Australian mining in Africa
Australia's current commercial activity in Africa is strongly focused on
the extractives sector. While reported figures vary, submissions to the inquiry
have indicated that at least 170 Australian Stock Exchange-listed mining and
other resource companies are operating in some 35 African countries, with
the scale of exploration, extraction and processing involving current and
potential investment estimated to be worth more than $40 billion.
Africa is generally acknowledged as having some 30 per cent of the
world's mineral, oil and gas reserves. The Australia-Africa Minerals and Energy Group (AAMEG) expressed the view that
resources development 'will remain a cornerstone, if not the cornerstone, of African
economic development for the remainder of the twenty-first century – and
perhaps well beyond'.
DFAT has described the footprint of Australian extractives companies in
Africa as follows:
A DFAT stock-take in 2015 estimated that investment flows in
the extractives sector by Australian companies were significant and
geographically diverse with projects underway in 35 countries. Australian
companies are most active in the resources sector in South Africa, Namibia, Tanzania,
Zambia and Burkina Faso.
Operations of Australian mining sector companies
Australian mining companies in Africa are active across a broad
geographical area, in both the operation of mines and the exploration of future
projects (see Figure 3 below).
3: ASX listed mining companies in Africa
Source: AAMEG, Submission 4, p. 4.
Data provided by AAMEG shows the range of minerals currently being
extracted by Australian mining companies. As shown in Figure 4 below,
Australian mining projects in Africa span a broad range of resources, including
uranium compounds, manganese, ilmenite (a titanium ore), and diamonds. Coal
mines form the largest portion of existing mines (27 per cent), followed by
platinum (20 per cent) and gold (16 per cent). A large number of additional projects are currently in the exploration phase
for those minerals listed above, in addition to nickel, phosphate, rare-earth
elements, iron ore, and copper.
4: Sector investment by ASX-listed companies in Africa, 2015
Source: AAMEG, Submission 4, p. 5.
For example, Base Resources, with headquarters in Perth, is an Australia
and UK-listed resources company. Its flagship development is the Kwale Mineral
Sands Project in Kwale County, 50 kilometres south of Mombasa in Kenya. This is
a US$310 million investment currently producing ilmenite and zircon. The
boosting revenue for the Government of Kenya and Kwale County and is set to
deliver significant revenues in tax and royalty payments over the life of the
mine, together with considerable indirect taxation, direct and indirect
employment and other economic benefits.
Australian mining equipment,
technology, and services (METS)
As a result of Australia's strength in the extractives sector,
Australian companies have developed expertise in a range of supporting
functions. The mining equipment, technology, and services (METS) sector has
become an important industry in its own right.
The Department of Industry, Innovation and Science describes the METS
sector as follows:
Mining Equipment, Technology and Services sector provides specialised products
and solutions for mineral exploration, extraction and mining supply chains.
This includes equipment manufacturers; engineering services; mine software
products and other related equipment, services and technologies where the
primary function is to support the mining and mineral extraction industries.
In his submission to the inquiry, the Hon Bill Johnston MLA, Minister
for Mines and Petroleum, also acknowledged:
Africa has also been
identified as a key market for Australian mining equipment, technology and
services (METS) companies, with many companies already having established
operations in the region.
Paydirt Media indicated that many African countries are important
markets for Australian METS companies:
In the Austmine 2015
survey, 33 percent of METS companies identified Sub Saharan Africa as a key
market, while 26 percent regarded North Africa as important. The Austmine 2013
Survey found that 26 percent of Australian METS companies have invested in Sub
Saharan Africa through establishing operations there. There is therefore an
obvious synergy whereby Australian mining activity provides the Australian METS
sector with a competitive advantage which in turn is available to support the
continued development of the minerals and energy sectors in the countries of
It is also of note
that the use of Australian mining software in the discovery and ongoing
development of the African minerals sector has been important. Some sixty
percent of the world[']s exploration and mining software has been developed in
Australia and generates $600 million a year in revenues and more than $240
million in exports.
Mr Dominic Piper, Editor, Paydirt Media, stated that in his view the
METS sector could be better supported by the Australian Government in Africa:
I think that as part
of the overall METS, mining engineering technology services, sector it certainly
is an area that would benefit from assistance from the Australian government,
perhaps through Austrade [Australian Trade and Investment Commission].
In other jurisdictions, particularly looking at somewhere
like Latin America and places like Mexico and Brazil and Peru and Chile, other
big mining economies, the Australian METS sector is well served by Austrade for
the most part, leading trade missions and things like that, organising
companies to visit some of the major mines. We don't really see that in Africa
at the moment.
Australia's trade and investment in other industries
Submissions noted that Australia's strong focus on the extractive
industries is not indicative of the broader investment landscape in Africa,
however, with technology, media and telecommunications, retail and consumer
products, and financial services accounting for over 50 per cent of foreign
direct investment in the countries of Africa in 2013. Outside of the resources sector, Australian companies are forming a growing
presence in agriculture, education, and services industries. This is further
examined in chapter 4.
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