I'm delighted to be here today to outline Australia's involvement with Africa in the mineral and resources sector.
I am here at Indaba 2011 with the six other Australian high commissioners and ambassadors posted in sub-saharan Africa, with our senior trade commissioner, and with over 400 Australian companies. This visible and active presence at Indaba by team Australia is a reflection of Australia's growing engagement with the continent and the constituent countries of Africa.
Our enhanced engagement comes at a time when Africa is "on the move." I'm sure I don't need to tell an audience like this but the environment has never been better to realise Africa's potential.
Despite many challenges and with some exceptions, the continent is more politically stable, free and prosperous than in the past. We've seen the end of civil wars in Mozambique, Sierra Leone, Angola, Liberia, Burundi and Rwanda. Governance has also moved in the right direction. Of the 26 presidential elections held in Africa in the 1960s, the incumbent faced an opponent in just two of them. But since 2000, 98% of elections were contested. Coups are now rare and where they happen the continent rejects them.
The African Union and other sub-regional bodies have played a leading role in seeking to resolve disputed election outcomes.
Of course, challenges persist as we see in Somalia, the DRC, Ivory Coast and Sudan's Darfur region.
Over 30 of the world's 49 least developed countries are in Africa. Economic growth - which slowed during the Global Financial Crisis - will remain uneven and vulnerable to shocks in the global economy. Tackling corruption and increasing transparency and accountability are priorities.
But as the 2010 report by the McKinsey Global Institute showed us Africa's long-term growth and investment prospects are becoming more promising.
Three of the world's 10 fastest-growing economies of the past five years were from sub-Saharan Africa. And the IMF predicts four of the top 10 in the next five years will also be from Africa.
Over the past decade sub-Saharan Africa's real GDP growth rate jumped to an annual average of 5.7%, up from 2.4% over the previous two decades.
Africa's consumer spending is predicted to total $US1.4 trillion by 2020, with around 128 million households having discretionary income and more than half living in cities.
And as a consequence of all these positive factors, flows of inwards investment are expected to grow. Foreign direct investment in Africa has increased from $10 billion in 2000 to $59 billion in 2009, significantly larger than the flow to China if measured relative to GDP.
In short, Africa is on a new growth trajectory and now is the time to have confidence in Africa's future.
All of us, Australia included, are keen to be part of that future. Australia is conscious of the real and expanding interests we have here. And we have broadened our approach accordingly.
Today Australia has diplomatic ties with 52 of the 53 countries in Africa. We have expanded our diplomatic and trade presence on the ground, to better support Australian interests here. Just two weeks ago the Australian foreign minister, Kevin Rudd, officially opened our new Embassy in Addis Ababa, accredited to the African Union and Ethiopia. We have increased high-level political visits in both directions.
Australia has also increased our development assistance to Africa and this is likely to reach $500 million by 2015. It includes a major scholarship program aimed at building human resource capacity. By 2013, Australia will provide up to 1000 scholarships per year to African students. People-to-people links are also growing in importance. A quarter of a million African-born people have migrated to Australia bringing with them vital skills and connections.
Trade and investment has been one of the key drivers of Australia's growing engagement with Africa. Australia's merchandise trade with the continent has grown at more than 6% annually over the past decade to total just under $5.8 billion last financial year.
But it is the increase in investment by Australian companies in Africa's resources sector that has been the most impressive element of the Australia-Africa story - both in absolute numbers and in geographical spread.
In the main, it is a story of responsible investment, commitment to local communities, as well as to the highest standards of occupational health, safety and the environment.
It is a story of Australian companies working in partnership and cooperation with African governments and local communities to realise the full potential of their natural resource base in a way that delivers a sustainable benefit to their citizens.
But this year, particularly as we come out the other side of the global financial crisis, the story is even better.
The Australian Department of Foreign Affairs and Trade has recently compiled a database of Australian resource sector projects in Africa and the companies involved.
We are reasonably confident that it is comprehensive and up-to-date, particularly with regard to companies listed on the Australian Securities Exchange. We are perhaps a little less confident that it is fully comprehensive with respect to unlisted private companies and services companies - but even with that caveat, the information in that database shows us that the scale of Australian resources sector interests in Africa is significant and expanding at a rapid pace.
