Resource Nationalism: How to grow, not shrink, the pie the pie - - PowerPoint PPT Presentation

Resource Nationalism: How to grow, not shrink, the pie the pie

Nick Holland CEO Gold Fields GIBS, 15 August 2013

Resource Nationalism is entirely rational… Definition: Countries’ efforts to extract m axim um value and developm ental im pact for their value and developm ental im pact for their people from their finite natural resources

2

…particularly as states are under fiscal pressure

Central Government Debt ($T) Central Government Debt as % of GDP $30T

80%

20

40 60

% of GDP

10

20 40 20

2003 2004 2005 2006 2007 2008 2009 2010 2011 2003 2004 2005 2006 2007 2008 2009 2010 2011

Note: Includes the 41 countries who have continuous central government debt data from 2003 to 2011

3

g Source: World Bank

But Resource Nationalism is viewed badly

“Miners encounter the hard rock of resource nationalism”

Th T l h (UK) N 2011

“Resource nationalism a key threat to mining”

BlackRock, Oct 2011 The Telegraph (UK), Nov 2011 ,

“Resource nationalism plagues the oil market”

Wall Street Journal Mar 2012

“Resource nationalism is ’ b f d the oil market Wall Street Journal, Mar 2012 “Resource nationalism: the usual miners’ number one fear and major threat to global security”

Mining.com, December 2012

Resource nationalism: the usual suspects or a wider problem?”

RigZone, May 2012

“Canada’s veto of Petronas deal raises spectre of resource “Resource Nationalism #1 on mining risk list” Ernst & Young, Aug 2011 raises spectre of resource nationalism” Daily Telegraph (UK), Oct 2012

4

What is the disconnect?

1 Too many fingers in the wrong pie

• 1. Too many fingers in the wrong pie

– Mining profits

• 2. Not growing the right pie

– The Mining Economy to create jobs, fuel g y j , development and attract investment capital

5

Too many fingers in the wrong pie

At first glance it might appear

Mining Net Profit - pre Tax and Royalties: Global 2012 = ~$280B

• At first glance, it might appear

there’s a bigger slice to take

Royalties 9% Net Profit post Dividend 25% Direct corporate tax 25% Dividends 42%

Government N t D t b d P C Mi 2012 l i f i t t t f th t 40 i b t l d t t th h l i i t Government Company

6

Note: Data based on PwC Mine 2012 analysis of income statements from the top 40 companies but scaled up to represent the whole mining sector Source: IHS Global Insight; Mine: PwC Mine 2013

Why? Wrong cost metric

At first glance it might appear

'C h t' hid

Gold example

G ld i d t

• At first glance, it might appear

there’s a bigger slice to take O i d t h d thi i

'Cash cost' hides unprofitability of gold mining

GATA, August, 2009

Gold miners need to think differently about costs

Nick Holland, August, 2012

• Our industry has made this pie

look more attractive than it is by focussing on cash costs t ll i t i i t

average total production cost was $1170/oz, compared with an average reported cash cost of $773/oz

, g , , g ,

not all-in sustaining costs

Gold Miners Come Clean on Costs f 6 More reported cash cost of $773/oz

Gold analyst, Bell Potter, Jan 2013

After Lost 6 Years

Bloomberg, February 2013

transparency needed on gold production The (gold) industry has to change production cost

BlackRock, December 2012

and make sure they're very transparent around how they report costs

Northern Star Resources January 2013

7

Northern Star Resources, January 2013

Mining industry is going through tough times

G ld i d t l C t R t d

• At first glance it might appear

Operating cost per tonne (06 11) CAGR

Costs rising at ~12%

Average gold yield (06 11) CAGR

Yields down 5% Gold industry example: Costs up; Returns down

• At first glance, it might appear

there’s a bigger slice to take

• Our industry has made this pie

20 30 $40/t Major gold producers 12% (06-11) 1.5 2.0g/t 5% (06-11)

• Our industry has made this pie

look more attractive than it is In realit margins and ret rns

10 20 6 7 8 9 1 1 1 0.5 1.0 6 7 8 9 1 1 1 Major gold producers

• 5%
• In reality, margins and returns

from mining are in decline

Grassroots + 75% of late stage budgets CAGR

Exploration budgets up 20%

3-yr avg potential production in new discoveries (mil oz) CAGR

New Discoveries down 7%

2 6 2 7 2 8 2 9 2 1 2 1 1 2 6 2 7 2 8 2 9 2 1 2 1 1 3 4 $5B stage budgets Exploration budget 20% (97-11) CAGR 60 80 100M in new discoveries (mil oz) (97-11) CAGR 1 2 20 40 3-yr avg potential production

