African countries should ensure fair return from resource riches

Western Australian Premier Colin Barnett has urged African leaders not to be intimidated by global mining companies, but to ensure that their citizens received a fair return for their resource exploitation.

Speaking at the first day of Paydirt’s Africa Downunder conference, in Perth, Barnett told delegates that while capital required a safe environment for investment, resource companies would always pursue resource deposits.

“The mining industry will do what it does, but African nations need the courage and political will to ensure that a fair return from the projects are derived,” the Premier said.

Furthermore, Barnett advised African leaders to refrain from subsidising the minerals industry, warning that it could be detrimental to the countries’ economies.

“There have been some subsidiary arrangements over the years in Western Australia, and it’s not the way to go. Emerging African economies should resist that – often international companies will put pressure on small countries to provide concessions and subsidise arrangements, and those countries are not in a position to do that.”

Instead, Barnett recommended that host countries should implement stable and predictable taxation structure to ensure resource companies were attracted to the region, while the host country could retain a fair return for its resources.

“They should resist profit taxes and the like, and make sure that an easily-administered royalty is in place to make sure that all minerals extracted are paid for. [Do] not … overcharge, but … set a fair charge that retains investment, but allows the nations to have an income to deal with the social and infrastructure issues in that country.”

Barnett will this week welcome members of the Common Market for Eastern and Southern Africa (Comesa) trading bloc to cement ties established in January this year when the Premier signed a memorandum of understanding (MoU) between Western Australia and Comesa. Barnett said the MoU aimed to provide economic opportunities for Western Australia and the Comesa nations through the sharing of knowledge and technology in the resources and agriculture fields. “Western Australia has a world-class system of legislation and regulation governing its mineral and petroleum sectors, and we want to pass on our experience to assist African countries in building resources industries that are profitable, sustainable, safe, and beneficial to their citizens,” Barnett said. “Under the MoU, Western Australia and Comesa will also seek to collaborate closely on training and capacity building across resources and agriculture.”

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