What we know is that there are over 220 Australian companies with nearly 600 projects in Africa spread across 42 countries.
The number of companies with projects here has nearly tripled since 2005 and nearly 70% of the projects commenced after 2005.
Some 48 companies and 143 new projects were added to the list in 2010 alone.
Australia's minerals and resources companies have more projects in Africa than in any other region of the world.
The biggest growth in new projects over the last two years has been in exploration for gold in West Africa, which accounts for about one third of new projects started in 2009-10, with Burkina Faso having the single biggest increase in West Africa.
South Africa, with 134 Australian projects, accounts for the largest amount of new and existing activity in any one country.
Australian companies are engaged in mining as well as oil and gas and the projects cover the full spectrum from smelters and refineries, to mines, to feasibility studies, to exploration, and to branch offices of mining services companies.
Australians will mine anything - but gold is the main mineral of interest, followed by uranium, copper, coal, platinum, diamonds and iron ore. However, the prospective iron ore, coal and bauxite/alumina projects in such countries as Guinea, Cameroon, Mauritania and Mozambique dwarf most of the other mineral projects in the scale of potential capital investment.
One very interesting point that emerged during the collation of the database was the likely size of the Australian investment pipeline into Africa. For the last few years we have been estimating the value of Australia's current and future investment at about USD $20 billion. Our research has shown that current investment is likely to be well over USD $20 billion and prospective investment much higher again. So the potential figure for current and future investment is likely to be much higher than our conservative USD $20 billion.
Australian companies are also active in delivering a range of mining services, including engineering, consulting and analysis.
Many of these companies in the mining equipment and technology services sector have looked at the range of technology goods and services that are suitable for Australia's demanding conditions and seen similar opportunities for them on the African continent. Well-known Australian METS companies such as Leightons, GHD, Clough Engineering and Snowdon are all active in Africa.
But so too are some of the smaller players like Runge which offers an online mining course called Smartminer that is targeted at professionals, technical staff and graduates entering the mining industry, and aims to improve productivity by up-skilling a global workforce irrespective of their location or time zone.
Ladies and Gentlemen
Australia recognises the importance of the resources sector for African economic development - between 2000 and 2010 it is estimated that USD $200 billion will accrue to African governments in oil revenue. About two-thirds of African countries have significant mining activities underway. And there is considerable further potential in the sector.
Africa contains over 30% of global mineral reserves, however less than 5% of the global mineral exploration and extraction budget is allocated to African projects. Well managed, the mining sector could contribute substantially to growth and progress towards the Millenium Development Goals in Africa.
As a world leader in the mining sector, and with significant development expertise, Australia is well-placed to assist African countries in overcoming the challenges this sector can present. This is recognised in Africa - assistance to the mining sector has been raised with the Australian government as a development assistance priority by a number of African governments.
Australia is seen in Africa as having a mature domestic mining sector with effective governance institutions and structures in place to manage the sector and the wealth it creates.
Certainly Australia's mining and resources industries are based on world-class expertise and technology in exploration, development, production, processing, and environmental management.
In recent years, the resource sector has been Australia's largest single export earner.
In 2008-09, over 80% of the resource sector's output was exported, accounting for around 56% of Australia's total goods and services exports.
The Australian minerals sector is in the top five producers or exporters of most of the world's key minerals commodities.
We are the world's largest exporter of coal, accounting for 30% of world trade and a major exporter of gold, iron ore, copper, zinc, lead, uranium and rutile. Australia is also a large exporter of aluminium, and the fifth largest exporter of liquefied natural gas.
Rio Tinto and BHP Billiton, two of the world's top three exporters of seaborne iron ore have their key operations in the Pilbara region of Western Australia.
In 2008, Australia was the world's third largest producer of gold and fourth largest producer of copper. There are approximately 60 operating gold mines in Australia.
Australia's aluminium industry is a highly-integrated sector of mining, refining, smelting and semi-fabrication centres, and is of major economic importance nationally and globally.
This production base gives our mining companies a very strong platform to work internationally, including in Africa, where many of the geographic conditions are similar to Australia's arid and tropical regions.