• 7%

8

1 9 9 7 1 9 9 9 2 1 2 3 2 5 2 7 2 9 2 1 1 1 9 9 7 1 9 9 9 2 1 2 3 2 5 2 7 2 9 2 1 1

Note: Cost per tonne is the weighted average of 8 major gold producers by total ore mined; average grade is the weighted average of 8 major gold producers by total ore mined; Major Gold producers: AngloGold Ashanti, Barrick, Harmony, Kinross, Goldcorp, Gold Fields, Newmont and Newcrest. Source: Gold Fields company data; annual reports, Condemned to Excellence report(IAMGOLD Corporation, Dec 2012)

Margins in the gold sector are under pressure…

At fi t l it i ht

Gold industry example: margins in rapid decline

• At first glance, it might appear

there’s a bigger slice to take O i d t h d thi i

Margins under greater ld i h

$1,800 100% Margin US$/oz

• Our industry has made this pie

look more attractive than it is I lit i d t

pressure as gold price has since fallen as low as $1300/oz

1,200 1,400 1,600 60 80 Gold price

• In reality, margins and returns

from mining are in decline

Avg cash costs A

600 800 1,000 40 60

Avg capex

200 400 20 2006 2007 2008 2009 2010 2011 2012 2012 % margin (RHS) Q1 Q2

9

Source: Streetwise reports website

… as they are for the Top 40 global miners

At first glance it might

• At first glance, it might

appear there’s a bigger slice to take

Top 40 Mining Giants - financial distress

• Our industry has

made this pie look tt ti th it

30 35

more attractive than it is I lit i d

15 20 25 %

2007 2008 2009

• In reality, margins and

returns from mining are in decline

5 10 15

2010 2011 2012

• Similarly the top 40

mining companies are i i i

Gearing ratio Return on capital employed Net profit Return on Equity

experiencing serious financial troubles

employed

10 10

Source: PWC – Review of global mining trends 2012

Industry is not self-funding at present

At fi t l it i ht

Top 4 0 2 0 1 2 cash flow ( $ Bs)

• At first glance, it might appear

there’s a bigger slice to take O i d t h d thi i

150 $137B

• Our industry has made this pie

look more attractive than it is I lit i d t

50 100

• In reality, margins and returns

from mining are in decline O ti h fl t

• Operating cash flows not

sufficient to cover investments

• 50
• $169B

Operating I nvesting p g g

Note: Data based on PwC Mine 2012 analysis of top 40 companies

11 11

Note: Data based on PwC Mine 2012 analysis of top 40 companies Source: IHS Global Insight; Mine: PwC Mine 2013 ;Note: Gearing ratio = Net borrowings / Equity

Investors are deserting the sector

At fi t l it i ht

I ndex perform ance

• At first glance, it might appear

there’s a bigger slice to take O i d t h d thi i

1.5

Dow Jones Industrial Index

• Our industry has made this pie

look more attractive than it is I lit i d t

1.0

FTSE 100 Index

• In reality, margins and returns

from mining are in decline O ti h fl t

HSBC global

• Operating cash flows not

sufficient to cover investments

0.5

mining index

2010 2011 2012 2013

• Equity model is at breaking point

Jan 2 Jan 2 Jan 2 Jan 2

12 12

Industry is halting new investments…

At fi t l it i ht

A harsh environment with new projects increasingly being delayed and cancelled

• At first glance, it might appear

there’s a bigger slice to take O i d t h d thi i

Copper-gold project (Xstrata) $6bn Status: Delayed Mongolia copper project (Rio Tinto) $10bn

• Our industry has made this pie

look more attractive than it is I lit i d t

$10bn Status: on hold PNG copper- gold project (Nautilus) Status: Delayed Malaysia various projects $ Colombia gold

• In reality, margins and returns

from mining are in decline O ti h fl t

Guinea (Simandou) Iron Ore Status: Delayed Peru:135 mining $1.5bn Status: delayed g project (A. Ashanti) $3.5bn Status: delayed

• Operating cash flows not

sufficient to cover investments

Olympic dam Zambia DRC Peru:135 mining projects $7.5bn Status: delayed Chile: 11 copper- Kenya gold project (GoldPlat) Status: delayed

