Sustainable mining in Latin America:

Australia’s competitive advantage

Australia-Latin American Business Council

3 February 2015

• Australia has world-leading track record and global brand in sustainable mining: discovery, development, operations, METS, community, environment

• Latin America is a fast growing destination for Australian-based mining investment and METS

• Latin America and Australian economic diplomacy, aid for trade

• Scope for stronger collaboration between ALL Australian and Latin American stakeholders to achieve sustainability and shared value

Summary

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Sustainable mining: oxymoron or imperative? APPROACH OF SUSTAINABLE MINERALS INSTITUTE, THE UNIVERSITY OF QUEENSLAND

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Stage 1: Only revenue maximising

Stage 2: Efficient – Enhancing performance through individual activities

Stage 3: Effective – Improve benefits and performance through connectivity with environments, communities and industry

Stage 4: Sustainable – Embedding sustainability in all decision making and business practices to consider

the economic, social and environmental needs of current generations without compromising the needs of

future generations

Business

Opportunities

& Challenges

Corporate

Assets and

Expertise

Societal

Needs

Emerging approach: Shared value

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Shared Value is:

Policies and practices that

enhance the competitiveness of a

company while simultaneously

advancing the economic and

social conditions in the

communities in which it operates

Shared Value is NOT:

• Sharing the value already

created (philanthropy)

• CSR by another name

• Personal values

• Balancing stakeholder interests

• Compliance

Tying business success to the prosperity of host communities and countries

Source: Adapted from Shared Value Initiative, Extracting with Purpose, October 2014

COMPANIES ADDRESS SOCIAL NEEDS AND IMPROVE THEIR COMPETITIVENESS

•Integrate shared value creation into business model

•Reconceive products and markets – eg build local markets for intermediate products

•Redefine productivity in value chains – eg local workforce and local suppliers

•Create enabling local environment – eg local clusters, shared infrastructure

Companies

•Implement policies and regulation that encourage and facilitate shared value

•Shift relationship with energy and minerals companies from a contractor model to a development partner model

•Co-invest with companies and communities

Governments

•Become centres of excellence for shared value and disseminate best practices to their members & clients

•Balance holding sectors accountable with engaging them constructively to advance their mission

NGOs & education providers

•Support developing country partners to maximise the development potential of mining – eg though cooperation in capacity-building in in governance , education, R&D, OHS

International development community

Building sustainable mining and creating shared value requires shared effort EVERY STAKEHOLDER HAS A ROLE TO PLAY

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Acquisition and

exploration

Construction and

development

Mining and concentration

Transport Trading,

marketing and sales

Closure, rehabilitation

and monitoring

Mining lifecycle and key interactions

6

Precompetitive geodata

Mineral economics & policy

Resource governance Indigenous agreement-making

Community engagement

Negotiations and agreements

Regional development

Education, training and skills

Local content & enterprise

Revenue design & administration

Occupational health & safety

Infrastructure planning & delivery Mine waste management

Mine closure and post mining land use Environmental & water management

Post mining economy

FIELDS IN WHICH GOVERNANCE CAPACITY IS NEEDED

Australian energy and minerals project construction 2010 –2016: the largest investment wave since the 1800s gold rushes*

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, mineral sands,

gold

Mid West Region Iron ore, gold,

uranium, nickel,

Pilbara Region LNG, iron ore, infrastructure

LNG, mining

Bowen, Surat and Galilee Basins Coal, CSG, LNG

South Australia projects to 2016 USD10 billion+

7 *Reserve Bank of Australia

Copper, uranium, mineral sands,

petroleum

PORT HEDLAND KARRATHA

Gladstone and North West

Economic Triangle Base metals,

bauxite-alumina

Goldfields Region Gold, nickel, iron ore

New South Wales Coal, gold, base

metals

Victoria/Tasmania Coal, gold, base metals, oil & gas

RESULTING IN DECADES OF WORLD-LEADING PRODUCTION

Australian companies also have been busy globally! DISCOVERED MINERAL AND COAL RESOURCES 2008 – 2013

8 ‘Maiden resources’ discovered and delineated by ASX companies 2008 – 2013

How to turn potential to actual shared value?

Value of discoveries by Australian (ASX) companies $2,100bn

Value of discoveries by other companies ?$4,000bn – ?$5,000bn

Africa

North & Central

Asia

Latin America

Europe

Australia

North America

SE Asia & Pacific 5b

206

75

94

53

Percentage of Australian-based METS companies identifying region as a key market (Source: Austmine)

Number of ASX-listed mining companies operating in region (Source: SNL Mining and Metals)

66

105

$25bn

34%

62%

38%

27%

27%

23%

Generating value globally: Australia’s mining-related

investment and trade interests

662

$410bn

$218bn

$296bn

$461bn

$556bn

$687bn

Value as at August 2014 of ‘maiden resources’ announced by ASX-listed companies 2008-2013 by region

(Source: SNL Mining and Metals)

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Latin America is rising fast in exploration and mining AUSTRALIA HAS GROWING PRESENCE

