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Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre
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Mining’s legacy: thinking beyond the mine - Ian Satchwell, International Mining for Development Centre

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Mining’s legacy: thinking beyond the mine …

Mining’s legacy: thinking beyond the mine
Speaker: Ian Satchwell, Director, International Mining for Development Centre

Mining On Top: Africa - London Summit
24-26 June 2014 | London

Published in: Business, Technology
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  1. Mining’s legacy: thinking beyond the mine Taking an integrated approach by developing lasting solutions, serving diverse interests, to support local community and economic development Ian Satchwell 24 June 2015
  2. • Investment attraction, efficient approvals, certain fiscal regime • Economic reform and infrastructure partnerships • Whole-of-government and whole-of-jurisdiction approaches to infrastructure planning • Win-win-win approaches: partnerships, delivery of returns for all, responsibilities for all • Using mining to facilitate broad-based economic growth • Importance of technology, knowledge and skills • Generating strong social licence to operate 2 Australian approaches to resources development Source: Qantas GROWING THE PIE
  3. • Investment attraction, efficient approvals, certain fiscal regime • Economic reform and infrastructure partnerships • Whole-of-government and whole-of-jurisdiction approaches to infrastructure planning • Win-win-win approaches: partnerships, delivery of returns for all, responsibilities for all • Using mining to facilitate broad-based economic growth • Importance of technology, knowledge and skills • Generating strong social licence to operate 3 Australian approaches to resources development Source: Qantas GROWING THE PIE
  4. • Rationale for growth in minerals and energy • Seeking sustainable win–win–win outcomes • Designing sustainable revenue and expenditure systems • Maximising direct, indirect and induced benefits • Building local enterprise and employment • Activating human and knowledge capital • Integrated approach to infrastructure to create opportunities for sharing, co-investment, private sector delivery • Thinking beyond mining Outline – infrastructure planning in the context of: 4
  5. 81countries driven by resources in 2011— up from 58 in 1995 Rationale for mining growth: realising unmet potential of minerals and energy development 5 80% of resource-driven countries have per capita income levels below the global average; more than ½ of these are not catching up But 69% of people in extreme poverty are in resource-driven countries 90% of resources investment has been in middle- and high - income countries Source: McKinsey Global Institute, Reverse the curse: Maximizing the potential of resource-driven economies, December 2013
  6. ~½ of the world’s known mineral and oil and gas reserves are in developing countries Rationale for mining growth: strong win-win-win outcomes 6 540 million peoplein resource- driven countries could be lifted out of poverty $11-$17 trillion of resources investment could be needed by 2030—more than double the historical investment rate Opportunities to share $2 trillion of investment in resource infrastructure Source: McKinsey Global Institute, Reverse the curse: Maximizing the potential of resource-driven economies, December 2013 50%+ improvement in resource-sector competitiveness possible through cooperative action …if we get it right
  7. Source: CET/IM4DC/World Bank Mining Tax Course 7 Taking a broad view: policy and planning around the full mining value chain and lifecycle – and interactions
  8. Natural Resources Charter Precept 3: “Fiscal policies and contractual terms should ensure that the country gets full benefit from the resource, subject to attracting the investment necessary to realize that benefit. The long-term nature of resource extraction requires policies and contracts that are robust to changing and uncertain circumstances.” 8 Revenue from resources development is a key objective, but not the only key to sustainability …and trade-offs are inherent Fiscal regime objectives • Maximise return to the State • Encourage investment • Optimal and sustainable tax base • Economic efficiency (optimal exploitation of the resource) • Equity • Revenue predictability and stability • Fiscal regime stability and transparency • Administrative efficiency Sound revenue design, administrative capacity and transparency are vital to sustainable revenue systems Sound expenditure systems (including infrastructure planning and delivery) and administrative capacity are also vital
  9. 9 Indirect Induced Direct Local manufacturer or service provider Purchasing expenditure for local goods and services  Payments to employees  Subsequent backward expenditure for local goods and services along the supply chain  Income of supply chain employees  Taxes paid by suppliers to the Government  Household consumption as direct and indirect employees spend their income within the local economy Taking a broad view: Sustainable benefits from resources largely derived by growth of enterprises and employment Economic output from mining operation Local dealer  Income of dealer’s employees  Taxes paid by dealer to the Government  Household consumption as direct and indirect employees spend their income within the local economy Adapted from Saipem 2011 In Australia, for every $1 of mining revenue, 40¢ is spent on goods and services: Reserve (Central) Bank