• Equity model is at breaking point
• Mining investments under threat

Olympic dam uranium (BHP) $20bn Status: Shelved Zambia DRC copper belt Status: on hold gold projects $39bn Status: delayed

13 13

Sources: Factiva, Literature search

… and cutting back on existing operations

At fi t l it i ht

Existing mines under pressure from price decreases and cost increases; greater taxes will aggravate the problem

• At first glance, it might appear

there’s a bigger slice to take O i d t h d thi i

150 jobs go as Tanami closes mine

The West Australia\n – April 24, 2013

• Our industry has made this pie

look more attractive than it is I lit i d t

Xstrata's Sinclair mine in WA to close, follows closure of nearby South African miner Amplats closes

• In reality, margins and returns

from mining are in decline O ti h fl t

Cosmos

Dow Jones - May 2, 2013

shafts and cuts jobs

BBC – Jan, 2013

• Operating cash flows not

sufficient to cover investment

Brunswick Mine closes Bathurst-area

• peration: Unemployment hit 20.2%

CBC News - May 1, 2013

• Equity model is at breaking point
• Mining investments under threat

Sibanye Gold to Cut 1,110 Jobs to Return Beatrix West to Profit

Bloomberg – May 29, 2013

14 14

This is why mining earnings is the wrong pie

At first glance it might appear

Royalties

• At first glance, it might appear

there’s a bigger slice to take O i d t h d thi i

Community

Direct corp. tax 25% Net Profit post Dividend 25% 9%

• Our industry has made this pie

look more attractive than it is I lit i d t

Global mining revenue 2012 ~$2T

Dividends 42%

• In reality, margins and returns

from mining are in decline O ti h fl t

Net Profit post Dividend Dividends Direct corporate tax Royalties

• Operating cash flows not

sufficient to fund investment E it d l i t b ki i t

• Equity model is at breaking point
• Mining investment is under threat

Government

Dividends and retained profits are <10% Ever increasing costs account f 90%+

• The revenue pie shows just how

little there is still to take

Company expenses Company earnings

are <10% (~$190B) for 90%+

15 15

Note: Data based on PwC Mine 2012 analysis of income statements from top 40 companies but scaled up to represent the whole mining sector Source: IHS Global Insight; Mine: PwC Mine 2013

This is the lose:lose pie

• The more everyone takes, the

greater the risk the pie shrinks:

• Rising costs of mining…

combined with a greater fiscal take

• …combined with a greater fiscal take…
• … jeopardise further investment
• The result: loss of jobs and long-term

government revenues

16 16

No Development without Growth

Increased investor Increased political stability/ certainty

• GDP growth is essential for

governments targeting effective d l t d i

confidence y

Development

+ + development and economic transformation

Increased invest- ment Capacity to deliver

+ Economic Transformation

+ +

Increased growth

Countries must both grow Countries must both grow AND develop. Growth OR development is untenable

17 17

Source: Brenthurst Initiative, 2003

Growing the right pie: Mining GDP

BRICS 2010 7 other resource rich countries

• GDP growth is essential for

governments targeting effective t f ti

Direct mining share

2010

Direct mining share f GDP 10% ($140B)

countries 2010

transformation

• Mining GDP is the right pie,

especially for resource rich

• f GDP 2% ($200B)
• f GDP 10% ($140B)

especially for resource-rich developing countries

• In 2010 the economies of 40
• In 2010 the economies of 40

countries were driven to a significant extent by mining: Metals and Minerals accounted − Metals and Minerals accounted for >25% of exports

Source: ICMM: Mining’s contribution to sustainable development October 2012; Note: Top 7 countries selected from top 20 countries other than BRICS by 2010 production value and where production values is greater than 5% of GDP

18 18

Note: Top 7 countries selected from top 20 countries other than BRICS by 2010 production value and where production values is greater than 5% of GDP. These include Australia, Chile, Peru, Ukraine, Ghana, Zambia, Papua New Guinea (South Africa included in BRICS)

The Mining Economy has large multiplier effects

3

GDP contribution of mining (indexed)

