African countries looking to further develop their significant natural resources are looking to Western Australia’s ‘state agreements’ as a model for contractual relations between the state and project proponents.
State agreements are essentially long term contracts between the Western Australian government and proponents of large resources projects, ratified by an Act of Parliament. These agreements have been used to foster resource development such as mineral, petroleum or wood extraction and related downstream processing projects, together with essential infrastructure.
Large resources developments often require long term certainty and complex land tenure. The fact that these agreements are ratified by an Act of parliament, and can only be subsequently changed through mutual consent, provide greater certainty with regards to the project itself and minimise sovereign risk, an important consideration when working in Africa.
The agreements outline the rights and obligations of both parties and terms and conditions for a project. They also provide the basis for future relations between the relevant company and the state government.
Giles Nunis, the deputy director of the Western Australian Department of State Development, has said that African counterparts were looking at introducing state agreements or similar to boost the continent’s growing mining sector.
An important consideration for the respective African governments is that Chinese and Japanese trade partners viewed these agreements favourably, and see the agreements as an effective and transparent way of dealing with governments.