  10. Resource economy in Australia: bigger than traditionally measured Resource employment by industry 2011-12 Share of total employment, financial year Source: Rayner and Bishop, Reserve Bank of Australia, February 2013 10 Gross Value Added – resource economy 2011-12 Share of nominal GVA, financial year (has more than doubled in past 10 years) 18% of GVA • 11.5% directly from extraction and processing • 6.5% from other sectors providing inputs 10% of employment • 3.25% directly from extraction and processing • 6.75% from other sectors providing inputs
  11. Employment growth: driven by mining, but more than just mining jobs – Western Australia example Source: CCIWA: Building Western Australia’s Workforce for Tomorrow, June 2010 0 50,000 100,000 150,000 200,000 250,000 300,000 Other Administration and Support Hospitality Transport Manufacturing Education Professional Services Mining Retail Healthcare and Social Services Construction 0 500,000 1,000,000 1,500,000 Non Mining and Construction Mining and Construction Currentworkforce (2010) Additionalworkersuntil 2020 11 Employment growth by industry sector 2010-2020 Australian mining employment multiplier is 3 – 4 Africa 7 – 10?
  12. Case study: Australia’s biggest investment wave since the 1800s gold rushes – but still peaky and transitory 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, gold Mid West Region Iron ore, gold, uranium, nickel, Pilbara Region: LNG, iron ore, infrastructure LNG, mining Base metals Bowen and Surat Basins Coal, CSG, LNG, infrastructure 12 *Reserve Bank, Australia Copper, uranium, infrastructure PORT HEDLAND KARRATHA
  13. Western Australia sub case: new investment will result in decades of increased production with lower volatility – great basis for economic leverage * At ten year average prices Historic and forecast production value* for WA’s key resources 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 2005 2009 2013 2017 Gold Iron Ore Nickel Oil/Gas Alumina and Bauxite ~ 2.5 x 2010 value $m Source: ACIL Tasman analysis 13 Increased sustaining capital and services …infrastructure implications?
  14. Source: Austmine Mining Equipment, Technology and Tervices (METS) is now a very important industry sector to Australia INCLUDING $27 BILLION EXPORTS
  15. Activating human capital: a nation’s most precious resource – education and training institutions are key infrastructure assets Education and training institutions: key infrastructure assets Complementary to traditional infrastructure Education and training ecosystem: public sector and industry collaboration • Crucial to dealing with challenges and opportunities of the 21st Century • Advanced education integrated with research • Build skills and knowledge capital • Knowledge-intensive and knowledge creating • Adaptable and capable to deal with uncertainty and to engage with the emerging new economy at home and abroad • Public and private university and technical colleges; industry and company learning centres; regional learning hubs; • Knowledge spillovers and though-career learning: trained workers move between projects and firms, taking skill set and culture with them Integrated policy on industry, education and training – and integrated into infrastructure planning
  16. Minerals Council of Australia 2020 Vision Infrastructure Project (2009): resources growth regions 21 growth regions Current projects and production Adequacy of current infrastructure Growth scenarios for each region Interaction of regions Infrastructure gaps and needs to 2020
  17. • Minerals & petroleum growth prospects remain strong • Many infrastructure gaps now • Worse in future – would inhibit development and international competitiveness • Infrastructure for community and local economic development very important • Need detailed region-by-region planning and provision to ● overcome current infrastructure deficits ● manage for growth 2020 Vision Infrastructure Project: what was found
  18. Infrastructure Australia – established 2008 • To drive the development of a long term, coordinated national approach to infrastructure planning, priorities and investment, focusing on transport, water, energy and communications • Seven strategic priorities ● Expanding Australia's productive capacity ● Increasing Australia's productivity ● Diversifying Australia's economic capabilities ● Building on Australia's global competitive advantages ● Developing Australia's cities and regions ● Reducing greenhouse emissions ● Improving social equity and quality of life in cities and regions
  19. • Infrastructure Australia http://www.infrastructureaustralia.gov.au/ Strategic Infrastructure Plan for South Australia http://www.infrastructure.sa.gov.au/strategic_infrastructure_plan • NSW State Infrastructure Strategy http://www.infrastructure.nsw.gov.au/state-infrastructure-strategy.aspx • Pilbara Planning and Infrastructure Framework http://www.planning.wa.gov.au/672.asp • See also UK National Infrastructure Plan https://www.gov.uk/government/collections/national-infrastructure-plan Australian and state approaches to infrastructure planning
