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Rio Tinto calls for collaboration in current mining climate

8th February 2016

By: Kim Cloete

Creamer Media Correspondent

  

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Multinational diversified miner Rio Tinto has called on the mining industry and African governments to work together to rise above the extremely tough times for commodities.

“We have to be collaborative in solving today’s problems in a tough operating environment. We can wring our hands or work together to figure out how to get through the storm,” said diamonds and minerals chief executive Alan Davies, speaking at the 2016 Investing in African Mining Indaba, in Cape Town.

He noted that strong partnerships between governments and the private sector were key to achieving common objectives in the long run.

Davies said investment certainty, infrastructure and innovation were the three major components needed for an attractive operating environment in Africa.

He added that, if the investment environment was not secure, many deposits would simply remain “in the geologist’s eye”.

Further, improving tax clearances and streamlining systems would “massively improve” the environment for international firms and establish investment certainty, while transparency and rule-of-law would pay dividends for Africa in the long run.

Davies suggested that, while governments needed to help the private sector through productivity and cost reductions, such as power costs, investment in infrastructure was also critical to the prosperity of mining in Africa.

“Infrastructure is the lifeblood of countries [and] many of Africa’s most promising mining assets are in remote regions. We have to get these assets to market, often crossing country boundaries. We need regional integration and cooperation – borders should not get in the way,” urged Davies.

He added that Rio Tinto was continuing to invest in and explore future opportunities in Africa, including potential projects in Botswana and Namibia.

Davies told thousands of Mining Indaba delegates that he expected excellent opportunities in Africa in the long term.

“The global drivers of long-term demand for Africa’s minerals point in the right direction,” he said, adding that world population growth, and particularly population growth in Africa, would provide significant opportunities.

“World population growth will require more housing, more infrastructure and more resources. That’s especially true in Africa, where population is expected to grow from 1.2-billion people in 2015 to 2.5-billion people in 2050.

“The Nigerian population alone, which would reach 400-million people in 2050, could surpass the population of the entire US. There will be a need for minerals that need modern life to work.”

Davies noted that, despite the slowdown in China’s economic growth and its shift from being investment-driven to a consumption economy, new growth areas were emerging.

He said China was still growing in absolute terms and that he expected the paths of Africa and China to converge in the future, even more than they already had.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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