WA Premier Colin Barnett has quashed doubts Australia is threatened by Africa’s rise in the mining industry by proposing to work with the African governments to propel their mining industries.
Barnett’s proposal to work with African nations could mean drawing up formal deals with the continent’s trading blocs and sending public servants from WA to collaborate with government officials in Africa.
The deal could not only benefit African economies and offer humanitarian aid, it could also help 280 Australian mining companies operating in Africa lessen investment risks.
Some of Australia's companies operating in Africa include Rio Tinto, Paladin Energy, Perseus Mining and Tiger Resources.
He told The Australian he was willing to offer WA’s advice to Africa on mining laws, tax regimes, tenement schemes, tax systems and environmental and safety measures similar to Australia.
Barnett pointed to the minerals resource rent tax to illustrate that a royalty system based on profit does not work. He instead recommended Africa should have ad valorem royalty scheme, where tax is decided based on the value of real estate or personal property.
While Barnett highlighted Africa possesses about 30 per cent of the world’s minerals reserves, he said tighter regulation would help in capitalising on the availability of resources.
Barnett was to go through his proposal at the Africa Down Under conference dinner in Perth last night.
Fifteen mining ministers from Africa were in attendance.
Barnett refuted suggestions his proposal to work with Africa would turn company investment away from Australia and send them overseas.
“For many years people in the mining industry in Australia, and in government, have seen Africa as a threat – I don’t happen to share that view,” he said.
“I think Africa is more of an opportunity than a threat. WA is the biggest mining economy in the world, but our long-term future is not only here, it’s also in being part of Africa’s development.”
Barnett said African countries’ natural resources were not getting its due because many countries handed out huge tax concessions to overseas companies.
It came as companies said they needed something to drive them to invest in politically risky countries.
“For companies that invest in a place like Africa, they look for stability,” he said.
“The error of many African countries is to win investment by giving concessions and at the end of the day they find they’ve derived little benefit from it.
“I would argue that if they have a secure title system and consistency of mining laws, they will attract investment regardless.
“I will put the case that if they follow, in large part, the laws here and apply them across as many as developed nations as possible there will be more certainty for business and they will attract more investment.”
AusAID held the Mining for Development conference earlier this year to encourage developing nations in Africa and Asia to get the most out of the mining industry and protect it from factors like rising currencies and harmful environmental impacts.
Director-general of AusAID Peter Baxter said sorting out policy settings for the resources sector was the key as it generated Africa six times the income it receives from aid.