AGCS eyes potential of deepening Australia-Africa mining link-ups

AGCS recently signalled its intention to establish a significant local presence in Sub Saharan Africa with the appointment of Delphine Maidou as CEO of its regional subsidiary, AGCS of Africa Pty. Ms Maidou, formerly AGCS’s Head of Market Management in Canada, arrived in Johannesburg on September 3 and leads the Munich-based group’s planned expansion across the region. She took overall responsibility for AGCS business in both South Africa and the wider Sub Saharan zone. In a statement, AGCS said that as part of its global growth strategy, South Africa and now Sub Saharan Africa are ‘important’ markets. This is proven by Ms Maidou’s appointment and by the company’s planned investment in the region, it stated. AGCS said that it plans to more than double its local team over the next three years to support the move. The mining business is a top target for AGCS along with other key sectors such as marine, aviation and infrastructure. Business and investment between the Australian and African mining sectors is booming and AGCS is keen to make sure it leads the pack in meeting the risk management and transfer needs of those involved. The Australian push into the Africa mining sector has government backing. The Australian government’s Joint Standing Committee on Foreign Affairs, Defence and Trade instigated their recent Inquiry into Australia’s Relationship with the Countries of Africa, with mining a particularly area of scrutiny. The Australia-Africa Mining Industry Group, an interim committee of an industry group which represents the Australian mining industry, made a submission to the committee at the end of last year, and has been marshalling its forces to take a full part in any further strengthening of ties.hideWidespread operations In its submission the group pointed out that some 150 ASX listed or Australian-based mining and exploration companies, with a collective market capitalisation of over A$260 billion, are presently active on the ground in 40 African countries. This number includes 28 companies that currently have, or have an interest in, mining operations in 17 different African countries, it noted. This is not a small sector. In addition to mining and exploration companies, the mining service sector also represents a significant contribution, with some 30 Australian companies estimated to have African-based operations and a further 50 Australian firms estimated to be routinely involved in African assignments on a campaign basis from Australia, continued the group. “While it is not possible to accurately determine what these entities have collectively invested over the last 10 years, in excess of A$20bn can be readily accounted for. In short, Australian investment and involvement in the African mining sector is considerable and growing,” stated the submission. AGCS pointed out in a recent special report on the Australia-Africa mining relationship that similarities between the country and region make a good basis for a future partnership. “Like Australia, Africa has a wealth of natural resources. For example, it has 60 per cent of the world‘s uncultivated arable land, 12 per cent of the world‘s petroleum and 30 per cent of the planet‘s known mineral reserves. Africa is also a key source for known reserves of platinum, diamonds, cobalt, gold and bauxite. As a result investment in Africa is booming. The flow of FDI increased from $10bn in 2000 to $62bn in 2008. This is significantly larger than the flow to China if measured relative to GDP,” stated AGCS. AGCS stressed that the Australian government has actively sought to advance Australia’s level of engagement with Africa, as demonstrated by the JSCFADT Inquiry into Australia‘s Relationship with the Countries of Africa. And the insurer pointed out that the mining sector has reacted well and receives support for the annual ‘Africa Down-under Conference’ and the annual ‘Mining Indaba Conference’ held in Australia. AGCS noted that, as a result of such engagement, Australia‘s trade with Africa has grown steadily over the last decade at an annual average rate of 6.1%. “Australia’s mineral and resources companies have more projects in Africa than in any other region of the world, covering all types of mining projects from exploration to smelters and all the major minerals,” stated AGCS. The insurer estimates that some 220 Australian resource companies are coordinating as many as 600 projects across 42 African countries. Operators include industry heavyweights such as BHP Billiton and Rio Tinto, junior explorers and a host of mining service providers, it noted. Largest activity “There are also 134 active Australian projects in South Africa, which accounts for the largest amount of new and existing activity in any one country. In addition to this there are a significant number of Australian and Australian-based service companies providing accounting, technical, legal, logistics and other services to these companies,” continued the AGCS report. “While there are a number of challenges facing those who seek to invest in Africa, the opportunities are equally vast. Many companies and investors believe commodity prices and returns will stay high enough, in the medium to long term, to justify the risks,” added the insurer. “Investment into Africa is booming as a result of its wealth of natural resources. Many Australian companies are at the forefront of this investment. In fact Africa accounts for the largest amount of new and existing overseas investment, by Australian companies, than any other region of the world,” it concluded. And of course this potential for new risk transfer business needed on the back of this growth is not lost on AGCS. “We are optimistic about the future of Africa in the long term. While many countries have struggled with the aftermath and challenges brought forward by the global financial crisis, Africa is considered a major growth area, which is one of the reasons why AGCS has established a new African footprint, complementary to the existing Allianz network, bringing its corporate and specialty know how to Africa,” stated the company. The insurer said that its AGCS Pacific operation is also closely connected to its growing network in Africa and is in a ‘unique’ position to support Australian companies with investments and operations in Africa, not least through its ability to issue admitted insurance paper in most African countries. Global programmes are also critical for the development of such cross-border business. AGCS now has 15 subsidiaries in west Africa, central Africa and Madagascar, and says that it can now deliver comprehensive international insurance programmes in nearly 30 African countries.

AGCS eyes potential of deepening Australia-Africa mining link-ups

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