Chapter 8
Mining for development
The continental African Indian Ocean states are resources
rich, and their commodities boom is just beginning....significant oil and gas
finds in the coastal region are likely to increase its strategic importance and
fuel economic growth in years to come.[1]
8.1
Australia has 'a clear and vital interest in the prosperity and
stability of the Indian Ocean'.[2]
A number of Indian Ocean littoral states, however, are classified as Low Human
Development countries, including Kenya, Bangladesh, Myanmar, Madagascar,
Tanzania, Yemen, Comoros and Mozambique. To give an indication of their level
of human development: 43.4 per cent of Kenya's population live below the
poverty line; in Bangladesh the figure is 43.3 per cent; in Mozambique, 59.6 per
cent; in Tanzania, 67.9 per cent; and in Myanmar, 81.3 per cent. Indeed,
countries such as Tanzania, Mozambique and Madagascar are listed among the
world's 'least developed countries'. South Africa is categorised as a medium
human development country with a ranking of 121 from 186 countries, sharing
this position with Indonesia. India is also in this medium development
classification with a rank of 136.[3]
8.2
Although in the category of medium to low development, a number of these
emerging or developing countries are resource rich. Australia recognises that the
mining sector in these countries can make a valuable contribution to reducing
poverty, accelerating their human development and economic growth, and supporting
progress towards their Millennium Development Goals.
8.3
Australia's has significant mining interests in a number of Indian Ocean
rim countries, many of which confront considerable social and economic
problems. In this chapter, the committee considers the work that Australia does
in the Indian Ocean rim to assist countries fulfil their potential using the
mining sector as an example. Its focus is on the African countries bordering
the Indian Ocean.
Helping resource-rich countries
8.4
While mining can help a country realise its social and economic potential,
the extent to which the exploitation of mineral endowments drives development
depends on their management. Thus, if poorly managed the benefits from mining
may come at a cost of limiting economic and social progress for developing countries
in the region.[4]
The Australian Government recognises that the mining sector in resource rich
but economically poor countries, such as Africa, could unlock significant
socioeconomic benefits, reduce poverty and support progress toward the MDGs.[5]
It observed, however, that:
...the extent to which these benefits are achieved depends
heavily upon how countries meet the institutional and policy challenges that
come with mineral resource wealth.[6]
8.5
AusAID noted that 'converting mining into sustainable development is
challenging'. It explained:
Countries can experience economic instability as a result of
volatile prices and inflation. In countries where poor transparency and
institutional capacity enables corruption, mining can present lucrative
opportunities to enrich powerful elites. In some cases, waterways can be
affected by mining and ecosystems can be negatively affected. An influx of
migrant and foreign workers can create complex social impacts.[7]
8.6
Numerous reports have recognised the enormous benefits to be gained by
African countries from their mineral resources. In Tanzania, gold exports
account for more than a third of total exports of goods and services and
Mozambique has experienced a boost in coal production from the 'first mega coal
mining project that came on line in 2011'.[8]
South Africa is a major exporter of gold, platinum and chromium and a number of
other metallic minerals. In 2010, total primary mineral sales exports accounted
for 35.9 per cent of South Africa's total merchandise exports.[9]
The reports also draw attention to the importance of ensuring that mining
contributes to local, national and regional development: that it brings with it
longer term growth and socio-economic development.[10]
For example, AusAID argued that 'Well managed, the mining sector could
contribute substantially to growth and progress towards the MDGs in Africa.[11]
A 2011 report noted that:
Africa faces numerous entry barriers and a dearth of
capacity. Yet fundamentally, Africa has to shift focus from simply mineral
extraction to much broader developmental imperatives in which mineral policy
integrates with development policy.[12]
8.7
Africa has taken definite steps toward developing guidelines for the use
of its natural resources to transform the continent's social and economic development.
The African Union adopted the 'African Mining Vision' (AMV) in February 2009. Its
long term goal is to create circumstances that support a 'transparent,
equitable and optimal exploitation of Africa's mineral resources to underpin
broad-based sustainable growth and socio-economic development'. One of its main
objectives is to achieve:
A sustainable and well-governed mining sector that
effectively garners and deploys resource rents and that is safe, healthy,
gender & ethnically inclusive, environmentally friendly, socially
responsible and appreciated by surrounding communities.[13]
8.8
While Africa now has a long term vision for the responsible mining of
its mineral resources, the capacity of individual countries to implement
measures that could 'transform' their social and economic development may be
lacking.
