Africa Down Under Conference
Yesterday, August 29, I attended the Africa Down Under conference in Perth. I’d like to share with you my speech from the conference:
This century, the Asia-Pacific will be at the centre of global economic growth and rising power.
Forecasts of sustained economic growth and social transformation in the region support the notion of an ‘Asian century.’
But here, on the eastern edge of the Indian Ocean, with the vast African continent – its natural resources and people – to our west, it is important to qualify the expectation that the century belongs to Asia alone.
And it’s important to remember that Australia is an Indian Ocean continent as well, with a foreign and trade policy that has a global focus.
Yes, looking to Asia, but looking to the Americas, the Middle East, Europe and Africa as well.
In the next few years, to 2015, African countries will be among the world’s fastest growing economies – based on International Monetary Fund data.
China, no surprise there, will top the list for highest average annual GDP growth.
But Ethiopia, Mozambique, Tanzania, Congo, Ghana, Zambia and Nigeria will be close behind with growth rates between 8.1 and 6.8 per cent respectively, for that period.
Speaking at Oxford University in February last year, Kofi Annan spoke optimistically, though cautiously, on the future of Africa – its growing economic strength and confidence.
He told a gathering at Exeter College that Africa is “once again being seen as a continent of opportunity” where the “number and diversity of businesses and countries flocking to invest”.
And his view is supported by data from the African Development Bank (ADB) which shows that direct foreign investment in Africa rose from $9 billion in 2000 to $80 billion last year.
Australia’s outlook on Africa
Australia is optimistic about Africa and its prospects and we see immense opportunities on the continent.
The African economy is growing quickly – at an average annual rate of 5.7 per cent over the past decade and forecast to grow at 7 per cent per annum over the next 20 years.
The African population is young with a median age of 20 years – compared to 30 in Asia and 40 in Europe.
It is urbanising rapidly, with a growing middle class.
Africa is rich in arable land, mineral reserves, and energy deposits with:
• 30 per cent of the world’s mineral resources;
• 10 per cent of the world’s oil reserves; and
• 8 per cent natural gas stores.
Security in Africa is much improved and the quality of governance is getting better.
Growing Australian engagement with Africa
Against this backdrop, Australia is scaling up our presence and increasing our engagement with Africa.
We are opening new diplomatic missions in Ethiopia and soon in Senegal.
We are joining the African Development Bank.
And we are strengthening political links with African regional organisations and through high-level contact.
Our development assistance – to help Africa increase economic self-reliance – has quadrupled in the last five years.
And we are helping to build capacity by providing more than 1,000 scholarships for Africans to study in Australia this year alone, through the Australia Awards.
Our trade and investment with Africa is growing rapidly.
We have a large and growing African diaspora – with around 300,000 people from communities in South Africa, South Sudan, Somalia and Ethiopia now living in Australia.
And 14,000 African students are currently studying here – just some of the next generation of African leaders in government, science, medicine, business and of course mining.
In Africa’s minerals and resources sector, there are currently 200 Australian companies involved in 650 projects in 37 countries – many of them represented here at Africa Down Under.
One in 20 Australian companies listed on our Stock Exchange has an investment in Africa.
Africa hosts the largest number of Australian mining projects of any region outside Australia – around 40 per cent of all overseas mining projects.
And the Africa Down Under conference, which has grown every year since 2003, is now the second-largest African mining investment conference in the world (after Mining Indaba in Cape Town).
Australia and Africa have a great deal to offer one another – we’ve knowledge and experience to share.
Australia has secured its economic prosperity through industries that are very familiar to Africa such as mining, agriculture, fisheries and forestry.
Like Africa, we understand the opportunities and risks of natural resource endowment.
On our side, however, we have the advantage of mature, world’s best practice mining and gas industries.
In many ways we are natural partners.
And in the spirit of cooperation, and in our own national economic interest, Australia is committed to developing a long-term partnership with Africa.
