Big risks for miners in Africa PDF Print E-mail
STAFF REPORTER   
Sunday, 03 February 2013 11:46

The rapidly growing number of Australian resources companies with projects in Africa face a myriad of issues, according to a leading Perth-based legal expert.

Allan Drake-Brockman, the Perth Managing Partner of business law firm DLA Piper, said security concerns, managing active unions, dealing with industrial action, bribery and corruption, staff recruitment and ensuring compliance with the laws and regulations of unfamiliar markets were just some of the issues Australian businesses faced.

“Resources projects in Africa offer foreign companies and investors significant opportunities and the potential for great rewards.  However operating in Africa also carries with it a number of risks beyond the top of mind issues of political and macroeconomic instability, whether perceived or real,” Mr Drake-Brockman said.

There are now 220 Australian mining and oil companies with some 595 projects across 42 countries in Africa, and their numbers continue to grow.

“There is, however, a range of escalating risks that companies and investors need to be mindful of, with labour related issues being right at the top of the list,” Mr Drake-Brockman said.

“At its most extreme, these issues can boil over into violence as we have witnessed in Africa on more than one occasion in recent times.

“Any inconsistency between the wages and conditions paid by the various contractors working at a project can be a critical factor. What is also becoming more apparent is the awareness of the significant wage disparities that exist between local workers and foreign workers of foreign contractors (such as Australian mining contractors) who are operating on the same project in Africa.

“In many instances the local workers may perceive the work performed by foreign workers to be similar to their role.  Yet they are typically paid significantly less.

“An important consideration for any resources company operating in Africa is which country’s laws apply in relation to employees.

“This is particularly important where a foreign company is operating in Africa and engaging both local and foreign employees on site.

“In some circumstances both foreign and local labour laws may have some application to the particular site.”

Mr Drake-Brockman said the situation was complicated by the fact there is a tremendous variety of legal systems within Africa.

“For instance, the Democratic Republic of Congo has Belgian civil law as the basis for its legal regime;  in Guinea it is a combination of French civil law, customary law and decree;  while in Ghana it is English common law,” he said.

“Within these jurisdictions there are complex employment and industrial relations laws that give trade unions and employees the right to engage in industrial action.  The freedom of association provisions also generally require companies to recognise trade unions and deal with them in accordance with local laws.

“Arguably Australia has a much more institutionalised, organised and better resourced trade union movement than African counterparts. As a result, Australian companies are used to dealing with trade unions in a sophisticated manner, forming a significant part of the overall project management plan.”

According to Mr Drake-Brockman, the most significant risk to any resources project is delay due to industrial relations problems.

“Plans should be developed to identify rates of pay and general employment conditions for the project, the procedure for resolving any disputes that arise and other related matters,” he said.

“Setting consistent project wages and conditions (as far as possible) is critical to ensuring harmonious workplace relations and positive wage outcomes on a project.

“One of the industrial relations risks facing resources companies are those associated with bribery and corruption.

“This can be mitigated by ensuring contractors and sub-contractors comply with anti-bribery and corruption standards as determined by relevant legislation.”



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