Junior miners are heading for the wide open spaces of Africa in search of resources – and their lawyers are not too far behind.

Australian investment in Africa – quick facts
• there are approximately 220 Australian mining and oil companies with some 595 projects across 42 countries in Africa
• 143 new Australian projects were added in 2010 alone
• Australia’s mineral and resources companies have more projects in Africa than in any other region of the world, excepting Australia
Source: Australian Trade Commission survey, February 2011

When Norton Rose announced a merger with Canada-based Ogilvy Renault and South Africa-based Deneys Reitz in November last year, the firm cited the growing China-Africa deal flow as the key rationale for the move. That may well be the case, but it would have also been accurate to add Australia into the mix: Australian miners have been world leaders in exploring the potential of African resources. All the more reason, then, for Australian law firms to take note.

Junior miners have been particularly active,  a fact which came to prominence following the tragic death of representatives from Perth-based Sundance Resources in a plane crash in Congo last year. Other examples include Equatorial Resources on the search for iron ore in Congo and Waratah Gold, which made an acquisition in Congo last year. 

 There are a number of possible reasons suggested for this trend. Anecdotally, many of the junior miners in question are controlled by South African expats with the appropriate contacts to pursue such ventures. It may also be a case of junior miners being squeezed out of the Australian market. “A lot of assets in Australia are becoming reasonably mature and junior explorers are finding it harder and harder to find new territory they can explore where they can find something which can prove to be a bounty - but you will find that offshore,” says Holding Redlich’s David Walker. There is also interest from the majors, with Rio Tinto making a A$3.9bn bid for Australian coking coal developer Riversdale Mining  to gain access to coal reserves in Mozambique.

Investment
Is there a new paradigm of Australian-African-Chinese investment in resources projects? Lawyers are observing a greater Chinese interest in participating in Australian projects in Africa – either through investment in the project or the company itself, or by providing the infrastructure.

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