But it also means we are very conscious of the benefits of mining for our own economy and for the potential benefits that mining can bring in tackling poverty and achieving the MDGs in Africa. For that reason, the Australian Government is committed to supporting African governments' efforts at managing the mining sector in their countries.
Over the last few years we have been involved in a range of mining-related activities on the continent:
- Last year we provided 31 mining short-course awards to 16 African governments to support improvements in the sustainable management of their mining sectors.
- And I want to quickly just give you a sense of how that works. In 2010, for example, two officials from the Ministry of Mineral Resources in Sierra Leone undertook a fellowship at the University of Sydney on regulation and management of the sector. The fellowship provided officials with exposure to both government and industry and allowed the officials to compare Australia's approach to policy development and regulatory frameworks with those in Sierra Leone. The fellowship also provided the officials with access to international experts on global oil and gas contracts and provided specific training on monitoring exploration and mining licence conditions. The two Sierra Leone officials are now establishing a unit within their ministry to advise on policy reform, regulation and management of Sierra Leone's diamond industry. We plan to deliver an additional 60 of these short course awards in 2011.
- In addition to these short-term opportunities, under our Australia Awards scholarships program, 250 African students will take up masters degree courses in Australia in 2011. Over 10% of them will be studying natural resource management, including mining.
- In 2009, Australia supported a Southern Africa Development Community (SADC) workshop on the sustainable use of mining revenues which was opened by the Australian Governor General and the Mozambique President;
- At Indaba last year our former Trade Minister announced the beginning of a partnership between the government and the Australian mining industry body, AMIRA International, to improve the capacity of four universities in West Africa to undertake mining-related research and teaching including in geosciences;
- We have provided $1.45 million to the Extractive Industry Transparency Initiative (EITI) to support a range of countries to implement governance and transparency reforms in the mining, gas and petroleum sectors. Two African countries are already EITI compliant, with a further 19 African countries (of a total of 33 countries) currently going through the process for EITI compliance; and
- And we have provided $3 million to the International Monetary Fund's (IMF) network of African Regional Technical Assistance Centres (AFRITACs) to support capacity building work focused on macroeconomic and financial management, a key issue for resource-rich countries. For example, through this funding Australia is supporting the strengthening of mineral taxation policies in Ethiopia.
Australia's commitment to assist African governments fully realise the potential of their resources sectors in sustainable and efficient ways for the benefit of their citizens is unwavering.
Just two weeks ago at the African Union meeting in Addis Ababa, the Australian Foreign Minister, Kevin Rudd, briefed his African counterparts on Australia's likely future approach to the provision of assistance to mining-related governance and capacity issues in Africa.
Australia is certainly keen to support the efforts of African governments to:
Improve resource governance by strengthening local capacity for management and regulation of the sector.
Build resource sustainability through promoting effective environmental management and social responsibility in mining
Enable resource development by building technical capacity in geosciences, surveying and exploration, occupational health and safety and mining operations
We are particularly keen to utilise public-private partnerships to work with, and share expertise from, the mining industry, governments, academia and civil society. Developing guidance on social responsibility in mining or community development techniques are particular areas where we believe we could add value.
Ladies and Gentlemen
I have sought to paint the picture of Australia's engagement in the resources sector in Africa both from the commercial perspective but also in terms of the Australian government's role in helping to build capacity so that our African counterparts can create an environment conducive to investment and development.
As you will know from observing the response of my countrymen and women to the natural disasters that have ravaged Australia in the last couple of months, Aussies are resilient, creative, innovative and undaunted in the face of adversity.
We do not seek to be something we are not. We are a developed country but one from the 'south' not the 'north'. We do not seek to be European or American - but Aussies.
We have learnt as Aussies that to be successful in countries in Africa it is important to bring honesty and transparency. Australian companies are committed to upskilling their workforces in Africa and giving something back. The Australian government brings the same commitment.
Ann Harrap is Australian High Commissioner to South Africa. This text of her remarks to last month's Investing in African Mining Indaba 2011 conference in Cape Town was provided by the High Commission's office in Pretoria.