• GDP growth is essential for

governments targeting effective t f ti

Mining has boosted

3 0.9 2.6

transformation

• GDP is the right pie, especially for

resource rich developing countries

Mining has boosted RSA GDP by R468 billion or 18.7% of

2 0.3

~2.5x for

resource-rich developing countries

• Mining punches above its weight

with its GDP multiplier effect

total GDP

1 1.0 0.4

2.5x for

• S. Africa

~3.2x for Ghana

with its GDP multiplier effect

~1.7x in Peru

Direct mining 1st round Impact Indirect impact Induced impact Total direct and indirect effect of mining 19 19

g

Source: Facts about mining ins South Africa (South Africa Chamber of Mines, November 2012), The Socio-Economic Impact of Newmont Ghana Gold Limited (Newmont Ghana Gold Limited, June 2011), The economic contribution of large scale gold mining in Peru (World Gold Council, May 2012). South Africa: IDC and Quantec study

Job and livelihood multiplier effect is significant

30 Number of jobs and livelihoods supported by each mining worker

• GDP growth is essential for

governments targeting effective t f ti

30 14 4 27

transformation

• GDP is the right pie, especially for

resource rich developing countries

20

~27x for

• S. Africa

~28x for

resource-rich developing countries

• Mining punches above its weight

with its GDP multiplier effect

10 8

~28x for Ghana ~18-19x in Peru

with its GDP multiplier effect

• 1 direct mining job supports

1 indirect job and 1 impacted job

Mine worker

1

Direct impact Secondary and Informal sector Total direct and

j p j

• …in SA, 1 job supports on average

around 9 dependents

Note: Peru study based on five mines and Ghana study based on analysis of one mine

worker impact and tertiary sectors sector direct and indirect impact

20 20

Note: Peru study based on five mines and Ghana study based on analysis of one mine Source: The Rise of Resource Nationalism report (South African Institute of Mining and Metallurgy, February 2012), The Socio-Economic Impact of Newmont Ghana Gold Limited (Newmont Ghana Gold Limited, June 2011), The economic contribution of large scale gold mining in Peru (World Gold Council, May 2012); IDC and Quantec study

Benefits go beyond jobs

• GDP growth is

Skills/ education Catalyst for other industries

Multiplier benefits go beyond jobs

• GDP growth is

essential for governments t ti ff ti

Capital inflows y

targeting effective transformation

• GDP is the right pie

p

• GDP is the right pie,

especially for resource rich countries

Infrastructure Community development

countries

• Mining punches

above its weight

Technology transfer

above its weight with its GDP multiplier effect

• Investing in mining

creates jobs, investment and

21 21

uplifts communities

Growing mining activity has a dramatic impact

Mining impact on GDP

• GDP growth is essential for

governments targeting effective t f ti Mining impact on GDP

BRICS and 7 resource rich countries

transformation

• GDP is the right pie, especially for

resource rich developing countries

Full m ultiplier effect of m ining

Direct im pact 2.6x

resource-rich developing countries

• Mining punches above its weight

with its GDP multiplier effect

effect of m ining = 1 2 % ( $ 8 5 0 B)

• f m ining

= 5 % ( $ 3 4 0 B)

3 % 7 %

with its GDP multiplier effect

• Investing in mining creates jobs…

and uplifts communities

Impact of a 1% increase in mining activity in BRICS and 7 other resource rich countries after:

p

• A 1% increase in mining in just 12

countries creates ~$8-9B of value in

1 Year

Year 1…

Source: ICMM: Mining’s contribution to sustainable development October 2012; Indirect effect estimated at 2.5X

$8-9B

22 22

Source: ICMM: Mining s contribution to sustainable development October 2012; Indirect effect estimated at 2.5X Note: Top 7 countries selected from top 20 countries other than BRICS by 2010 Production value and where Production values is greater than 5% of GDP. These include Australia, Chile, Peru, Ukraine, Ghana, Zambia, Papua New Guinea; First figure is weighted average; Second figure is numerical average

Growing this economy can have a dramatic impact

Mining impact on GDP

BRICS and 7 resource rich countries

• GDP is the right pie, especially for

resource-rich developing countries Mining impact on GDP

• GDP growth is essential for

governments targeting effective transformation

Full m ultiplier effect of m ining

Direct im pact 2.6x

transformation

• Mining punches above its weight

with its GDP multiplier effect

effect of m ining = 1 2 % ( $ 8 5 0 B)

• f m ining

= 5 % ( $ 3 4 0 B)