One that helps African countries realise their economic potential and promotes self-reliance.
What Australian mining companies are doing in Africa
Last night I met with many of Australia’s Ambassadors and High Commissioners to Africa.
They shared with me a number of examples of this partnership.
In Cameroon, RioTinto has partnered with the Government on the Alucam smelter for the last 53 years.
The smelter directly employs 1,000 people, and 1,300 indirectly.
It represents $22 million of investment, $126 million of local procurement and $46 million in tax revenue to the Government of Cameroon (up to 2006).
For the local community, the project has funded:
• provision of eight safe water wells;
• 50 scholarships; and
• medical assistance aimed at reducing the incidence of malaria and HIV/AIDS.
In Malawi, Paladin operates the country’s biggest mine – the Kayelekera uranium mine – which contributes around 10 per cent of Malawi’s GDP.
Paladin has shown strong corporate social responsibility by funding community projects including:
• an upgrade of the water supply to the region’s largest town; and
• construction of school facilities and teacher housing near the mine.
In Guinea, Rio Tinto’s Simandou iron ore project represents a $10 billion investment including construction of a 730 kilometre railway line.
The project is expected to double Guinea’s GDP by 2015.
BHP Billiton has invested in the Mt Nimba bauxite and alumina smelter project.
Bauxite and alumina are Guinea’s main exports – contributing 40 per cent of GDP in 2008.
Democratic Republic of Congo
In the Democratic Republic of Congo, Australian based Mawson West has two main projects.
In the true spirit of corporate social responsibility, the company has given a 10 per cent equity interest to a non-profit community development organisation.
In Liberia, the resources sector will be a big factor in its recovery from civil war.
Australia is providing a technical adviser to the Government of Liberia to help establish a Natural Resource Tax Unit within the Ministry of Finance.
In Botswana, the discovery of diamonds and other resources has had a significant impact on this strong middle-income state.
The mining industry contributes about 35 per cent of Botswana’s GDP.
Currently, more than 30 Australian companies are operating there and Australian firms hold nearly 40 per cent of mining licences (the most of any country).
One project, Aviva coal, will attract a further $2 billion of Australian investment in Botswana.
Another, the Boseto copper mine, is owned by Discovery Metals and is one of the largest in Botswana.
Botswana’s strong mining investment record would not have been possible without strong governance for which it’s government deserves credit.
Burkina Faso, Niger, Liberia
Further west, in Niger, Burkina Faso and Liberia, the Australian Government is partnering with Middle Island Resources – a gold exploration and development company – to provide benefits to local communities.
In Niger, for example, a primary school was built and in Liberia, a secondary school.
The partnership also included an agricultural and irrigation project in rural Burkina Faso – with 14,000 people benefitting directly.
Most of Australia’s exports to Mozambique are alumina which is processed in the BHP Billiton-owned Mozal aluminium smelter.
The $1.3 billion smelter is the largest single infrastructure project in Mozambique, and its return to the government is expected to continue to grow 5.7 per cent a year.
In South Africa, there are 134 Australian projects – the highest level of activity by Australian companies in any African country.
An Austrade survey shows that 44 per cent of Australian mining equipment and technology services companies have operations in South Africa.
This makes it the most favoured destination for Australian investment after New Zealand and Indonesia and equal to PNG.
26 Australian companies operate in Namibia, mostly in base metals, diamonds and uranium.
Rio Tinto’s Rössing uranium project produces and exports uranium oxide to nuclear power utilities around the world.
In 2011, Namibia provided around seven per cent of the world’s uranium oxide production.
And Rössing’s share in this production was 57 per cent – or around four per cent of world production.
What the Australian Government is doing for mining in Africa
It is clear that mining companies – explorers, miners, service providers, engineers, investors – are the driving force needed to unlock mineral wealth.
But we need look no further than the Australian success story to understand that governments also have an important role to play.
Resources must be managed well – with legislation, governance frameworks, sustainable environmental practices, and a skilled workforce.
