Sustainable mining in Latin America: Australias competitive advantage - - PowerPoint PPT Presentation

Sustainable mining in Latin America: Australia’s competitive advantage

Australia-Latin American Business Council 3 February 2015

• Australia has world-leading track record and global brand in

sustainable mining: discovery, development, operations, METS, community, environment

• Latin America is a fast growing destination for Australian-based

mining investment and METS

• Latin America and Australian economic diplomacy, aid for trade
• Scope for stronger collaboration between ALL Australian and

Latin American stakeholders to achieve sustainability and shared value

Summary

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Sustainable mining: oxymoron or imperative?

APPROACH OF SUSTAINABLE MINERALS INSTITUTE, THE UNIVERSITY OF QUEENSLAND

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Stage 1: Only revenue maximising Stage 2: Efficient – Enhancing performance through individual activities Stage 3: Effective – Improve benefits and performance through connectivity with environments, communities and industry

Stage 4: Sustainable – Embedding sustainability in all decision making and business practices to consider the economic, social and environmental needs of current generations without compromising the needs of future generations

Business Opportunities & Challenges Corporate Assets and Expertise Societal Needs

Emerging approach: Shared value

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Shared Value is: Policies and practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates Shared Value is NOT:

• Sharing the value already

created (philanthropy)

• CSR by another name
• Personal values
• Balancing stakeholder interests
• Compliance

Tying business success to the prosperity of host communities and countries

Source: Adapted from Shared Value Initiative, Extracting with Purpose, October 2014

COMPANIES ADDRESS SOCIAL NEEDS AND IMPROVE THEIR COMPETITIVENESS

• Integrate shared value creation into business model
• Reconceive products and markets – eg build local markets for intermediate products
• Redefine productivity in value chains – eg local workforce and local suppliers
• Create enabling local environment – eg local clusters, shared infrastructure

Companies

• Implement policies and regulation that encourage and facilitate shared value
• Shift relationship with energy and minerals companies from a contractor model to a

development partner model

• Co-invest with companies and communities

Governments

• Become centres of excellence for shared value and disseminate best practices to their

members & clients

• Balance holding sectors accountable with engaging them constructively to advance

their mission

NGOs & education providers

• Support developing country partners to maximise the development potential of

mining – eg though cooperation in capacity-building in in governance , education, R&D, OHS

International development community

Building sustainable mining and creating shared value requires shared effort

EVERY STAKEHOLDER HAS A ROLE TO PLAY

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Acquisition and exploration Construction and development Mining and concentration Transport Trading, marketing and sales Closure, rehabilitation and monitoring

Mining lifecycle and key interactions

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Precompetitive geodata Mineral economics & policy Resource governance Indigenous agreement-making Community engagement Negotiations and agreements Regional development Education, training and skills Local content & enterprise Revenue design & administration Occupational health & safety Infrastructure planning & delivery Mine waste management Mine closure and post mining land use Environmental & water management Post mining economy

FIELDS IN WHICH GOVERNANCE CAPACITY IS NEEDED

Australian energy and minerals project construction 2010 –2016: the largest investment wave since the 1800s gold rushes*

HOBART Western Australia Northern Territory South Australia Queensland New South Wales Victoria SYDNEY CANBERRA MELBOURNE BRISBANE ADELAIDE DARWIN BROOME PERTH

Offshore petroleum basins

WA & NT projects to 2016: USD220 billion+ Queensland projects to 2016: USD100 billion+ South West Region Alumina, mineral sands, gold Mid West Region Iron ore, gold, uranium, nickel, Pilbara Region LNG, iron ore, infrastructure LNG, mining Bowen, Surat and Galilee Basins Coal, CSG, LNG South Australia projects to 2016 USD10 billion+

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*Reserve Bank of Australia Copper, uranium, mineral sands, petroleum

PORT HEDLAND KARRATHA

Gladstone and North West Economic Triangle Base metals, bauxite-alumina Goldfields Region Gold, nickel, iron ore New South Wales Coal, gold, base metals Victoria/Tasmania Coal, gold, base metals, oil & gas

RESULTING IN DECADES OF WORLD-LEADING PRODUCTION

Australian companies also have been busy globally!

DISCOVERED MINERAL AND COAL RESOURCES 2008 – 2013

8 ‘Maiden resources’ discovered and delineated by ASX companies 2008 – 2013

How to turn potential to actual shared value? Value of discoveries by Australian (ASX) companies $2,100bn Value of discoveries by other companies ?$4,000bn – ?$5,000bn

Africa North & Central Asia Latin America Europe Australia North America SE Asia & Pacific 5b

206 75 94 53

Percentage of Australian-based METS companies identifying region as a key market (Source: Austmine) Number of ASX-listed mining companies operating in region (Source: SNL Mining and Metals)

66 105

$25bn

34% 62% 38% 27% 27%

23%

Generating value globally: Australia’s mining-related investment and trade interests

