australia africa relations thanks anvil

Strengthened Australia-Africa relations underpinned by mining

14 September 2007
Source: 2007 Australian Associated Press Pty Ltd.

By Rebecca Le May

PERTH, AAP - Australia's growing trade relationship with Africa has outpaced that with any other nation in the world in the past five years.

Since 2001, trade with Africa has grown by 10.5 per cent, compared with nine per cent for Asia and six per cent for Europe, Australia's High Commissioner in Africa, Philip Green, told delegates at the 2007 Paydirt Africa DownUnder Conference in Perth earlier this month.

"Trade typically follows investment," Mr Green explained, "and Australian investors tend to contract their services to Australian providers, purchase Australian made and sourced equipment, and hire Australian labour in key positions."

A Department of Foreign Affairs and Trade survey found Australia's involvement in Africa's mining and resources sector is now worth $US15 billion ($A17.9 billion).

Also, Australia's exports to Africa have grown by 54 per cent since 2001.

"Its hard to track how much of that is attributable specifically to mining but I'm confident that a substantial share ... is a result of increasing investment by Australians in the African mining sector," Mr Green said.

"My view is that the growth in Australian mining interests in Africa is now the most important dynamic in Australia's relations with the continent."

When Mr Green began his career as an Australian diplomat in Africa some 20 years ago, Australian-African business relations were sparse to say the least.

"You would have struggled to find half a dozen African countries where Australian firms had a substantial presence," Mr Green said.

"Since then, mining investment has transformed the commercial relationship.

"Now you would struggle to find half a dozen African countries where there is no substantial Australian commercial presence."

Mr Green said the impetus in mining investment has brought new vigour to the relationship between the two continents, has contributed to opening up new strands to bilateral relationships and is delivering additional benefits to the Australian economy.

There are now about 124 Australian mining companies operating in Africa, and investment there is becoming more attractive.

Many miners cite delays in approvals processes Australia-wide as being off-putting, although anecdotal evidence indicates that mines departments are backlogged around the globe.

Moreover, some uranium miners have cited frustration with limitations in Australia as reasons to take on Africa instead.

At least 13 African countries significantly improved their World Bank stability ratings last year compared to their standing in 1996, according to chief economist of the Australian Government's Export Finance and Insurance Corporation Roger Donnelly.

"As well as conflict resolution and better economic performance, debt relief has been a contributing factor to Africa's greater stability," Mr Donnelly said.

"Foreign direct investment (FDI) inflows into Africa are booming, if from a low base, and had nearly tripled by late last year."

He noted Australian-based companies were the third largest spenders on mineral exploration in Africa, totalling $US160 million ($A191.3 million) in 2006.

Conference speakers confirmed that some of the risks of doing business in Africa were indeed lessening, with strife-torn Democratic Republic of the Congo (DRC) a prime contender for the "most improved" award.

The political situation in the DRC improved greatly after it held democratic elections last year - the first since gaining independence from Belgium in 1960.

Its not all roses, however. The north-east of the country and indeed anywhere near the capital Kinshasa is understood to be worlds apart from the mineral rich Katanga Province to the south, where it is much easier for foreign companies to operate.

The Governor of Katanga Province, His Excellency Moise Katumbi, told conference delegates that major changes in his nation's political landscape, higher metals prices and a new mining code introduced in 2003 under the guidance of the World Bank had "tipped the risk/reward balance in favour of investing in the DRC".

Remaining problems, however, include illegal artisanal mining, and the need to develop human resources and infrastructure.

Mr Katumbi congratulated companies such as First Quantum Minerals Ltd, Tiger Resources Ltd and Moto Goldmines Ltd for being pioneering Australian firms in the DRC.

Credit also went to Anvil Mining Ltd, which has weathered tough times since starting operations in the nation in 1995, and its joint venture partner Mawson West Ltd.

Anvil has now cleared its name after being the subject of an ABC Four Corners report in 2005 that alleged the company was implicated in deadly action by rebel military forces at the Katanga village of Kilwa in 2004.

Then, in April last year, an artisanal miner was found drowned at an Anvil concession where the firm's security guards had repeatedly chased off such trespassers.

The company and its employees were acquitted in late June of any involvement in the Kilwe tragedy.

As for the artisanal miner's death, an Organisation for Economic Co-operation and Development audit of the company found it had been tarred with a brush "that might more appropriately have been applied to other far less respectable mineral trading firms whose comportment has been below the standard set by Anvil".

Anvil managing director Bill Turner said artisanal miners remained a challenging problem in the Kolwezi area, "an issue ... that we hope to solve as time goes forward".

The company now plans to double copper production at its flagship Dikulushi mine and other DRC operations to 100,000 tonnes by 2010.

Despite anecdotal evidence of the DRC's improvements, its OECD risk classification stands at seven, the same rating as Zimbabwe, a country in crisis under President Robert Mugabe.

By way of comparison, high income OECD nations such as Australia and Denmark rank nil.

Namibia, which has attracted the likes of Rio Tinto, Bannerman Resources Ltd and Paladin Resources Ltd with its rich uranium resources, ranks a favourable three.

Neighbouring Botswana, the world's largest diamond producer (by value) and considered Africa's most salubrious nation, ranks two.

Notable Australian exploration here is being undertaken by Bannerman (uranium), A-Cap Resources (precious and base metals, and diamonds) and Albidon Ltd (nickel).

Along with Botswana and the DRC, Paydirt editor Barry Avery singled out Zambia and Burkina Faso as being good choices for establishing a mine.

Mr Avery described South Africa, Angola, Kenya, Uganda and post-Mugabe Zimbabwe as "wait and see countries", while no-go areas were Nigeria, Sudan, Ethiopia, Guinea, Liberia, Sierra Leone and Central African Republic.

AAP rlm/klm