Mining for Development initiative
8.9
As a world leader in the mining sector, Australia is well positioned to
provide assistance to Africa countries to help them manage the industry through
improving their resource governance and better regulatory framework. It can
provide assistance to help strengthen revenue transparency, support improved
partner government regulatory frameworks and social and environment safeguards
and maximise economic opportunities.[14]
As part of its assistance package, during the 2011 Commonwealth Heads of
Government Meeting the Australian Government announced that $127 million would
go towards the 'Mining for Development' initiative. This measure is central to
the Government's engagement with mining companies in developing countries, and
is administered by AusAID. It is intended to draw on expertise from across
government, industry and academia in Australia to help developing countries in
Africa, Asia-Pacific and Latin America address mining-related challenges.
8.10
The initiative was to include Africa as an initial priority area, with
other regions to follow.[15]
The aim of 'Mining for Development' was to ensure:
...resource-rich developing countries use opportunities
generated by mining to create much needed education and job opportunities for
some of the world’s most vulnerable people. Well-governed mining, gas and
petroleum sectors can not only help reduce poverty but also reduce a developing
country’s dependency on aid.[16]
8.11
Ms Lisa Rauter, AusAID, described this engagement with mining
companies in Africa as a multi-faceted initiative that would provide an
understanding of the skill gaps within Africa and the opportunities for local procurement. [17]
International Mining for
Development Centre
8.12
The International Mining for Development Centre, based in the University
of Western Australia’s Energy and Mineral Institute, is the centrepiece of the
initiative. It commenced operation in October 2011 and works in partnership
with the University of Queensland’s Sustainable Minerals Institute.[18]
According to the Prime Minister:
The first-class expertise on offer at both of these
universities will mean this new centre will be a valuable resource for
developing countries around the globe.[19]
8.13
AusAID informed the committee that the Centre's role was to develop
networks between African senior officials and other people in the private
sector and NGOs. It would help to improve the understanding of mining
regulation and mining governance by conducting short courses or bringing people
to Australia on study tours so they could learn from Australia's state governments
about regulatory policies, occupational health and safety and environmental
management. Also, they would engage with some of the Western Australian and
Queensland mining companies in order to gain a better understanding of the challenges
created by, and facing, the mining industry and to find solutions.[20]
By increasing the skills level of key personnel in government, universities,
research institutions and civil society, the centre aims to help African
countries to improve:
- policies and practices in the governance and management of
extractive industries and their interactions with society and the environment;
-
legislative frameworks; and
- knowledge of a country's resources base.[21]
It also hopes to enable countries to continue to build local
capacity in minerals governance and mining.[22]
8.14
A number of partnerships come under AusAID's Mining for Development
banner. According to AusAID:[23]
- The Australia Africa Partnerships Facility (AAPF)...provides
African governments with the knowledge, skills and systems to better manage
their resource wealth.
- The Extractive Industries Technical Advisory Facility (EI-TAF) is
a World Bank multi-donor facility that provides short-term, rapid assistance to
developing countries to help them understand, negotiate and analyse the complex
financial, legal, environmental and related technical aspects of mining
agreements, thereby reducing the risk of costly or politically difficult
remediation at later stages.
- The Topical Trust Fund on Managing Natural Resource Wealth (MNRW)
delivers technical assistance in the areas of macroeconomic policy, revenue
collection, statistical management, fiscal regulation and investment strategies
for natural resource assets in developing countries rich in oil, gas and
minerals.
- Governance Partnership Facility (GPF) is a flagship governance
engagement activity for the World Bank supported by four countries. The
objective is to improve governance and anti-corruption outcomes in developing
countries, through rigorous and systematic country-level approaches.
- Natural Resource Charter (NRC) is a series of economic principles
for governments and societies on how to sustainably manage the opportunities
created by natural resources.
8.15
Additionally, Mining for Development provides funds for the mining study
awards (masters and short courses offered by Australian Universities), and assistance
to the African Minerals Development Centre (an African mining research centre).[24]
8.16
Several submissions mentioned the Mining for Development initiative as a
positive way to engage corporate mining interests in important development
issues. For example, the West Australian Department of Premier and the Cabinet
made the following observation about the initiative and its positive impact in
the developing world; particularly the potential opportunities for West
Australian interests to be involved:
Australia (AusAID and governmental relations) and Australian
resource companies can play a significant role in helping improve these
conditions. Western Australia has know-how that could be useful in developing
the economies of African mining economy.[25]
8.17
Mr Jeff Hart, AAMIG[26],
acknowledged successes in the Government's approach in Africa, particularly
when it came to the promotion of development issues, particularly the
involvement of AusAID.
