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DOING SOME DIGGING – Sustainable development will succeed in Asia

Despite resource wealth and fast-growing minerals demand, a number of Asian countries are not attracting their shar...



Despite resource wealth and fast-growing minerals demand, a number of Asian countries are not attracting their share of global investment, according to the International Council on Mining and Metals (ICMM at www.icmm.com) of London, U.K. The principal reason is insufficient security to safe long-term investment, according to Paul Mitchell, secretary general of ICMM. He made his remarks to the Asia Mining Congress 2005 in Singapore on March 22.

Despite good reserve prospectivity, proximity to major markets including the rapid growth of China and India, Asia attracts only about 10% of global expenditure on minerals exploration. This means that many Asian countries are missing out on the sustained economic growth that can come from mining investment, and what is needed is for governments and resource companies to work together to achieve economic, social and environmental sustainability, Mitchell said.

He contrasted declining minerals investment in Indonesia and the Philippines with rapid growth in Peru, where US$6.7 billion of foreign mining investment over the past decade has delivered mineral exports now accounting for 53% of total export revenue and providing 29% of total tax revenues. According to Mitchell, this disparity highlights the challenges that a number of Asian resource-rich countries need to be overcome if the region’s vast minerals potential is to be realized and converted into lasting economic prosperity.

Mitchell pointed to five challenges, the first three of which were specific to Asia while the other two brought in wider global issues.

The first challenge is GOVERNANCE, which presents a significant impediment to business investment in many Asian countries. Five countries in Asia ranked at the bottom of international indices for transparency and economic freedom, with the ability to conduct business, enforce a contract and register a property being many times slower than the best performers globally.

"Much more is needed than encouraging words from government officials. National administrations must act in concert to apply sound and balanced policies consistently and ensure that the proper rule of law and security applies," Mitchell said.

The second factor inhibiting resource investment in Asia is POOR INFRASTRUCTURE, with effective co-operation between governments, mining companies and financiers needed to create security and certainty for long-term investment. As an example Mitchell pointed to Papua New Guinea where a general lack of infrastructure outside provincial capitals means only about 19% of the area available for exploration has been approved for this purpose.

A third challenge is the SHORTAGE OF SKILLED WORKERS in the mining industry, especially in Asia, where governments will have to import or train skilled professionals and fund education and training initiatives like that of Freeport in Papua, which has a large local apprenticeship program.

A fourth challenge, which is a global issue, is overcoming the so-called "RESOURCE CURSE" which, while not inevitable, can see resource-rich countries experience low economic growth if sound revenue management practices are not followed by governments.

A fifth challenge is for the mining industry to be heard on issues of importance and overcome its sometimes LIMITED POLITICAL AND PUBLIC SUPPORT BASE by demonstrating the value of its products to society and its leadership in achieving sustainable development.

Mitchell concluded by saying these challenges in Asia could be met by governments providing secure institutional settings where investment could be made safely and with industry demonstrating social and environmental responsibility by making a clear contribution to economic development.

Some Canadian juniors are exploring in Asia, and although the risks are great so could be the rewards. They would do well to heed Mitchell’s five challenges.


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