Australia has more than 100 years of experience in harnessing natural resources to build our economic future.
And we are committed to sharing this experience with Africa.
The Australian Government – through our aid program – is helping develop Africa’s minerals sector in a way that is sustainable and transparent – in a way that yields benefits for the entire population.
We have committed $200 million between 2011 and 2015 on mining for development.
Let me give you some examples of what we have achieved in recent years:
• we have helped the Liberian Government set up a natural resource taxation unit to improve mineral taxation;
• we have supported the Ministry of Petroleum and Mining of the world’s newest country – South Sudan – in drafting mining law;
• we have assessed mineral taxation administration in Cameroon, Namibia and Uganda (partnering with the World Bank); and
• implemented relevant procurement frameworks in Liberia, Burkina Faso and with the Economic Community of West African States (partnering with the World Bank).
In the last 18 months alone, we have helped 210 African officials and Ministers from 19 African countries to participate in mining study tours to Australia.
As an example, we brought 90 officials from 32 countries to attend the 2012 International Geological Congress in Brisbane.
These tours enable officials to visit our regional centres and learn first-hand about natural resource management, including mining governance, taxation and impact assessment.
Following these study tours:
• Namibia is re-examining clauses in its Mining Act to ensure greater protection of local communities;
• Zambia is preparing an amendment to its Mines and Minerals Act to include regulations for preferring local procurement and local content; and
• Mozambican Railways has established links with Queensland Rail to explore business opportunities including the design of a new railway line for coal transportation.
International Mining Centre for Development
On August 10, I visited the International Mining Centre for Development here in Perth for the first time.
The Centre brings Australia’s world leading expertise in mining to resource rich developing countries through education.
It is a partnership between AusAID, the University of Western Australia and the University of Queensland and was launched by Prime Minister Gillard at the Commonwealth Heads of Government Meeting last year.
By 2015, the Centre will train 2,000 people in the management of mineral resources.
When I was there, I announced an extra $4.9 million in aid funding for the Extractive Industries Technical Advisory Facility to help developing countries share the benefits from mining.
The Facility helps developing countries to understand, negotiate and analyse the complex financial, legal and environmental aspects of mining agreements.
A course was run recently in QLD and NSW with participants from 16 countries from Africa, Asia and Latin America.
Following the course, we supported these participants to continue their discussions on technical matters through the centre’s management information systems.
This has meant, for example, that specialists in Ghana are able to exchange views and advice with those in Peru, Indonesia and the Philippines.
Australia is willing to do more to strengthen the partnership between Australia and Africa.
That’s why today I am pleased to announce that Australia will make an initial commitment of $5 million over the next two years to support the establishment of the African Minerals Development Centre.
The centre will implement the African Union’s African Mining Vision.
It aims to:
• drive sustainable mining further still;
• increase transparency around major projects; and
• support infrastructure and develop new capacity.
African countries have been at the forefront of increasing transparency in mining.
Of the 36 countries that are working with the Extractive Industries Transparency Initiative, 21 are in Africa.
Australia started a domestic pilot last year, and we are keen to encourage more countries to adopt the Extractive Industries Transparency Initiative.
Today I am also pleased to announce that Australia will host the next global conference of the Extractive Industries Transparency Initiative in Sydney in May 2013.
This will be an opportunity for us all to help improve the transparency of company payments and government revenues in this sector.
I started today by asking what role we might see for Africa in this century.
It is ultimately a question for Africa – but on what we’ve seen since 2000, this could well be an African Century.
But it isn’t a question that can be answered by looking one year ahead, or five years ahead, but decades into the future.
Africa is changing shape – for the better.
In the past we might have been pessimistic about Africa’s prospects.
But in our own lifetimes we’ve seen East Asia redraw the world’s economic fault lines.
What will Africa look like in 2100?
What proportion of the global economy will it be then?
Whatever its shape, one thing is clear – Australia wants to be part of that growth story.