Address to Latin America Downunder Conference
Strengthening Business Relationships between Australia and Latin America
Speech by Bruce Gosper, CEO Austrade
Thursday, 30 May 2013
Sheraton on the Park, Sydney
Introduction
It’s a pleasure to be here today at Latin America Downunder.
This July it is 120 years since William Lane set off from Australia with a group of hardy followers to establish a new colony in Paraguay in South America.
I’m sure most of you have heard this story a dozen times.
What interested me most about this story is why Lane chose South America. He chose it not so much because it was the new world, and a place of opportunity, which it certainly is, but because it was a great distance from Australia.
For Lane, it was a test of commitment. If his followers would follow him to South America, they were truly committed to the cause. Lane wanted the great distance to serve as a test of their ‘commitment and heart’.
Today, the continent of South America is no closer to Australia than it was 120 years ago, but let me assure you that distance is no longer a challenge to our interactions, our commitment or our ‘heart’.
Today, even as Australia’s natural resources and energy exports are helping fuel Asia’s industrialisation, the extraordinary and sustained economic performance of Latin American economies has inspired Australian companies to forge closer economic ties across the Pacific.
Let me say something here about our ‘Australia in the Asian Century’ project launched a few months ago by the Government. It reflects the reality that – barring some unforseen catastrophe – the centre of gravity of the world economy will shift to Asia over the next century.
I know that all of you from South America understand that prospect also, and are preparing for it. So you will also understand it is not our sole preoccupation.
A defining feature of the coming century will be more diffuse global economic patterns, with several poles of economic strength.
One of the reasons for Asia’s rise has been its place in value chains – chains which are global. And it should be clear to this audience that Australia’s business interests are global. And so we support business in all of the markets it is working – like South America.
And South America is more and more an exciting place for business.
Brazil is now the world’s seventh largest economy. Let me here congratulate Tim Harcourt and Mark Thirlwell on their report yesterday on the challenge of building this relationship. Mexico is expected to be the tenth largest economy by 2018. Economies like Colombia, Peru and Chile are forging new links with the world.
Argentina has immense potential in food and resources, while others like Guyana are attracting significant interest from miners.
This strong growth and potential, backed up by stable fiscal policy and a young population have attracted solid investment into the continent. In 2012, Latin America took 12 per cent of global FDI and more than a quarter of that went into the region’s natural resources sector.
In recent years, Australia’s trade with Latin America has grown strongly. Two-way trade grew over 60 per cent in the five years between 2006-07 and 2011-12, to over AUD8 billion.
Australian expertise in mining, water technology and education is helping Latin American countries make the most of their natural and human resources.
Australia’s Mining Sector
Australia and many Latin American countries share a long history of mineral extraction, processing and exporting.
Australia is one of the world’s leading mining nations, not just because of our natural resource endowments – which are vast – but also because of how we’ve developed them.
Australian mining firms spend nearly AUD4 billion on research and development each year and we have built expertise right along the mining production chain – in exploration, engineering, minerals processing and environmental remediation.
Australia’s so-called METS sector – that is, mining equipment, technology and services – is world leading. We have over 270 companies which brought in more than AUD70 billion in revenue in 2012 and now employ over 260,000 people.
Hedweld Engineering is a good example of an innovative Australian mining technology company. Hedweld is also building its future in Latin America.
While the Hunter Valley-based company has been exporting tried-and-tested maintenance equipment for mining machinery to Chile and Colombia for the past 15 years, it recently used Chile as a test-bed for a new hoist design which, after surviving mining environment in Chile, they now market around the world.
Indeed, the company told me that it couldn’t get a trial of its new machinery anywhere, but Chilean engineers were the first to welcome the opportunity. It’s great to have innovative solutions, but you also need people willing to support innovation in their mines. Chile had that appetite for innovation.
You’ll find plenty more Australian METS firms helping to run mines, keeping workforces safe and monitoring the surrounding environments right around the globe.
Good Corporate Citizenship and Sustainable Mining
Mining is sustainable only when it is financially sound and environmentally and socially responsible, and it’s no accident that Australian firms have sustainable mining expertise to share.
Australia’s environment and safety regulations recognise the importance the Australian community places on protecting our sensitive ecology and landscape, and our mining industry and our governments have worked closely to address the need for more environmentally sound mining techniques.
Australian miners are committed to indigenous engagement and it is fundamental to their way of doing business. It’s in our DNA.
The Australian Government has also worked hard to help other countries, including developing economies, learn from the Australian approach.
