkina Faso
Cameroon
Cote d'Ivoire
DRC
Eritrea
Ethiopia
Gabon
Ghana
Guinea
Guinea-Bissau
Kenya
Liberia
Madagascar
Malawi
Mali
Mauritania
Mauritius
Morocco
Mozambique
Namibia
Nigeria
Nigeria
Rep. of Congo
Senegal
Sierra Leone
South Africa
Tanzania
Trinidad
Tunisia
Uganda
Zambia
Zimbabwe
Number of projects
Number of
companies
0
10
20
30
40
50
60
70
Australia and Africa 6
Table 3 – Share of projects by region
North Africa
4%
Southern
Africa
38%
West Africa
35%
East Africa
17%
Central Africa
6%
The majority of Australian projects are in the exploration or pre-exploration stages, with a smaller number of projects in
production or near-production. Reflecting on Australian project data from 2013 conducted by SNL Metals & Mining, the
share of projects into 2016 has remained heavily tilted towards exploration, despite a reduction in the overall number of
projects. Operating projects comprise approximately 5% of all Australian projects in Africa. This demonstrates the
enormous potential for growth available in the future.
Table 4 – Project Stages
1%
2%
1%
1%
2%
Target Outline - 10%
Reserves Development - 12%
10%
Prefeasibility/Scoping - 8%
Operating - 5%
12%
Limited Production - 1%
Grassroots - 21%
30%
Feasibility Started - 2%
8%
Feasibility Complete - 1%
Feasibility - 3%
5%
Exploration - 30%
Expansion - 1%
3%
1%
21%
1%
2%
Construction Started - 2%
Commissioning - 1%
Closed - 1%
Advanced Exploration - 2%
Australia and Africa 7
The Australian owned projects cover a wide range of development stages and commodities. Gold, coal, copper and
uranium have traditionally been the minerals with the highest quantum of Australian companies, and while this remains
the case, we can see a diversification in the minerals mined over recent years. Projects developing new world commodities
such as graphite and lithium have become significantly more commonplace in 2016.
Table 5 – Minerals mined by Australian companies 2013 & 2016
Bauxite
Chromite
Coal
Copper
Diamonds
Gold
Graphite
Ilmenite
Iron Ore
2016
Lithium
2013
Manganese
Nickel
Phosphate
Platinum
Potash
Tin
Uranium
Zinc
0%
10%
20%
30%
40%
50%
60%
Conclusion and Next Steps
Australia has a far reaching footprint in Africa with trade increasing significantly over the past 20 years.
Australia is uniquely placed to benefit from Africa’s economic potential through its active involvement in the positive
progress in supporting African governments to unlock the growth potential of this continent, while providing mutual
benefit to African nations and their people through direct foreign investment, job creation and skills development.
The Australian resources industry is well-positioned to play a pivotal role in the development and economic growth of
Africa’s natural resources.
AAMEG research has shown that over 170 Australian companies, with a combined market capitalisation of greater than
$200 billion have operating, development and exploration projects in Africa. This footprint has spread across the continent
and, importantly, only 5% of the more than 400 projects are currently in operation. The potential for future growth is
clear.
Establishing further detailed analysis of the economic impact and valued added both to African nations and Australia will
be the key next step in this research. Gaining a deeper understanding of what has been invested, what is at stake and how
much value has been created will support the further deepening of Australia’s engagement with Africa.
This is a significant document and begs the question of where to from here. AAMEG looks forward to close engagement
between industry and Government in developing key outcomes to foster growth between Australia and Africa. Ongoing
positive engagement with the African continent represents a real opportunity for both Australia and Africa.
Australia and Africa 8
We would like to note the key contributions to the development of this document.
In particular AAMEG wishes to thank:
Berkay Erkan (Project Officer, AAMEG)
Tinashe Jakwa (Masters Student University of Western Australia
Ben Gargett (Partner, PwC)
Adel Van der Walt
TrishO’Reilly(CEO,AAMEG)
AAMEG is reliant on the active contribution of its members and is grateful for the time
invested in this project.