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PBIT Delegation to Australia Visit ReportIn June 2010, PBIT, in a joint initiative with Austrade led an agri business mission to Australia with a view to sourcing technologies and know how, business to business matchmaking and to learn from Australia’s experience in agriculture and trade and investment promotion. This report describes the initiative in greater detail and documents some of the outcomes, learnings and observations.

2010

Projects Directorate,Punjab Board of Investment & Trade

7/9/2010

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Contents

I. BACKGROUND AND VISIT OBJECTIVES..................................................................................................3

A. Background .......................................................................................................................................3

..................................................................................................................................................................3

B. Objectives.......................................................................................................................................... 3

Identify areas of collaboration..................................................................................................................3

Enhance Pakistan’s perception rating.......................................................................................................4

Enhance present business interaction between 2 countries.................................................................... 4

II. PRE DEPARTURE PREPARATION AND DELEGATION COMPOSITION.....................................................4

III. VISIT LOGISTICS.................................................................................................................................5

IV. B 2 B Seminars...................................................................................................................................6

Matchmaking and B2B interaction ...........................................................................................................7

Field Visits ................................................................................................................................................. 8

Outcomes..................................................................................................................................................9

V. DISCUSSIONS WITH AGWEST..............................................................................................................10

VI. DISCUSSIONS WITH AUSTRADE.......................................................................................................12

VII. MINING CONSULTATIONS...............................................................................................................15

STRIKE RESOURCES PTY LTD................................................................................................................15

Outcomes............................................................................................................................................16

SNOWDEN MINING CONSULTANTS....................................................................................................16

COLIN ROBERTS...................................................................................................................................17

VIII. KEY LEARNINGS...............................................................................................................................17

IX. ACTION POINTS GOING FORWARD.................................................................................................18

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I. BACKGROUND AND VISIT OBJECTIVES

A. Background

he Australia visit was envisaged in continuation of the Friends of Democratic Pakistan (FoDP) PPPforum, held in Dubai on 26th January 2010. The choice of Australia as a sourcing destination was made on the basis of the support shown by the Australian Government to Pakistan at this forum.

Subsequent to the FoDP forum, Punjab Board of Investment & Trade (PBIT) led a delegation of leading local food based companies to theGulfood exhibition Dubai 2010, the largest event of its kind in Asia in February 2010. The visit aimed to incentivize Dubai based companies to migrate their production bases to Punjab. Dubai today boasts a number of reputable foods based companies with strong brands and elaborate distribution networks across GCC country markets and beyond. Under the idea opportunities would be created and incentivesoffered to as many of these companies to migrate their production bases to Punjab. This could typically be structured as collaboration, strategic sourcing, JV, M & A or even Greenfield investments.

A major hurdle that was identified in this objective was technology/food standard and quality gaps that needed to be bridged. For this purpose, Australia was identified as source of relevant technology forPakistani companies where needed. Hence the Australia visit was planned in collaboration with AUSTRADE, to address the need forPakistani companies to gain exposure to the latest practices in food production and to source technology from Australia in the food (dairy/livestock/vocational training) sectors. Australia has world class capability in these key areas and the focus of the delegation was to gain exposure to their best practices, field visits as well as face to face business meetings with Australian companies with a view of matchmaking.

B. Objectives

Identify areas of collaborationhe main objective of the delegation was to initiate dialogue between local companies and leading Australian companies to identify key areas of collaboration. At present there is a wide

gulf between the technologies used in the two countries, the visit will help create a better understanding of the methods being used in Australia after which local companies will be in a better position to identify which of these is required and relevant with respect to the current realities of Pakistan’s food industry.

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Friends of Democratic Pakistan

The Punjab Board of Investment and Trade, the Government of Punjab’s premier Investment and Trade Promotion Agency took an 18 member business delegation to Australia. The idea of developing Pakistan's Punjab province into a food production and agri processing base for the UAE and the wider Gulf Region was originated at the FoDP PPP forum in Dubai, January 26th which was led by Pakistan’s Foreign Minister Shah Mahmood Qureishi and hosted by the FM of the UAE. The UAE Government and private sector delegates fully supported the initiative and Austrade offered to assist with enhancing quality and standards of production / food processing to materialise this initiative.

The present visit was in continuation to this initiative - Developing Pakistan's Punjab province as a food production and processing base for the Gulf region. Leading food and agri processing companies based in Punjab visited Australia with a view to sourcing appropriate technologies and enter business partnerships to participate in this FoDP initiative. Moazzam Husain, Director General Projects at PBIT led the delegation. Austrade hosted the delegation in Australia and assisted with local contacts and business to business matchmaking

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Enhance Pakistan’s perception ratinghe second objective was to address the major concern caused by media coverage of the adverse security situation in the country and the extremely negative travel advisories issued by Western diplomatic missions in Pakistan. In a counter narrative it was explained that the major cities are

witnessing an apparent upsurge in terrorist strikes and that these are desperate attempts by insurgents and terror groups following Pakistan’s recent military successes against insurgents in Swat and the regions bordering Afghanistan. At the same time, the present democratic disposition in Pakistan has the will and the capacity to overcome this challenge as well.

Enhance present business interaction between 2 countriesn 2009, Pakistani exports to Australia were a miniscule US 118 m, consisting mostly of textile products, rice and cotton. Similarly Australia’s exports to Pakistan were US $ 535 m consisting mainlyof fertilizer, petroleum products and edible oils (canola). Keeping in view these figures, a third

objective was to enhance and intensify the level of business engagement between the two countries so the bilateral trade volumes and relationships can multiply. However, gaining market access to the Australian market was not a specific objective of this visit. This is itself a vast area and may be the subject of a separate engagement under FoDP.

