Lowy Institute Report: Economic Diplomacy Between Australia and Africa is Out of Sync with Investment Ties

By AAMEG | 13 March 2024

Professor Ian Satchwell has eloquently called out the gap between Australia’s economic diplomacy and its investment ties with the countries of Africa in an article published by the Lowy Institute on 17 January 2024.

The Australia-Africa Minerals & Energy Group (AAMEG) collaborated with Satchwell – Adjunct Professor at the Sustainable Minerals Institute of The University of Queensland, and a Senior Fellow of the Australian Strategic Policy Institute – to identify and confirm the key metrics of the Australia-Africa resource sector relationship.

Key Metrics are as follows, with all values quoted in AUD:

·      Australian-headquartered or ASX-listed minerals companies have invested capital of $60 billion in 234 exploration, mining and processing projects in Africa.
·      The value of these companies’ African in-ground mineral assets (resources and reserves) exceeds $17 trillion.
·      Australian companies budgeted $539 million for mineral exploration in 2023, a 14 per cent increase on 2022 and 29 per cent of total exploration spending in Africa last year.
·      Australian mining companies collectively are the largest private sector investors in Burkina Faso and Mali.
·      Woodside and Rio Tinto projects in Senegal and Guinea will be nation-building for those two West African countries.

Unfortunately, despite this impressive commitment by Australian materials and METS companies, they have minimal Australian government support.

Indeed, as Professor Satchwell points out, in 2016, the government’s newly established Advisory Group on Australian African Relations released its “Strategy for Australia’s Engagement with Africa“, a renewed vision with six interlinked strategic focus areas to strengthen ties.

These included recommendations to expand Australia-Africa:
·      Trade and investment,
·      Security cooperation, and
·      Environmental protection.

Although these elements remain current, there has been little if any progress by the Australian government to implement the engagement strategy and the advisory group has disappeared from public view.

Further illustrating the opportunities for improvement is the extreme lack of Bilateral Investment Treaties and Double Tax Treaties between Australia and African countries.  To put it in context, if Australia was to double the two it has in place (with South Africa and Egypt), it would have less than 10% of the 40+ that Canada (a very efficient competitor in the resources sector) has in place.

It’s time to take action

There is no purpose in pointing out shortcomings unless one has a desired outcome and action plan to support it. Accordingly, in 2024, AAMEG’s Tax and Legal Working Group will continue to support the Australia-Africa minerals and energy sector by quantifying the value of the resources sector, the opportunities to accelerate and streamline social development and propose inter-government actions to address the gaps.

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