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HomeAfricaAfrica gaining ground on Australia as an attractive mining investment destination, warns leading resources and energy lawyer

Africa gaining ground on Australia as an attractive mining investment destination, warns leading resources and energy lawyer

Australia risks losing its investment edge over Africa for mining projects in coming years if it does not stay “match fit”, one of Australia’s leading resources and energy lawyers warned today.

Addressing the second day of the three day Paydirt 2016 Africa Down Under mining conference in Perth today, Gilbert + Tobin Partner, Mr Phil Edmands, said today the “playing field” between Australia and Africa was becoming much more level – and will continue to lean to towards Africa if changes are not made.

“Compared with Africa, Australia attracted a disproportionate share of international resources investment relative to its resources endowment during the last boom, partly as a result of its greater stability and development,” Mr Edmands said.

“But the playing field will be much more level going forward,” he said.

“Australian and Western Australian Government initiatives to improve competitiveness, administration and governance of mining in Africa is not only laudable, but economically rationale – both for Africa and Australia.

The pie will grow for both of them – but there is a catch.

“As Africa develops, so its sovereign and operating risk will diminish, and its infrastructure will improve.

“Australia’s luck will ultimately run out unless it can stay match fit.”

Mr Edmands singled out Australia’s corporate tax rates as one area that needed attention – not necessarily immediate change but focussed attention with a view to medium term reduction.

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He said the rates needed to be reduced for Australia to be competitive with “comparator countries” and warned the nation’s mining industry could not tolerate any additional imposts or royalties.

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As an example, he highlighted the proposal to increase rent on iron ore from 25c to $5 a tonne for two mining company labelling it “particularly egregious”.

“It is the very definition of sovereign risk and fiscal responsibility, and would be highly destructive – and not just for mining companies,” he said.

Mr Edmands gave a wide-ranging presentation on how Australian companies and investors could maximise their investments in Africa.

Central to any success was the depth of relationships with all stakeholders, he said.

And building those strong relationships is – in large part – a function of attitude, he believed.

“A good starting point is having a healthy respect for African governments as sovereigns, for communities as vital, and for Africa as the giant of tomorrow rather than the supplicant of yesterday,” Mr Edmands said.

“Africa as a continent is not poor – its people are poor,” he said.

“But that does not make them any different to anyone else – or any less – than anyone else.

They want the things that those in the developed world have, and as they gain them so Africa’s power will grow.”

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