Shadow Minister for Resources Gary Gray has spoken at the annual Africa Downunder Conference, which began in Perth yesterday.
The minister reflected on the progress that has been made in developing African natural resources, and the economic and social benefits flowing to the people.
“Just as WA has thrived from mining, this opportunity has presented itself to Africa, where an estimated 30 per cent of global mineral reserves reside” Gray said.
“We’ve seen some of the largest gas finds in decades off the coast of Mozambique and Tanzania, as well as significant onshore oil discoveries in Kenya and Uganda.
“Expectations for the hydrocarbons industry across East Africa are high and there is a real hope that discoveries will be commercialised, but there are still many challenges that need to be overcome.
“As a former Minister for Resources I encouraged Australian business to engage with the Extractive Industries Transparency Initiative (EITI) because good governance, transparency and goodwill eventually overcome the maleficent few who may seek to defraud.
“Importantly our combined efforts can do most to ensure efficient and effective resource development for the good of all citizens; it is essential in order to encourage foreign direct investment in African hydrocarbons.”
DLA Piper head of mining Rob Edel told visitors to the conference that Australian explorers and miners looking to increase their footprint in Africa’s resources riches have been encouraged to increasingly push for stabilisation clauses in all new contracts.
Edel said such clauses are fundamental to attracting increased investment in African mining projects.
“Australian miners have to manage the risk of investing in Africa and the optimal way to achieve that is to help contribute to a stable investment regime,” he said.
“The key risks to such a stable investment environment include any increase in taxes after a project enters the development phase, changed environmental regulations, minimum wage laws, a licence review which revokes or requires a renegotiation of a mining licence, or changing company ownership requirements.
“This could be at two levels – increased state participation or requirements to increase the local ownership content of a project.
“Nationalisation or expropriation for assets remains the other outstanding top investment risk.”
World ebola expert Professor David Heymann will address the conference this morning to discuss the ebola outbreak and ongoing medical crisis in Ghana and West Africa.
Mining companies have been evacuating staff from the affected regions, which has affected various operations.
The Africa Downunder Conference has been running for a decade and has coincided with a substantial increase in the political, diplomatic, commercial, strategic, and cultural ties between Australia and the African continent.