Gold offers great scope to boost two-way investment

- Australian High Commissioner to India John McCarthy

Australian High Commissioner to India John McCarthy believes that gold provides a glittering example of growing Indo-Australian bilateral trade, in the same manner as Shakespeare famously said and whom the envoy quoted, "Gold that's put to use more gold begets." Addressing the Second International Gold Summit organized by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) in New Delhi recently, High Commissioner McCarthy says that Australia, the world's third largest producer and exporter of gold, offers investment opportunities to Indian entrepreneurs and is willing to provide technical collaboration to India in exploring and mining the yellow metal in this country. Following is the text of High Commissioner McCarthy's speech.

India's emergence as an economic and strategic powerhouse in Asia is proving to be one of the most significant forces for change in the 21st century. India has seized opportunities presented by the modern globalised economy, and is increasingly seen as a hub of global trade and commerce. It is therefore timely for India to further study how it can maximise the benefit it accrues from its critical role in the world gold market.

For Australia, India is becoming increasingly important. This is not only because of its strategic role in Asia Pacific, but also because India has moved up to become Australia's sixth largest export market.

Gold is a critical element in this export trade. Gold is now Australia's main export to India. And the expansion in trade has been extraordinary. In 2000, gold exports to India were valued at less US$50 million. By 2005, exports increased to over US$2,500 million. Australia now supplies approximately 20 percent of India's gold market.

Market Liberalisation

Because of the importance of Australia-India gold trade, we monitor the on-going debate in India about further liberalisation with interest. India's record, since opening up its economy in the early 1990s, is one in which you can take pride. As a result of freeing up import access, India now accounts for around 20 percent of global gold off-take in any one year.

Further reform of India's domestic market will also have a significant impact on India's ability to take on a greater role in the world gold market. India's regulatory structures are, of course, a sovereign issue for India. I have been around long enough not to presume to advise on such matters. I would, however, note that Australia continues to encourage India's liberalisation efforts in a general sense. Fostering and encouraging entrepreneurial talents in India is good for the regional and global economy. In other sectors, such as knowledge industries including information technology and biotechnology, Indian companies are examples of world best-practice. Telecommunications and civil aviation are success stories and promise more. The prowess of Indian entrepreneurs in the global market is becoming legendary. India is already well on its way to becoming the global leader in export jewellery manufacturing. I have no doubt that, given the opportunity, India's entrepreneurs can play a leadership role in the world gold market more generally.

Our major gold companies have made the point that they enjoy very good relations with their main clients in India and our gold trade is forecast to remain steady in the next year or so, regardless of whether the Indian market is further liberalised. Our position on liberalisation is based simply on the principle of mutual benefit. A robust and responsible Indian gold market is good for regional and international trade. This in turn, benefits us all over time.

Australia strongly supports policy measures that promote high industry standards and consumer protection. We note the recommendation by the Ministry of Commerce and Industry concerning the hallmarking of gold. Promotion of these types of standards is good for the reputation of the industry, and provides greater certainty in trade.

Gold Mining and Investment

I want to talk about gold mining and investment. Australia is the worlds' third largest gold producer behind South Africa and the United States, and the second largest gold exporter. Australia supplies more that 11 percent of the world's gold each year and production is expected to hit 345 tonnes in 2008-09. We have approximately 70 operating mines. Our miners demonstrate world best practice in technology and sustainable development. This includes community engagement and development, mine rehabilitation, mine closure and environmental stewardship.

Australia wants international investment in its resources industry, including gold mining. This is because it makes commercial sense. Overseas control of Australia's gold production is estimated to be around 70 per cent. Investment opportunities can be found in a number of gold exploration projects in Australia, and I invite you to look further into this promising area of mutual benefit.

A number of Australian companies are active in the Indian gold mining sector or keen to enter - either on their own or as joint venture partners. Further liberalisation of the mining sector is one of the issues being grappled with in India, including through the Hoda Commission report. I would commend to you Australian gold mining and exploration companies. Quite simply, they are good at what they do. In one or two cases, Australian juniors are already involved in what might emerge as world class gold discoveries in India. India has the potential to supply a significantly larger percentage of its gold needs from domestic supply than it does at present, and we can help with the technical skills needed to develop a world class industry.

Two-way trade and investment in resources was high on the agenda when Australian Prime Minister John Howard visited India in March 2006 with a senior business delegation. These issues will again be in focus when Australia's Minister of Industry Tourism and Resources is expected to lead a delegation of around 70 senior industry representatives to the International Mining and Machinery Exhibition in Kolkata in November 2006. Australia is partner country at IMME this year in recognition of the growth of bilateral cooperation between our respective resources industries.

The scope of Australia's bilateral relationship with India has increased rapidly in line with India's economic and strategic growth. Trade and investment in the resources sector, including our main export gold, underpins this economic relationship. Continuing with this engagement can help ensure that Indo-Australian relations achieves its full potential.