Austrade estimates there are 230 Australian companies with 650 mining and exploration projects in Africa, collectively valued at more than $A50 billion.

As Australia’s footprint in Africa has grown in recent years, the mining service companies in Perth have been scrambling to provide the right advice to Australian miners.

Companies operating in Africa have been largely working things out as they go and sharing their experiences and lessons learnt by word of mouth.

The Investing in Africa forum held in Perth yesterday highlighted how mining service companies such as legal and investment firms offering advice to Australian miners operating in Africa really need to know more about mitigating risk in Africa if they are to provide their clients the right information.

International Mining for Development Centre director Ian Satchwell, who chaired the panel at the forum, said most Australians had good expertise and projects, but little understanding of Africa.

“Australians are exceptional miners and have good corporate social responsibility so they are welcome in other countries,” Satchwell said.

“However, we need to find the cultural bridge.”

The main advice to emerge from the forum for Australian explorers and miners operating in Africa surrounded the approach to different legal systems, taxation requirements, how to partner with government and how to develop local skills and training.

Sundance Resources understands the risks of operating in Africa all too well – this time two years ago, its whole board tragically died in a plane crash while visiting project sites in Africa.

Despite this, Sundance managed to re-form as a business and continues to build the mineral resource at its Mbalam iron ore project based across the Cameroon and Congo borders.

“The best advice I have is to understand Africa at a local level and bring in the Australian expertise at an international level,” Sundance managing director and chief executive officer Giulio Casello said.

Partnering with government jurisdictions in each country is also an important step, and can make or break a potentially strong project.

“These countries want development, they need development but they are also in a political atmosphere where they need to sell to their people they are doing the right thing,” Globe Mining and Metals managing director Mark Sumich said.

“You need local partners and you need to develop relationships with government, and view things from their perspective.”

Another key risk in Africa is political instability and corruption, although Deloitte Australian-Africa Services group leader Jacques Van Rhyn said this was a matter of perception.

“If a company is willing to go into Africa and do its homework properly, my view is that Africa will reward you richly,” Van Rhyn said.

“You need to understand local empowerment and the environment in which you are dealing with and if you can handle those challenges.”

A major challenge with remote projects in Africa is dealing with local communities. When a mine is established far away from a town and there is an influx of people to the site, the social infrastructure needs to be managed.

Van Rhyn said governments hadn’t always been prepared for managing this but the situation was improving.

Africa contains 54 different countries and Middletons partner and lawyer Eric Fethers advised gaining an understanding from local lawyers operating in the relevant country was essential.

He said miners needed to know their rights and obligations as a tenement holder in Africa and learn the taxation regime where the project was situated.

When operating in Africa, gaining access to skilled staff can be difficult.

Casello said although there were local people in Africa educated in fields such as geology who possessed sound theory and training, they lacked practical experience on site.

He said the key was to understand where the limitations of some employees were and invest in developing their practical skills.

The panel at Investing in Africa agreed that a strong mining project coupled with strong financing was the best solution to mitigating risk, given many of the other challenges could be controlled once understood.

In light of this, Casello described the business relationship between Africa, Australia and China as the “perfect triangle”

“Africa wants to develop, and has the resources,” he said.

“Australia has the international respect and mining expertise.

“China has the money and needs the materials.”

Chinese investors are driving many of the African projects as they prefer to invest when the resources are already proven.

Australia is good at applying the mining and geological expertise to start up the projects and renowned for taking the risk to explore and develop them.

There just needed to be some more understanding at a local level in Africa, if all parts of the “perfect triangle” were to succeed.

To cater to the economic potential of mining in Africa and the growing number of companies battling for a piece of the pie, there has been increasing support from the Australian government. An industry body, the Australia-Africa Mining Industry Group has also been formed.

Austrade recently confirmed funding for an embassy in Senegal and appointed a trade commissioner in Ghana, as a further commitment to investment in west Africa.

The Department of Mines and Petroleum met with members of the Cameroon government in Perth this week as the African leaders sought to understand more about how Australia works and gain a perspective on Perth’s mining professionals.

Satchwell said the development of AAMIG, which was only established six months ago, was long overdue.

AAMIG aimed to guide Australian based mining companies focused in Africa by managing their expectations and perceptions about developing projects there.

This article first appeared in ILN's sister publication MiningNews.net.