10 Source: SNL Metals and Mining

Mining operations

Exploration

Latin America is the top destination for exploration NON-FERROUS EXPLORATION 2013

11

Latin America 26%

Source: SNL Metals and Mining World Exploration Trends 2014

Africa 14%

13%

7%

13%

6%

6%

5%

6%

3%

Canada

United States

Mexico

Peru

Chile

Brazil

Other Latin America 6%

6% Pacific Islands

Australia

5% Russia

4% Europe

4% China

West Africa

2% FSU

3%

3%

2%

East Africa

DRC

Southern Africa

Other locations account for 6%

Latin America opportunity

12

5

10

15

19

95

116

347

JSE

HKEx

LSE

AIM

ASX

TSX

TSX-V

Number of exploration & mining companies in Latin America

• 96 ASX-listed mining companies have 539 projects across 16 countries

• Total capital raised for LatAm projects by ASX listed companies over last 5 years was $2.56 billion

Operations of ASX and non-ASX listed

mining companies in Latin America

Sources: SNL Metals and Mining, ASX,

Austrade

• Chile: 115 Australian companies total, incl. 28 juniors plus 59 METS

• Brazil: 110 companies, incl. 20 juniors plus 30 METS

• Peru: 88 companies total, incl. 20 investors/ juniors plus 60 METS

Africa comparison – Latin America has high potential!

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• $6.83 billion has been raised through

follow-on raisings by ASX listed companies

for projects in Africa over the last 5 years

Sources: SNL Metals and Mining, ASX

11

60

101

196

220

HKEx

JSE

LSE & AIM

TSX & TSX-V

ASX

Number of listed mining companies in Africa

Operations of ASX and non-ASX listed

mining companies in Africa

• Chile: energy, water, productivity, OHS, skills, gender, environment, mine closure, geoscience and titles, social licence

• Peru: community, social licence, OHS, environment, approvals, water, infrastructure, skills for mining and governance, ASM

• Brazil: geoscience, OHS, community and social licence, R&D and education

• Argentina: whole mining regime!

Mining and sustainability shortfalls snapshots POTENTIAL COOPERATION OPPORTUNITIES FOR AUSTRALIA

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• Building institutions and governance of the resources sector

• Developing infrastructure

• Ensuring robust fiscal policy and competitiveness

• Supporting local content

• Spending resources windfall wisely

• Transforming resource wealth into broad, inclusive socioeconomic development

• Gaining community support for responsible resource development Skills and institutional capacity are key to sound governance. OECD: "Skills have become the global currency of the 21st century. Without proper investment in skills, people languish on the margins of society"

Resource-driven countries need a new growth model TO TRANSFORM THEIR POTENTIAL RESOURCE WINDFALL INTO LONG-TERM PROSPERITY

15 Source: Adapted from McKinsey Global Institute, Reverse the curse: Maximizing the potential of

resource-driven economies, December 2013 and IM4DC

Building institutions and governance of the resources sector

Developing infrastructure

Ensuring robust fiscal policy and competitiveness

Supporting local content

Spending resources windfall wisely

Transforming resource wealth into broad, inclusive socioeconomic development

Gaining community support for responsible resource development Skills and institutional capacity are key to sound governance. OECD: "Skills have become the global currency of the 21st century. Without proper investment in skills, people languish on the margins of society"

Resource-driven countries need a new growth model TO TRANSFORM THEIR POTENTIAL RESOURCE WINDFALL INTO LONG-TERM PROSPERITY

16 Source: Adapted from McKinsey Global Institute, Reverse the curse: Maximizing the potential of

resource-driven economies, December 2013 and IM4DC

Resources companies need a new approach to the changing landscape PARTNERSHIPS WITH GOVERNMENTS & COMMUNITIES IN ECONOMIC & SOCIAL

DEVELOPMENT TO BUILD SHARED VALUE

17 Source: McKinsey Global Institute, Reverse the curse: Maximizing the potential of

resource-driven economies, December 2013

Mining and METS* companies

Customer & investor countries

Communities & NGOs

Education, training & capacity-building

organisations

Developed supplier, METS & investor countries

Developing supplier countries

Shared interests and goals between stakeholders BASIS FOR COLLABORATION IN BUILDING MINING AND METS SECTORS

18 *METS = Mining Equipment, Technology and Services

International Mining for Development Centre

• Australia is a well-respected mining nation and partner: leading brand globally

• 100 years of experience and world leader in mining and processing technologies, in

mining services and education, and in doing well from mining

• Major offshore investor in Africa, Asia, Latin America

• Leader in mining governance and administration

• The X-factors: little geopolitical baggage; cultural competence; ability to work in

diverse cultures and frontier environments

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Building on Australia’s mining reputation

WHY DEVELOPING COUNTRIES WANT TO DEAL WITH & LEARN FROM AUSTRALIA

Economic diplomacy underpins Australia’s relationships

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BY MUTUALLY LIBERALISING TRADE, BOOSTING ECONOMIC GROWTH, ENCOURAGING