662 $410bn

$218bn

$296bn

$461bn $556bn $687bn

Value as at August 2014 of ‘maiden resources’ announced by ASX-listed companies 2008-2013 by region (Source: SNL Mining and Metals)

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Latin America is rising fast in exploration and mining

AUSTRALIA HAS GROWING PRESENCE

10 Source: SNL Metals and Mining

Mining operations Exploration

Latin America is the top destination for exploration

NON-FERROUS EXPLORATION 2013

11 Latin America 26%

Source: SNL Metals and Mining World Exploration Trends 2014

Africa 14%

13% 7% 13% 6% 6%

5%

6%

3%

Canada United States Mexico Peru Chile Brazil Other Latin America

6% 6%

Pacific Islands Australia

5% Russia

4% Europe 4% China

West Africa

2%

FSU

3% 3%

2%

East Africa DRC Southern Africa Other locations account for 6%

Latin America opportunity

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5 10 15 19 95 116 347 JSE HKEx LSE AIM ASX TSX TSX-V

Number of exploration & mining companies in Latin America

• 96 ASX-listed mining companies have

539 projects across 16 countries

• Total capital raised for LatAm

projects by ASX listed companies

• ver last 5 years was $2.56 billion

Operations of ASX and non-ASX listed mining companies in Latin America

Sources: SNL Metals and Mining, ASX, Austrade

• Chile: 115 Australian companies

total, incl. 28 juniors plus 59 METS

• Brazil: 110 companies, incl. 20

juniors plus 30 METS

• Peru: 88 companies total, incl. 20

investors/ juniors plus 60 METS

Africa comparison – Latin America has high potential!

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• $6.83 billion has been raised through

follow-on raisings by ASX listed companies for projects in Africa over the last 5 years

Sources: SNL Metals and Mining, ASX

11 60 101 196 220 HKEx JSE LSE & AIM TSX & TSX-V ASX

Number of listed mining companies in Africa Operations of ASX and non-ASX listed mining companies in Africa

• Chile: energy, water, productivity, OHS, skills, gender,

environment, mine closure, geoscience and titles, social licence

• Peru: community, social licence, OHS, environment, approvals,

water, infrastructure, skills for mining and governance, ASM

• Brazil: geoscience, OHS, community and social licence, R&D

and education

• Argentina: whole mining regime!

Mining and sustainability shortfalls snapshots

POTENTIAL COOPERATION OPPORTUNITIES FOR AUSTRALIA

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• Building institutions and governance of the resources sector
• Developing infrastructure
• Ensuring robust fiscal policy and competitiveness
• Supporting local content
• Spending resources windfall wisely
• Transforming resource wealth into broad, inclusive socioeconomic

development

• Gaining community support for responsible resource development

Skills and institutional capacity are key to sound governance.

OECD: "Skills have become the global currency of the 21st century. Without proper investment in skills, people languish on the margins of society"

Resource-driven countries need a new growth model

TO TRANSFORM THEIR POTENTIAL RESOURCE WINDFALL INTO LONG-TERM PROSPERITY

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Source: Adapted from McKinsey Global Institute, Reverse the curse: Maximizing the potential of resource-driven economies, December 2013 and IM4DC

Building institutions and governance of the resources sector Developing infrastructure Ensuring robust fiscal policy and competitiveness Supporting local content Spending resources windfall wisely Transforming resource wealth into broad, inclusive socioeconomic

development

Gaining community support for responsible resource development

Skills and institutional capacity are key to sound governance.

OECD: "Skills have become the global currency of the 21st century. Without proper investment in skills, people languish on the margins of society"

Resource-driven countries need a new growth model

TO TRANSFORM THEIR POTENTIAL RESOURCE WINDFALL INTO LONG-TERM PROSPERITY

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Source: Adapted from McKinsey Global Institute, Reverse the curse: Maximizing the potential of resource-driven economies, December 2013 and IM4DC

Resources companies need a new approach to the changing landscape

PARTNERSHIPS WITH GOVERNMENTS & COMMUNITIES IN ECONOMIC & SOCIAL DEVELOPMENT TO BUILD SHARED VALUE

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Source: McKinsey Global Institute, Reverse the curse: Maximizing the potential of resource-driven economies, December 2013

Mining and METS* companies Customer & investor countries Communities & NGOs Education, training & capacity-building

• rganisations

Developed supplier, METS & investor countries Developing supplier countries

Shared interests and goals between stakeholders

BASIS FOR COLLABORATION IN BUILDING MINING AND METS SECTORS

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*METS = Mining Equipment, Technology and Services

International Mining for Development Centre

• Australia is a well-respected mining nation and partner: leading brand globally
• 100 years of experience and world leader in mining and processing technologies, in

mining services and education, and in doing well from mining

• Major offshore investor in Africa, Asia, Latin America
• Leader in mining governance and administration
• The X-factors: little geopolitical baggage; cultural competence; ability to work in

diverse cultures and frontier environments

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Building on Australia’s mining reputation