Australia’s Mining for Development Initiative helps developing countries maximise revenue from mining, while at the same time protecting their environment and benefiting local communities.
Australia is also a strong supporter of the Extractive Industries Transparency Initiative through our aid program. We started a domestic pilot of the initiative last year and we are keen to encourage more countries to adopt the program.
Australia hosted the 2013 EITI Global Conference and the Mining for Development Conference back-to-back earlier this month here in Sydney.
On a smaller scale with DFAT, AusAID and the Department of Resources, Austrade held workshops on sustainable mining practices for Latin American officials last year, and earlier this year Austrade supported a mission to Colombia, led by former Premier of Queensland Peter Beattie, to showcase Australian experience in sustainable mining.
As the trade, investment and education promotion arm of the Australian Government, at Austrade we are also strong promoters of good corporate citizenship. We always encourage responsible behaviour from companies we assist in international markets, including in the mining sector. Against this backdrop, it’s an extra privilege to promote Australia’s sustainable mining and vocational education know-how and to see how this can help unlock Latin America’s great resources potential.
Sustainable mining is dependent to a high degree on water management techniques, another area which Australian companies have developed expertise.
In Australia, exploration and mining activities absorb four per cent of our national water supply each year.
Because our mines are often located in arid and isolated areas, the skills needed to run mines are complex and varied, ranging from water supply and storage; to dust suppression, waste treatment, acid rock drainage, and stormwater management.
Several Latin American countries, such as Peru, Mexico and Chile, also have to deal with water scarcity. This leaves an opening for the sharing of water management techniques between Australia and Latin America.
A delegation of Australian experts in water attended the inaugural Latin American Water Week in Chile in March, and the success of the event indicated a strong interest in Australian water technology.
Education links
Australia’s overall education relationship with Latin America is a bright spot in our commercial ties. Between 2002 and 2012 the number of Latin American students enrolled in Australian institutions grew from less than 10,000 to over 30,000.
Over the past four years hundreds of Chilean students have travelled to study in Australia under the Becas Chile scholarship program; more than 850 undergraduate students will soon come to Australian universities under the Brazilian Government’s Science without Borders scholarship program; and even 150 Brazilian high school students have studied abroad in South Australia and Tasmania.
Latin American countries have also shown great interest in learning from the way we run our vocational education system – especially when it comes to mining skills training.
In 2011 the Fundacion Chile (Chile Foundation) approached Austrade for advice on how to build a national mining skills council. Austrade helped visiting Chilean Ministers to research Australia’s training system last year, and Chile’s Government drew on this when it founded the Chilean Mining Industry Skills Council. That Council now leads the way in Chile on mining training.
Conclusion
So, in conclusion, let me say something about Austrade. We have 86 offices in 50 countries. Two thirds of our people are offshore. More than 40 per cent of our people have one or more Asian language. About two-thirds of our people have a second language.
Importantly, two-thirds of the people we send offshore or our managers in Australia have private sector experience.
So, as a public organisation we combine an international network, linguistic skills, and business savvy. Not a bad combination for what we do in helping business in tough markets.
Helping the most innovative and competitive Australian industry – the resources sector and METS companies – is a big focus for Austrade. We have a team of nine specialists dedicated to the task.
Austrade puts Australia’s mining companies and educational institutions in touch with customers through our network of offices in Latin America and around the world, and works closely with DFAT and its ambassadors.
We work to promote Australia as a credible and responsible partner in mining, and we’ve helped many executives and boards understand the operating environment and get access to Governments in Latin America.
In the last two years, Austrade has significantly expanded our presence in Latin America. We currently have six offices with more than 40 staff. We’ve opened a Consulate General in Bogota, added a second Trade Commissioner in Sao Paulo, and strengthened our team in Santiago. And I’ll be looking for further opportunities to strengthen our presence.
We’ve also got a lot planned for the coming year. We’ll be working around the 2014 FIFA World Cup and the 2016 Summer Olympics to help share Australia’s expertise in delivering major sporting events.
We’ll also be taking Australian water technologies to Mexico, and encouraging Australia’s junior miners to learn more about Andean Latin America – and encouraging them to start projects there. There’s over 200 Australian junior miners doing business in Africa, but only around 50 in Latin America, so we’ve got room to grow.
And Latin America feels closer by the day!
Thank you for your attention.
ENDS
For further news and information from the Australian Trade Commission (Austrade) visit www.austrade.gov.au/mediacentre.
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