Premier backs development of African mining

AFRICA’S emergence as a mining powerhouse would not be a threat to Australian investment, according to WA Premier Colin Barnett, who claimed it is in Australia’s best interest to help
develop the nation’s resources industry.
At the Africa Downunder conference, Mr Barnett outlined some of the achievements the WA Government had made before making a ‘genuine’ offer to assist the African mining industry by sending some of the state’s most experienced officials to share their knowledge.
Mr Barnett said WA and Africa shared many common characteristics such as remoteness, long distance, travel costs and travel time, and indicated a large proportion of Australian companies involved in African mining were based in Perth.
Ownership of resources was the most important issue in terms of mining and the government, he said.
“I think any country has to be absolutely clear about the ownership of its natural resources and particularly minerals,” he said.
“The important thing, I think, is to always remind companies who owns the minerals and also to make sure that buyer countries understand…who owns the minerals.
“And the particular point I’d make is to keep a clear distinction between the ownership of minerals and their development.”
Mr Barnett pointed out that it would be imperative for African nations entering the resources arena to establish “clear, legally backed and credible” systems for progressing from exploration through to mining.
As mining was a high-risk business no matter the location, he said it was essential that governments imposed a well-crafted mining law to reduce sovereign risk and provide companies with certainty.
Mine safety, environmental standards and rehabilitation were other issues singled out by Mr Barnett as being complex but necessary, however his focus remained on mining royalties.
“You must always sell the mineral,” Mr Barnett said.
He said there was often confusion between mining royalties and mining taxes, explaining that a mining royalty was the price a company paid to acquire a government-owned resource.
“Make sure that your pricing regime has a royalty and it should be a royalty that picks up not only the volume of the material but the price,” he said.
“That is the system we have in Western Australia and it does work well and it guarantees that not a grain of mineral or a molecule of hydrocarbon goes out without the company or the ultimate customer paying for it.”
Should Mr Barnett’s offer of assistance lead to a formal deal, it could lessen the investment risks currently faced by 280 Australian mining companies operating in Africa.
“We do it for self-interest, because we want Australian business to be part of your development, but we also want to see Africa and its 54 nations…develop, to be able to improve the living conditions of their people, and to develop, like us, a mining industry that can be a bedrock and of great substance and growth for your economies.”