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

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