What we have seen in the last five years is the development
of synergy with the AusAID programs rolling out in Africa, the Mining for
Development initiative and the private sector as well. We got the attention of
Africa in a number of ways...[27]
8.18
According to Mr Hart, people from Africa come out to Australia because
they 'believe that there is something here for them to learn'. They also come because
they know that the programs and activities are relevant and ones in which their
people can be involved'. In summary, he stated that the programs are of 'substance'
and everyone works together.[28]
Extractive Industries Transparency
Initiative (EITI)
8.19
Australia is also providing support to the Extractive Industries
Transparency Initiative (EITI). The initiative aims for better transparency
through companies publishing their payments and governments disclosing their
receipts from those companies. By doing so, it seeks to promote better
governance in countries rich in oil, gas and minerals and reduce the risk of
diversion or misappropriation of funds generated by the development of a
country’s extractive industry resources. The EITI works through the joint
co-operation of governments, private sector companies and civil society groups.
8.20
Of the African countries on the Indian Ocean rim, Tanzania and
Mozambique are EITI compliant countries and Madagascar is a candidate country
(suspended).[29]
Although Australia supports the initiative and encourages other countries to
join, it is not yet officially registered as a compliant country.
8.21
It should be noted that, although AusAID supports EITI abroad through
its aid program, Australia is yet to sign up to implement EITI domestically. It
has, however, launched an EITI pilot and agreed to host the biennial EITI
Global Conference in May 2013.[30]
When Australia announced its decision to pilot the EITI, the EITI Chair, Claire
Short, stated that Australians were 'now taking further steps to practice what
they preach'.[31]
8.22
At the May 2013 Global Conference in Sydney, the Minister for Resources
and Energy, the Hon Gary Gray MP, took the opportunity to acknowledge the EITI
as 'a frontline initiative greatly assisting emerging economies and opening
markets, particularly in Africa.' He noted that Africa was a 'continent of
opportunity' and that Australia wanted to assist countries in the journey toward
a 'fairer and more efficient distribution of natural resource wealth'.[32]
8.23
The minister referred to Australia's EITI pilot program. He noted that a
full systems analysis of Australia's transparency framework including existing
governance and probity arrangements would need to be undertaken. According to
the minister, this approach was a defining feature of the Australian EITI Pilot
and proving to be valuable. In his view, the approach was 'highly compatible
with the new EITI Standard that includes provision for more contextual
information and consideration of domestic conditions'. He informed the
conference that he was awaiting the Pilot's results and a multi-stake holder
group report to government early in 2014 when the debate could 'be more
meaningfully addressed'.[33]
8.24
The committee recognises the need for transparency in the exploitation
of Africa's extractive industries and of the importance of Australia
strengthening its advocacy for countries to become EITI compliant and leading
by example.