3 % 3 % 7 %

with its GDP multiplier effect

• Investing in mining creates jobs… a

uplifts communities

Impact of a 1% increase in mining activity in BRICS and 7 other resource rich countries after:

p

• A 1% increase in mining in just 12

countries creates ~$8-9B of value in

1 Year 5 Years 10 Years

Year 1 … compounded over several years it is even more significant

Source: ICMM: Mining’s contribution to sustainable development October 2012; Indirect effect estimated at 2.5X

≈$45B >$90B $8-9B

23 23

Source: ICMM: Mining s contribution to sustainable development October 2012; Indirect effect estimated at 2.5X Note: Top 7 countries selected from top 20 countries other than BRICS by 2010 Production value and where Production values is greater than 5% of GDP. These include Australia, Chile, Peru, Ukraine, Ghana, Zambia, Papua New Guinea; First figure is weighted average; Second figure is numerical average

Growing GDP through mining is the win:win pie

• Growth … leads to more

investment

• The result: increased
• The result: increased

employment, development and national GDP growth national GDP growth

• How do we get there?
• It has been done before

24 24

Chile focused on the ‘win:win’ pie

• Long term investment to establish

market economy, strong institutions and transparent and stable fiscal regime

GDP at PPP (indexed to 100)

CAGR

transparent and stable fiscal regime

• Chile has the best risk ratings in South

America

800 1,000

Chile 7%

(80-12)

Direct mining was 14% of GDP in 2010 600 800

South A i 5%

400

America Index 5%

200 1 9 8 1 9 8 5 1 9 9 1 9 9 5 2 2 5 2 1

25 25

Note: South American index includes 12 South American countries (Argentina, Bolivia, Brazil, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay, Venezuela) Source: IMF data, March 2013

Peru acted to continue growth

800 (80-12)

GDP at PPP (indexed to 100)

CAGR

• The Humala government recently

enacted similar policies to continue growth:

Direct mining

600 Peru 6%

growth:

• Proactively engaged with industry and

communities in a full review of all the options Ended up with a pragmatic focus on rent

Direct mining was 9% of GDP in 2010

400

2011 H l 1990:Fujimore’s govt. liberalisation

• Ended up with a pragmatic focus on rent

taxes

• Continued to ring-fence benefits for regions

and projects linked to mining to help address

200 400

2011: Humala elected

and projects linked to mining to help address sensitive local community issues

200

1980s: Period of hyperinflation

1980 1985 1990 1995 2000 2005 2010

26 26

Source: World Bank data, March 2013

Botswana partnered to grow the pie

• Strong long term partnership to ensure

mutual success

40 year partnership to drive benefits for both

GDP at PPP (Indexed to 100)

CAGR

• 40-year partnership to drive benefits for both

Botswana and Debswana

• Limited government involvement in

production

2,000 Botswana 10%

(80-12)

Direct mining was >33% of GDP in 2010

production

• Government invested in social transformation

including infrastructure and education

1,500 500 1,000 SADC Index 6% 500 Index 1 9 8 1 9 8 5 1 9 9 1 9 9 5 2 2 5 2 1 27 27

Note: SADC region GDP per capita has been calculated as total regional GDP / population. Countries included in the index are Angola, Botswana, Dem. Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia, Zimbabwe. Data excludes Zimbabwe before 2000 and it also excludes Namibia before 1990 Source: IMF data, March 2013

Zambia has learned from the past

4,000

GDP at PPP USD (Indexed to 100)

1974-94: Prolonged depression; Income fell by

Direct mining 24% f GDP 3 000 4,000

1969: Govt. depression; Income fell by 50%; Mining production cut by 60%; lost $45B in mineral rents from 1970-2010

was 24% of GDP in 2010 2 000 3,000

nationalises two major mining companies to get a higher share of mining revenues 1996: By 1990, 95% of Zambia’s forex going to service debt

2,000

1996: Privatisation restarts 1970s: Copper prices fall owing to Vietnam and oil crisis

1,000

1964: Independence 1991: Regime change

1955 1960 1965 1970 1975 1980 1985 2010 1990 1995 2000 2005 Colonial period Nationalisation Privatisation

g 28 28

Source: Penn World Tables, University of Pennsylvania, https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form_test.php

Mining is at a crossroads

L t ll b ti

• Long term collaborative

partnerships (Miners, Governments, Labour,

Mining Economy/

Communities, Dev. Agencies)…

• … leading to more investment

Economy/ GDP impact

• The result: increased employment,

development and GDP growth

• Rising costs of mining….

