Opportunities beckon in Africa but Oz firms face stiff competition
PERTH (miningweekly.com) – Australian resources firms that were hoping to exploit African minerals would have to address challenges associated with building sustainable opportunities if they were to deepen market penetration on the continent, and to strengthen their foot-hold in the long term.
The message came from the Department of Foreign Affairs and Trade’s East Africa section director Jeannie Henderson at the first day of the East Africa Oil & Gas conference, in Perth.
Henderson noted that Australia was facing increasingly stiffer competition from Chinese and Canadian firms when dealing with investment in Africa.
“It should be considered that in particular, Chinese companies have a higher appetite for risk taking than their Australian counterparts,” she added.
Some 220 ASX-listed companies were currently operational in Africa, in nearly 1 000 projects, spread across 38 African nations. Henderson estimated that Australia’s investment in Africa was currently worth around A$40-billion.
“This figure puts Australia alongside China and Canada as leading miner investors in the continent. Australia’s investment in African resources is also creating a pull-through effect on suppliers,” she added.
Globally, some $54-billion of foreign direct investment has been spent on Africa, with the majority aimed at the resources sector.
Western Australia’s Minister for Commerce, Michael Mischin, pointed out that despite the major investments in the near past, the continent, and specifically East Africa, still had significant resource potential.
“While exploration activities in East Africa are at its highest level ever, the region still remains largely under explored and, therefore, under-exploited.”
Mischin noted that Africa currently supplied around 12% of the world’s oil, and it was estimated to possess an untapped reserve estimated at around 8% of the world’s proven resource.
“To give you an idea, in the last two years, more hydrocarbons have been discovered in East Africa than anywhere else in the world, with estimates of 440-trillion cubic feet of natural gas.”
By comparison, Western Australia’s own North West Shelf project was estimated to host only 33-trillion cubic feet.
“East Africa’s resource deposits provide the potential for important investment and commercial opportunities, not only in the upstream market, but also in a number of other sectors that will see an increase in demand, such as providing services,” Mischin added.
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