  20. Resources development clusters in Australia: what we have learned about infrastructure HOBART Western Australia Northern Territory South Australia Queensland New South Wales Victoria SYDNEY CANBERRA MELBOURNE BRISBANE ADELAIDE PERTH 20 • KALGOORLIE • DARWIN PILBARA REGION Chinese demandEnergy emergesFounded on iron ore 1960s 1970s 1980s 1990s 2000 2010 2020 Australia’s most northern city – close to Asia. Service centre for mining, oil and gas, defence and marine. Population 110,000 Mining city since early 1900s – gold, nickel sulphide and nickel laterite – long life operations and evolving industry. Strong METS sector. Regional population 45,000
  21. Kalgoorlie and Darwin: Infrastructure is key to success of mining, METS sector and local development • Water, energy and transport infrastructure: supports mining, small business and community • Business and community infrastructure: serviced industrial land, roads, energy, water, community facilities • Attractive urban amenity: skilled resident workforce; sustainable demographic profile; • Education and training institutions: public and private secondary schools and VET colleges; plus universities • Business services and financial institutions that understand mining and services • Supportive, light-handed government interventions, eg: partnerships with business to connect customers and suppliers; small business support 21
  22. Pilbara infrastructure planning changes ● Overall – framework for planning and all infrastructure – cooperative planning between levels of government and industry within agreed growth parameters – proportion of royalty revenues fund infrastructure ● Ports – move to multi-user ports to allow for investment diversity ● Rail – future multi-user railways with independent operator 22
  23. Pilbara infrastructure planning changes (2) ● Land, housing and community infrastructure – long-term planning; coordination between companies and government – seeking to build sustainable communities ● Energy – government seeking to establish Pilbara electricity grid ● Water – cooperation between companies and government 23
  24. • Predicting the future is very difficult ● a guiding overall vision is needed, with agility to respond to global forces ● uncertainty (in part) can be managed though options approach • Early planning and coordination of infrastructure is essential ● partnerships needed between government – mining industry – infrastructure providers – financiers • Efficient integrated production chains are vital for global competitiveness of resource development operations • But monopolies on rail and port infrastructure can hold out new entrants • Community and service industry infrastructure as important as industrial infrastructure • Through life infrastructure approach necessary to maximise utility of infrastructure • Economic resource corridors provide holistic approach and options for future development. What we have learned from Pilbara experience 24
  25. • An economic resource corridor is a sequence of investments and actions to leverage large extractive industry development into broader economic development and diversification • Investments (public and private) are prioritised and integrated around shared infrastructure and programs • The approach is flexible and unbundles otherwise very large investments • In each step, capacity is built within community and small-to-medium enterprises to realise benefits from emerging opportunities • The integration of public and private plans, together with key environmental and social factors, has a clearly defined geographic footprint • Corridors having economic diversity are designed to interconnect into a national pattern that will evolve organically across time with changing political and market dynamics. World Bank Economic Resource Corridor concept
  26. Maputo Development Corridor – projects completed MAPUTO Pande-Secunda Gas line. PPP Sasol completed Coal-based Power Station 2 transmission lines to Matola completed Liquid Fuels & Petro- chemicals: Sasol Al smelter 500ktpa BHPB completed Joburg-Maputo Highway PPP- BOT completed Port of Matola/Maputo Upgrades, PPP Joburg to Maputo Railway line: Upgrade GAUTENG
  27. Central Development Corridor
  28. • Take a broad view of benefits: ● revenue ● local business ● inclusive economic development ● skills and knowledge and spillovers ● infrastructure co-investment, sharing ● economic transformation – reshaping economies through growth • Integrated infrastructure planning, prioritisation, and delivery ● across the economy and across all classes of infrastructure ● economy-enabling – especially smaller business ● hard and soft; industrial to community; education and training • Use experience of others and adapt to local context 28 Conclusion: Thinking beyond the mine (or rather, mining plus) – activating broad-based economic transformation
  29. Contact International Mining for Development Centre WA Trustees Building Level 2, 133 St Georges Terrace Perth WA 6000 Australia Tel: +61 8 9263 9811 Email: admin@im4dc.org www.im4dc.org The Energy and Minerals Institute The University of Western Australia M475, 35 Stirling Highway Crawley WA 6009 Australia Tel: +61 8 6488 4608 Email: emi@uwa.edu.au Web: www.emi.uwa.edu.au The Sustainable Minerals Institute The University of Queensland St Lucia Brisbane QLD 4072 Australia Tel: +61 7 3346 4003 Email: reception@smi.uq.edu.au Web: www.smi.uq.edu.au

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