OPENING OF OZMINE2012
Speech by the Australian Ambassador to Indonesia Mr Greg Moriarty
Grand Ballroom, Shangri-La Hotel, Jakarta
Tuesday 17 April 2012
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Bapak-bapak dan ibu-ibu, terima kasih atas kehadirannya hari ini. Dan saya juga ingin mengucapkan terima kasih kepada bapak Wakil Menteri Widjajono dan semua staf dari Kementerian.
Ladies and gentlemen thank you very much for coming.
I would like to acknowledge the support of the Indonesian Government for Ozmine2012
We value very much our strong relationship with the Ministry and appreciate the support it has provided to Ozmine over many years.
I would like to extend a special welcome to those who have travelled to Indonesia to participate in this event.
We have representatives from right across the Indonesia Archipelago, from all states in Australia, and also a strong contingent of representatives from ASEAN countries, from India and further afield.
It is my pleasure to be here again to celebrate the opening of Ozmine, Australia’s largest mining exhibition and conference in South East Asia. We at the Australian Embassy are very pleased that our Government has chosen to support this event in Indonesia.
It should come as no surprise that this conference and exhibition has drawn high levels of interest:
Mining continues to be such a powerful economic driver for many countries in our region.
This year’s very topical conference theme, Sustainable and Responsible Mining is especially relevant for business people, government officials and industry leaders from Indonesia, Australia and across the region.
These topics are increasingly important in all of those countries.
It is worth touching on the importance of the mining sector for Indonesia and Australia.
The mining sector is an economic mainstay for both our countries, providing livelihoods for hundreds of thousands of people, attracting foreign investment and contributing billions of dollars to our economies through exports of minerals, mining services and technologies.
Indonesia’s economy grew last year by a very impressive 6.4 per cent.
Indonesia is Southeast Asia’s largest economy and contains some of the world’s richest mineral deposits. It has a fast-growing mining sector which accounts for around 10-11 percent of GDP.
Some have predicted that the value of the mining industry in Indonesia could reach $147 billion US dollars in real terms by 2015, almost double that of 2010, making it one of the world's top exporters of thermal coal and other minerals.
For Australia, mining contributes a very significant nine per cent of GDP and makes up almost two thirds of our export revenue. In 2010-11, Australian mining exports were worth $178 billion Australian dollars and this figure is forecast to increase to $202 billion by 2012-13.
The strength of our mining sector was one of the key reasons that Australia weathered the Global Financial Crisis so well.
To me, the important question for us here in this room is how Indonesia and Australia can work together to maximise the long term benefits that accrue from our mining sectors.
Or, to put it into the language of this conference, how can we work in synergy to promote sustainable and responsible mining sectors in both of our countries that are viable over the long term?
To a great extent, Indonesia and Australia already cooperate and complement each other on many levels for the long-term, sustainable future of our communities, businesses, and economies.
According to the Register of Australian Mining Interests, 38 Australian (ASX-listed) companies already have an interest in approximately 120 mining projects across Indonesia.
Of course in addition to that there are further interests held by private companies and also many more Australian companies providing mining equipment, training, technology, know-how and services to non-Australian companies, including some very significant Indonesian mining companies.
This is a positive story. However, when we consider that those 120 projects are being undertaken by just 38 Australian-listed companies, I think we can do more.
We see that while the bilateral business relationship between Australia and Indonesia is strong, there is no doubt that it is yet to reach its full potential, and there is certainly scope to realise greater trade and investment outcomes.
Indonesia is overall Australia’s 13th largest merchandise trading partner
Australian investment in Indonesia is currently $5.3 billion an 11 per cent increase from 2009-2010 and our two-way trade with Indonesia reached $13.8 billion last year (which was a 14 per cent increase from 2009 – 10)
It is through forums like this – through the exchange of ideas and frank assessments of opportunities and challenges - that we can better understand each other, conceive and implement sensible strategic plans and start to break down the ‘perception barriers’ that some in government and business circles see as hindering even stronger growth in our business-to-business relationship.
Investors in the mining sector need to be assured of certainty and stability.
Especially given the high risk, substantial capital expenditure and long lead times involved in moving from exploration to production, if indeed resources are discovered.
Predictable and resilient commercial and regulatory frameworks are vital to encourage development and long term commitment to mining ventures.
Which is why we at the Australian Embassy will continue to monitor and seek clarification on new mining regulations and engage with Australian companies to understand how the regulatory framework in Indonesia is impacting on individual commercial decisions.
We want to see this as a genuine partnership between the Embassy and Australian business in this country.
We look forward to continuing to work with Indonesia, and other countries of this region, to share collective experience in this area.
The Australian Government has committed $12 million dollars to the Extractive Industries Transparency Initiative to strengthen transparency and accountability of mining and petroleum revenues.
As well, we have committed $127 million dollars to the Mining for Development Initiative to provide practical advisory, education and training services to improve capacity. This Initiative will focus on support for good governance and regulation, community and environmental sustainability, and operational effectiveness and safety.
Indonesia is expected to benefit from both of these important initiatives.
It is important to note here that many Australian companies provide strong leadership and best practice examples in these areas as well – in particular from a Corporate Social Responsibility, governance, accountability and education and training perspective.