Rising costs of mining….

• … combined with a greater fiscal

take…

Mining Earnings

• …jeopardise further

investment Th lt l f j b

g

• The result: loss of jobs, a

shrinking pie

How do we grow the win:win pie?

29 29

How do we grow the win:win pie?

Starting point: Ore bodies

• 1. They can’t be moved, changed
• r replaced
• 2. Development is expensive and

i h tl i k ith l l d ti inherently risky with long lead times

• 3. Development has a major impact
• n communities and the
• n communities and the

environment

30 30

What can you do with them?

You either have ore You either have ore bodies or you don’t If you have them and they’re economically viable, environmentally sound and Determine full socio- economic viability by taking the potential economic environmentally sound and socially acceptable, develop them the potential economic multiplier impact into account

However this is not possible in the absence of investors

31 31

However, this is not possible in the absence of investors

But how do investors feel about the sector today

• Equity investors have become frustrated as miners have spent

their money with little to show for it y

• Cash, not growth, is king: Miners are cancelling new projects

and closing existing mines: returns just do not warrant the risk

• This leaves ore bodies undeveloped that are economically and

socially viable (when the GDP multiplier is taken into account)

• Moreover, the full potential benefit from mining on communities

and the environment is not always being addressed or delivered

32 32

How to align national interests with investors?

The role of mining companies 1 Acknowledge the role mining companies have played

• 1. Acknowledge the role mining companies have played

historically in exploiting resources and people 2 Recognise that both a mining licence and a “social

• 2. Recognise that both a mining licence and a social

licence” are required to operate

• 3. Develop practices that crack the code on long-term
• 3. Develop practices that crack the code on long term

sustainable community development – beyond life of mine

• 4. Engage with government on how to fund infrastructure

g g g development, fuel growth in other sectors and improve social outcomes

33 33

Making progress…but more needs to be done

Moving from philanthropy to systematic creation of shared value, recognising the impact of the GDP multiplier effect

Direct Economic contribution Small business development Mitigating the impact on the Local supplier development Skills/ training Socio-economic and community and community development

Ring-fenced benefits to drive value in host communities and beyond

34 34

Ring fenced benefits to drive value in host communities and beyond

How to align national interests with investors

Th l f t

• 1. Seek collaborative partnerships with miners who are

better able to operate and develop ore bodies and who are

The role of governments

good social partners

• 2. Put in place stable, competitive tax systems that allow

equity investors to earn competitive risk-weighted returns, File #14710445 q y p g , with governments benefitting increasingly from the upside

• 3. Ensure full impact of mining is taken into account

when assessing economic viability and social acceptability when assessing economic viability and social acceptability (requires a good understanding of the multiplier benefit as well as the full costs of mining) 4 C t li t d i t ibl i t t

• 4. Create a climate conducive to responsible investment:

provide policy certainty (and then stick to the rules); develop infrastructure and the broader economy; partner to manage input costs; help miners to procure locally manage input costs; help miners to procure locally

• 5. Adopt a “use it or lose it” approach (within an overall

“win:win” context) to ensure all socially acceptable/ i ll i bl b di b d l d

35 35

economically viable ore bodies can be developed

Not easy to do, but the upside is vast

CHALLENGE MITIGATION

• Partnership
• Working and collaborative partnerships

p g p p between miners, governments, labour and communities

• Balance
• Balance long-term growth strategies with

short-term fiscal imperatives

• Transparency
• Total transparency in reporting individual

asset performance

• Certainty
• Long-term commitments from governments

not to change the rules of the game

• Simplicity
• Simple rules of the game that align

interests and can be applied to all assets

36 36

interests and can be applied to all assets

Conclusion: Winning nations will choose the high road

• Engage to develop collaborative long term

partnerships…

• … increase investment …
• … Drive GDP growth: every 1% increase is worth

~$8-9B in just one year in just 12 developing countries $8 9B in just one year in just 12 developing countries

• Fight for a share of declining profits…

b t di ll d i t t i th l t

• …but radically reduce investment in the long term
• Result: loss of jobs, a shrinking pie`

Governments who recognise investors need fair risk weighted returns Governments who recognise investors need fair risk-weighted returns Miners who recognise the need to deliver full potential socio-economic returns Labo r / Comm nities ho temper demands to hat can be deli ered/ s stained

37 37

Labour / Communities who temper demands to what can be delivered/ sustained