INVESTMENT AND ASSISTING BUSINESS

Min

era

ls E

nerg

y

& D

eve

lop

me

nt

MINERALS ENERGY & DEVELOPMENT

WORKS ACROSS ALL PILLARS

Australian Government’s Economic Diplomacy Strategy

Australian aid: promoting prosperity, increasing stability, reducing poverty NEW STRATEGIC FRAMEWORK FOCUSSSED ON ECONOMIC CAPACITY-BUILDING

21 Australian Government’s Aid Framework

Latin America – high potential for economic diplomacy INCLUDING AID FOR TRADE WITH LOWER INCOME COUNTRIES AND CO-FUNDED

CAPACITY-BUILDING COLLABORATIONS

22 Source: SNL Metals and Mining

94

ASX mining

companies 27%

METS

priority market

$461bn

ASX

discoveries

Education

markets

Education &

research

partners

Water

services

markets

Governance

partners Team Australia

is highly

effective

International Mining for Development Centre

Role of IM4DC

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UNIVERSITY PARTNERSHIP SUPPORTED BY AUSTRALIAN GOVERNMENT

Mission

Support developing countries to transform their

extractive resource endowment into inclusive and

sustainable economic growth and social development

Goal

IM4DC alumni and partner institutions effect change

through transformational leadership in mining,

development and related activities

Themes

Governance and

Regulation

Community and

Environmental

Sustainability

Operational Effectiveness

Agent for sustainable mining underpinned by good governance

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INTEGRATED , UNIVERSITY-BASED PROGRAM

International Mining for Development Centre

IM4DC mining governance capacity-building

Institutional linkages

Education and training

Fellowships

Alumni network and conferences

Advice to governments

Publications

Action research

Acquisition and

exploration

Construction and

development

Mining and concentration

Transport Trading,

marketing and sales

Closure, rehabilitation

and monitoring

Mining lifecycle and key interactions

25

Precompetitive geodata

Mineral economics & policy

Resource governance Indigenous agreement-making

Community engagement

Negotiations and agreements

Regional development

Education, training and skills

Local content & enterprise

Revenue design & administration

Occupational health & safety

Infrastructure planning & delivery Mine waste management

Mine closure and post mining land use Environmental & water management

Post mining economy

FIELDS IN WHICH IM4DC HELP BUILD GOVERNANCE CAPACITY

IM4DC Achievements SUCCESSFUL TRAINING OUTCOMES

October 2011 to February 2014

IM4DC delivery GLOBAL CAPACITY-BUILDING OUTPUTS 2012-2014

2314 participants from 65

developing countries

(incl. 366 from LATAM)

13538 88 participant short courses

training days

30% 1400+ 50 female in mining & development action

participation alumni network research

(50% LATAM) projects

Resulting in

significant

changes

SE Asia & Pacific 5b

Number of IM4DC education and training participants

Where IM4DC is working

Africa

1071

366

226

651

Multi year engagement with governments and institutions

Indonesia

Ghana

Peru Zambia

The Philippines

Participation in courses, study tours, research

West Africa

Colombia

Uruguay

Ecuador

Southern Africa

East Africa

Bolivia

Mongolia

Latin America

Mozambique

African countries serviced by IM4DC include: Congo, Mali, Morocco, Niger, Nigeria, Burkina Faso,

Ethiopia, Guinea, Cote d’Ivoire, Gabon, Uganda, South Africa, Kenya, Malawi, Cameroon, Tanzania,

Sierra Leone, Senegal, Namibia, Madagascar, Cameroon, Ghana, South Sudan, Zimbabwe

Tanzania

Fiji

Papua New Guinea

Solomon Islands

Myanmar

Cambodia

● Universities

● Government agencies

● NGOs

● Multilateral organisations

● Donors

● Industry associations

● Companies

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Partnerships with other institutions UNDERPIN IM4DC CAPACITY-BUILDING

Institutional partnerships in developed and developing countries

• Latin American resource-rich developing countries are seeking new growth models

• Australian-based mining and services companies are embracing shared value and sustainability approaches

• Universities, research institutions and training centres support knowledge transfer and institutional partnerships

• Australia has major interests in supporting sound mining governance and sustainable growth

• Latin American countries and Australia are well-matched partners

Conclusion OPPORTUNITIES TO COOPERATE TO ACHIEVE SHARED VALUE AND SUSTAINABLE

BENEFITS FROM MINING

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International Mining for

Development Centre

The University of Western

Australia

WA Trustees Building

Level 2, 133 St Georges Terrace

Perth WA

Australia 6000

Tel: +61 8 9263 9811

Email: admin@im4dc.org

www.im4dc.org

Contact

The Energy and

Minerals Institute

The University of Western

Australia

M475, 35 Stirling Highway

Crawley WA

Australia 6009

Tel: +61 8 6488 4608

Email: emi@uwa.edu.au

www.emi.uwa.edu.au

The Sustainable

Minerals Institute

The University of Queensland

St Lucia

Brisbane QLD

Australia 4072

Tel: +61 7 3346 4003

Email: reception@smi.uq.edu.au

www.smi.uq.edu.au