Mining’s legacy: thinking beyond
the mine
Taking an integrated approach by developing lasting
solutions, serving diverse i...
• Investment attraction, efficient approvals, certain
fiscal regime
• Economic reform and infrastructure partnerships
• Wh...
• Investment attraction, efficient approvals, certain
fiscal regime
• Economic reform and infrastructure partnerships
• Wh...
• Rationale for growth in minerals and energy
• Seeking sustainable win–win–win outcomes
• Designing sustainable revenue a...
81countries driven by resources in 2011— up from 58 in 1995
Rationale for mining growth: realising unmet potential
of mine...
~½ of the world’s known mineral and oil and
gas reserves are in developing countries
Rationale for mining growth: strong w...
Source: CET/IM4DC/World Bank Mining Tax Course 7
Taking a broad view: policy and planning around the
full mining value cha...
Natural Resources Charter Precept 3:
“Fiscal policies and contractual terms
should ensure that the country gets full
benef...
9
Indirect Induced
Direct
Local
manufacturer
or service
provider Purchasing expenditure
for local goods and
services
 Pa...
Resource economy in Australia: bigger than traditionally
measured
Resource employment by industry 2011-12
Share of total e...
Employment growth: driven by mining, but more than just
mining jobs – Western Australia example
Source: CCIWA: Building We...
Case study: Australia’s biggest investment wave since
the 1800s gold rushes – but still peaky and transitory
HOBART
Wester...
Western Australia sub case: new investment will result
in decades of increased production with lower volatility
– great ba...
Source: Austmine
Mining Equipment, Technology and Tervices (METS) is now a
very important industry sector to Australia
INC...
Activating human capital: a nation’s most precious
resource – education and training institutions are
key infrastructure a...
Minerals Council of Australia 2020 Vision
Infrastructure Project (2009): resources growth regions
21 growth regions
Curren...
• Minerals & petroleum growth prospects remain strong
• Many infrastructure gaps now
• Worse in future – would inhibit dev...
Infrastructure Australia – established 2008
• To drive the development of a long term, coordinated
national approach to in...
• Infrastructure Australia http://www.infrastructureaustralia.gov.au/
Strategic Infrastructure Plan for South Australia
ht...
Resources development clusters in Australia: what we have
learned about infrastructure
HOBART
Western Australia
Northern T...
Kalgoorlie and Darwin: Infrastructure is key to success of mining,
METS sector and local development
• Water, energy and t...
Pilbara infrastructure planning changes
● Overall
– framework for planning and all
infrastructure
– cooperative planning b...
Pilbara infrastructure planning changes (2)
● Land, housing and community
infrastructure
– long-term planning; coordinatio...
• Predicting the future is very difficult
● a guiding overall vision is needed, with agility to respond to global forces
●...
• An economic resource corridor is a sequence of investments and actions to
leverage large extractive industry development...
Maputo Development Corridor – projects completed
MAPUTO
Pande-Secunda Gas line.
PPP Sasol completed
Coal-based Power Stati...
Central Development Corridor
• Take a broad view of benefits:
● revenue
● local business
● inclusive economic development
● skills and knowledge and sp...
Contact International Mining for Development Centre
WA Trustees Building
Level 2, 133 St Georges Terrace
Perth WA 6000
Aus...
Upcoming SlideShare
Loading in …5
×

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

849 views

Published on

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
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
849
On SlideShare
0
From Embeds
0
Number of Embeds
14
Actions
Shares
0
Downloads
25
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

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

  1. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 14. Source: Austmine Mining Equipment, Technology and Tervices (METS) is now a very important industry sector to Australia INCLUDING $27 BILLION EXPORTS
  15. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 27. Central Development Corridor
  28. 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. 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

×