WHY DEVELOPING COUNTRIES WANT TO DEAL WITH & LEARN FROM AUSTRALIA

Economic diplomacy underpins Australia’s relationships

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BY MUTUALLY LIBERALISING TRADE, BOOSTING ECONOMIC GROWTH, ENCOURAGING INVESTMENT AND ASSISTING BUSINESS

Minerals Energy & Development

MINERALS ENERGY & DEVELOPMENT WORKS ACROSS ALL PILLARS

Australian Government’s Economic Diplomacy Strategy

Australian aid: promoting prosperity, increasing stability, reducing poverty

NEW STRATEGIC FRAMEWORK FOCUSSSED ON ECONOMIC CAPACITY-BUILDING

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Australian Government’s Aid Framework

Latin America – high potential for economic diplomacy

INCLUDING AID FOR TRADE WITH LOWER INCOME COUNTRIES AND CO-FUNDED CAPACITY-BUILDING COLLABORATIONS

22 Source: SNL Metals and Mining

94 ASX mining companies 27% METS priority market $461bn ASX discoveries Education markets Education & research partners Water services markets Governance partners

Team Australia is highly effective

International Mining for Development Centre

Role of IM4DC

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UNIVERSITY PARTNERSHIP SUPPORTED BY AUSTRALIAN GOVERNMENT

Mission Support developing countries to transform their extractive resource endowment into inclusive and sustainable economic growth and social development Goal IM4DC alumni and partner institutions effect change through transformational leadership in mining, development and related activities Themes Governance and Regulation Community and Environmental Sustainability Operational Effectiveness

Agent for sustainable mining underpinned by good governance

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INTEGRATED , UNIVERSITY-BASED PROGRAM

International Mining for Development Centre

IM4DC mining governance capacity-building

Institutional linkages Education and training Fellowships Alumni network and conferences Advice to governments Publications Action research

Acquisition and exploration Construction and development Mining and concentration Transport Trading, marketing and sales Closure, rehabilitation and monitoring

Mining lifecycle and key interactions

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Precompetitive geodata Mineral economics & policy Resource governance Indigenous agreement-making Community engagement Negotiations and agreements Regional development Education, training and skills Local content & enterprise Revenue design & administration Occupational health & safety Infrastructure planning & delivery Mine waste management Mine closure and post mining land use Environmental & water management Post mining economy

FIELDS IN WHICH IM4DC HELP BUILD GOVERNANCE CAPACITY

IM4DC Achievements

SUCCESSFUL TRAINING OUTCOMES

October 2011 to February 2014

IM4DC delivery

GLOBAL CAPACITY-BUILDING OUTPUTS 2012-2014

2314

participants from 65 developing countries (incl. 366 from LATAM)

13538 88

participant short courses training days

30% 1400+ 50

female in mining & development action participation alumni network research (50% LATAM) projects

Resulting in significant changes

SE Asia & Pacific 5b

Number of IM4DC education and training participants

Where IM4DC is working

Africa 1071 366 226 651

Multi year engagement with governments and institutions Indonesia Ghana Peru Zambia The Philippines Participation in courses, study tours, research West Africa Colombia Uruguay Ecuador Southern Africa East Africa Bolivia Mongolia

Latin America

Mozambique African countries serviced by IM4DC include: Congo, Mali, Morocco, Niger, Nigeria, Burkina Faso, Ethiopia, Guinea, Cote d’Ivoire, Gabon, Uganda, South Africa, Kenya, Malawi, Cameroon, Tanzania, Sierra Leone, Senegal, Namibia, Madagascar, Cameroon, Ghana, South Sudan, Zimbabwe Tanzania Fiji Papua New Guinea Solomon Islands Myanmar Cambodia

• Universities
• Government agencies
• NGOs
• Multilateral organisations
• Donors
• Industry associations
• Companies

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Partnerships with other institutions

UNDERPIN IM4DC CAPACITY-BUILDING

Institutional partnerships in developed and developing countries

• Latin American resource-rich developing countries are seeking

new growth models

• Australian-based mining and services companies are

embracing shared value and sustainability approaches

• Universities, research institutions and training centres support

knowledge transfer and institutional partnerships

• Australia has major interests in supporting sound mining

governance and sustainable growth

• Latin American countries and Australia are well-matched

partners

Conclusion

OPPORTUNITIES TO COOPERATE TO ACHIEVE SHARED VALUE AND SUSTAINABLE BENEFITS FROM MINING

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International Mining for Development Centre The University of Western Australia WA Trustees Building Level 2, 133 St Georges Terrace Perth WA Australia 6000 Tel: +61 8 9263 9811 Email: admin@im4dc.org www.im4dc.org

Contact

The Energy and Minerals Institute The University of Western Australia M475, 35 Stirling Highway Crawley WA Australia 6009 Tel: +61 8 6488 4608 Email: emi@uwa.edu.au www.emi.uwa.edu.au The Sustainable Minerals Institute The University of Queensland St Lucia Brisbane QLD Australia 4072 Tel: +61 7 3346 4003 Email: reception@smi.uq.edu.au www.smi.uq.edu.au