I believe that Australian companies are world leaders in this area and world’s best practice.
In the current environment, it is very important that Australian companies let senior Indonesian decision-makers know what they are doing in this area and the benefit that their operations bring to this country.
A number of Australian companies have said to me that they prefer to keep a low-key approach on this area. They go about their work in communities with little fanfare.
I respect that opinion. But I also believe that in the current circumstances, where the Indonesian government is very genuinely interested in getting foreign companies to make a contribution in this country, it serves Australian companies’ interest to let senior decision-makers in this country know about the quality of our corporate social responsibility programs; what we’re doing with environmental management; what our governance arrangements are about; and what we are doing to educate and train Indonesian staff.
I believe that, given our best practice in this area, it is important to make known to senior Indonesian government people the commitment that Australian companies are making to this country.
Over the past 18 months as Ambassador here, I have been lucky to see first-hand a number of mining projects involving Australian companies – from Kalimantan to North Maluku.
What has struck me the most is how the presence of a mine can transform a community.
We all know that the impact of a mining project is very complex. It can have some negative consequences but it can have some very positive consequences.
In Balikpapan, Australian companies are running Australian-accredited training programs for up to 400 apprentices a year, with a particular focus on opening up opportunities for women.
In other locations, I have seen companies introducing scholarship schemes, supporting local schools, undertaking revegetation projects, establishing health clinics and undertaking complex environmental projects such as bio-diversity mapping.
These are really important contributions that Australian companies are making to this country.
Importantly, the projects contribute to sustainability and viability in the mining industry in a responsible way, and are closely assisting Indonesia in its capacity building goals by transferring important skills, knowledge and know-how.
This is being delivered not only through standard business practices, but also through dedicated education and training programs and significant CSR programs and initiatives that in many cases go beyond that required by the Indonesian Government.
Because this is what I believe you get, in terms of additional value add when you partner with an Australian company.
You get a company with strong credentials in CSR, safety, innovation and in good environmental management.
You get a partnership that maintains good governance and high standards of legal and financial practices
And you get a partner that is committed to the long term, that works with governments, business partners and communities in an open and transparent way and which has a keen interest in contributing to the development of the local economy.
What I have personally witnessed is Indonesians and Australians working together to achieve really positive results in the mining sector.
In ways that maximise the benefit of the resource for all parties – community, Government and industry.
Often the Australian company operating in Indonesia is an operating partner but in many cases the Australian business takes a lesser role - a typical example is where an Australian company provides design and engineering services to an Indonesian mining operation.
Together they are enhancing competitiveness via increased efficiencies and overall up-skilling of human capital - and in addition to positive business outcomes in Indonesia – together they can ultimately be successful in penetrating third markets.
We are already starting to see some evidence of Australian and Indonesian companies partnering together to look further afield.
It is important to note that Australian and Indonesian companies complement each other in a broad range of other sectors.
This is a particularly salient point, as we look towards negotiations on the Indonesia-Australia Comprehensive Partnership Agreement (IA-CEPA).
While we are still in early pre-negotiation phase for this agreement, we have already identified extractive minerals as one of the four clusters marked for a special capacity building element.
IA-CEPA is an important step in the already-strong relationship between Indonesia and Australia, and will potentially address barriers to services and investment between our two countries.
IA-CEPA is intended to boost mutual trade facilitation and competiveness while strengthening governance, regulation and accountability to foster long term, viable sectoral partnerships.
It builds on another important agreement that Indonesia became part of earlier this year – the ASEAN-Australia Free Trade Agreement, or AANZFTA.
AANZFTA dramatically reduces tariffs on two-way trade and creates greater certainty across the board for Australian and Indonesian business people.
So in my view the framework is there for an enhanced business to business relationship, and greater mutually beneficial results for both Indonesia and Australia in trade and investment.
We are living through a time of extraordinary industrial, economic, social and political transformation in Asia.
ASEAN countries – and Australia - are strategically located close to the world’s largest users of mineral products - China, India, Japan and South Korea - and the region is well positioned to continue to benefit from the strong demand that has been driving up commodity prices and creating economic prosperity.
This is certainly reflected in the wide breadth of involvement by Australian companies here at the Ozmine2012 exhibition and conference.
From major mining houses and mine safety consultancies, green mining technicians and best practice mine innovators, to financial institutions and law firms, I urge you all to spend some time looking at what Australian companies have to offer to the mining sector in Indonesia and throughout ASEAN.
I trust the Ozmine2012 conference, with such knowledgeable and dedicated speakers, will be able to address some of the challenges that we all face of doing business in the mining sector, and develop some practical ideas.
It is a great opportunity for us as well at the Embassy to be able to engage with business, to be able to hear about what your concerns are, but also to hear about where you see the opportunities and where we the embassy or the Australian government help it to build your business in Indonesia.
So I will certainly be spending quite a bit of time myself here over the next couple of days and a number of the embassy staff and our Austrade staff are very interested in hearing what your thoughts are on the current development in this sector and also where we go to from here.
So thanks very much for coming. It is a great opportunity to be able to be here with you and I hope that the conference is very successful.