Africa down under
8.25
Austrade has organised an 'Africa Down Under' conference annually for
the past ten years. It is held in Perth and is now the largest mining
conference in Australia and the second-largest mining conference focused on
Africa in the world, after the Mining Indaba in Cape Town.[34]
8.26
Although Africa Down Under is primarily a trade-based conference, AusAID
takes the opportunity to meet mining companies while they are in Perth. According
to Ms Rauter, by engaging with mining companies through forums such as this
conference or the Mining Indaba conference, AusAID can start a conversation
about 'some of their corporate social responsibility initiatives'. AusAID can
also help link companies with local NGOs or Australian NGOs operating in Africa
'in the hope that they can work towards the priorities and needs of particular
communities'.[35]
Officers from AusAID converse with delegates in order to understand some of the
regulatory barriers that they face. The agency is then better placed to work
with African governments to improve regulatory environments to achieve
consistency in the way that businesses are able to operate in Africa. The talks
also cover matters such as improved occupational health and safety standards,
environmental management and concerns that affect community development—making
sure that some of the revenue is being reinvested in development.[36]
Collaboration
8.27
Some of the challenges Australia faces in regards to resource discovery
and utilisation are shared by Indian Ocean rim countries. Therefore, the
commonalities also provide opportunities for collaboration between CSIRO and
Indian Ocean rim organisations to develop new approaches and technology for the
future use of minerals.[37]
8.28
Over many years, the CSIRO has developed considerable expertise and
experience in research associated with the entire minerals value chain, from
exploration to metal production and manufacturing. The research targets 'safe,
efficient, clean mining, mineral processing and metal production operations which
are all global requirements'.[38]
8.29
As an example of this collaboration, CSIRO receives funding from the
Australia-India Strategic Research Fund, which is run by the Department of
Industry, Innovation, Science, Research and Tertiary Education, and is focused
specifically on India. It has carried out a number of collaborative projects
with Indian partners with money from the fund. This work 'can often be taken to
other markets as well, including other areas around the Indian Ocean Rim'.[39]
Ms Liz Yuncken, CSIRO, mentioned one project on mining that CSIRO was doing
with one of the CSIR India institutes, 'looking at how mines are constructed to
make them safer for the people who are working in the mines and to make them
more efficient'.[40]
Clean energy
8.30
The Northern Territory Government drew attention to the opportunities
for increased NT clean energy exports—liquid natural gas and uranium—the Indian
Ocean rim. The government noted further that there were also opportunities for
increased collaboration between the NT and the Indian Ocean rim in green energy
and technology research and development and commercialisation.[41]
CSIRO is also undertaking research in securing an energy future. It noted that:
In many Indian Ocean Rim countries, population growth and
urbanisation are increasing pressures on electricity supply, as well as
increasing the greenhouse gas emissions from energy sources as more energy is
used by upwardly-mobile populations. Conversely, many population groups in
these countries have limited or unreliable access to energy, which limits their
ability to improve their living conditions.[42]
8.31
In this regard, CSIRO is conducting work to develop efficient and low
emission coal technologies for energy generation that could be exported to
coal-producing Indian Ocean rim countries such as India, Indonesia and South
Africa. In its view, the research has the potential 'to reduce global
greenhouse emissions and increase energy production efficiency'. CSIRO is in
the process of negotiating a collaboration agreement with the Central Mine
Planning & Design Institute (CMPDI) Limited in India (a subsidiary of Coal
India).[43]
8.32
CSIRO is also developing new technologies for oil and gas exploration
and production and collaboration with Indian Ocean rim partners is underway,
such as Petronas in Malaysia. It is collaborating with the Energy Resources
Institute of India (TERI) 'to assist with the low-emissions electrification of
rural areas in India through the exploration of mini-grids as a way to allow
greater penetration of renewable energy in electricity networks while remaining
completely portable across all generation methods, now and into the future'.[44]
8.33
Finally, CSIRO is working in rural India to improve food quality and
storage life by developing solar cooling facilities that provide refrigeration
in areas with no electricity supply. According to CSIRO, this $1 million AusAID-funded
project is intended 'to assist India to minimise the 30 per cent of
agricultural production that currently goes to waste due to lack of refrigeration'.
As well as solar cooling technology, CSIRO is investigating using waste heat
from biomass gasification/gas engine technology that is being developed in
rural Indian regions. CSIRO noted that both projects have application in rural
and remote areas of Australia, and would reap benefits for Australia as well.[45]
Conclusion
8.34
Australia has extensive experience and expertise in all aspects of
mining and is allowing that knowledge to be used by countries in the Indian
Ocean rim to their advantage. The success of the 'Africa Down Under' conference
is testament to the high regard in which Australia's mining industry is held.
8.35
AusAID is leveraging off this body of knowledge to better target the
assistance it provides to developing countries so that their mining industries
can help to alleviate poverty, create employment and overall contribute to their
development goals. The committee also acknowledges the work of the CSIRO
especially in the promotion of the use of clean energy. It draws attention
especially to the projects in rural India involving the development of
low-emissions electrification through the exploration of mini-grids and of
solar cooling facilities.
8.36
The practical application of the results of such research across the
region showcases the quality of research undertaken in the region and the
benefits of collaboration. The committee recommends that the Australian
Government should give much greater prominence to such research and should
ensure that funding for this type of research continues and opportunities for
broader application in the region are expanded.
8.37
The committee recognises that currently Australia is undertaking an Extractive
Industries Transparency Initiative (EITI) pilot program.
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