The visit resulted in 16 immediate outcomes and with several more in the pipeline.

II. PRE DEPARTURE PREPARATION AND DELEGATION COMPOSITION

nvitations with details of the proposed visit were sent to leading companies in the relevant sectors and to leading chambers of the provinces to identify potential members from their respective regions. Individuals that showed interest were then thoroughly facilitated in the extensive visa

process with all applications going thorough PBIT. PBIT was also in constant dialogue with AUSTRADE, Australian High Commission and Australian Consular to expedite the lengthy visa process.

The delegation planned to visit four cities; Perth (13th-16th June), Melbourne (16th-19th June), Sydney (20th-23rd June) and Brisbane (23rd-26th June). In Brisbane the main sectors of interest were agriculture, dairy, food, beverages and mining companies; Perth again has strong agriculture, mining and arid cattle stations (similar to our Cholistan model) and Melbourne capital of Victoria state is eminent for cattle and livestock.

A pre-departure orientation session was held at PBIT on 31st May 2010. Mr. Imran Saeed from AUSTRADE was present to brief the delegates about the logistical arrangements (travel, accommodation) that were being arranged, the delegates were also briefed on the tentative visit itinerary. The visit was planned so that there would be a seminar in each city on the first day of the delegations arrival. Leading Australian companies from the relevant sectors would be invited to the seminar where they could interact with the delegation. The remaining days of the stay would be reserved for followup meetings and field visits that would be arranged on the day of the seminar.

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A significant issue in terms of preparation for the visit wasplanning process. The details are given below

Although this was always expected people dropping out at the last minute was a concern because logistical arrangements had already been made and had to be subsequently cancelled. It seems acquiring an Australian visa through PBIT, while others backed out as their colleagues were not granted visas. An important learning for future delegations is that PBIT should charge a nonrefundable service fee upfront. The money may then be used for making arrangements for the trip. The advantage of an upfront fee rather than charging delegates during the visit is that it would filter out non serious candidates, hence saving vital time an effort of the team

The final delegation consisted of 16 members from leading food based groups in the country including, Big Bird poultry, Auriga Group, Syed Traders as well as leading businessmen nominated from local Chambers of Rahimyar Khan, SargodhaAnnexure 1

III. VISIT LOGISTICS

he delegates had requested to make travel arrangements on their own due to varying schedules and preferences of some members. PBIT recommended London Bridge travel agent after comparing rates being offered by various agents and negotiating the lowest

possible fares. Proposed flight numbers and schedule was circulated to the delegates so that they could plan their trip to coincide with the rest of the delegations’.

Upon arrival in Australia, AUSTRADE had made hotel reservations for the delegates on a credit basis. AUSTRADE had made the payments to reserve these bookingsto and from airports for each city. An advance payment of USD 300

42 Showed intent to

participate Applied for Visa

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A significant issue in terms of preparation for the visit was the substantial drop out at each stage of the planning process. The details are given below.

always expected with PBIT aiming for a delegation of around 25 members however people dropping out at the last minute was a concern because logistical arrangements had already been

and had to be subsequently cancelled. It seems that some individuals were mainly concerned with acquiring an Australian visa through PBIT, while others backed out as their colleagues were not granted visas. An important learning for future delegations is that PBIT should charge a nonrefundable service fee upfront. The money may then be used for making arrangements for the trip. The advantage of an

charging delegates during the visit is that it would filter out non serious candidates, hence saving vital time an effort of the team organizing the delegation.

The final delegation consisted of 16 members from leading food based groups in the country including, Big Bird poultry, Auriga Group, Syed Traders as well as leading businessmen nominated from local

godha and Bahawalpur. A complete list of delegates is attached as

he delegates had requested to make travel arrangements on their own due to varying schedules and preferences of some members. PBIT recommended London Bridge Travels as a potential travel agent after comparing rates being offered by various agents and negotiating the lowest

possible fares. Proposed flight numbers and schedule was circulated to the delegates so that they could e rest of the delegations’.

Upon arrival in Australia, AUSTRADE had made hotel reservations for the delegates on a credit basis. AUSTRADE had made the payments to reserve these bookings. Also coaches had been booked for travel

h city. An advance payment of USD 300 per head had been taken from the

36 Applied for Visa

24 Granted Visa Final Delegation

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substantial drop out at each stage of the

aiming for a delegation of around 25 members however people dropping out at the last minute was a concern because logistical arrangements had already been

that some individuals were mainly concerned with acquiring an Australian visa through PBIT, while others backed out as their colleagues were not granted visas. An important learning for future delegations is that PBIT should charge a nonrefundable service fee upfront. The money may then be used for making arrangements for the trip. The advantage of an

charging delegates during the visit is that it would filter out non serious

The final delegation consisted of 16 members from leading food based groups in the country including, Big Bird poultry, Auriga Group, Syed Traders as well as leading businessmen nominated from local

and Bahawalpur. A complete list of delegates is attached as

he delegates had requested to make travel arrangements on their own due to varying schedules Travels as a potential

travel agent after comparing rates being offered by various agents and negotiating the lowest possible fares. Proposed flight numbers and schedule was circulated to the delegates so that they could

Upon arrival in Australia, AUSTRADE had made hotel reservations for the delegates on a credit basis. Also coaches had been booked for travel

had been taken from the

16Final Delegation

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delegates for the purpose of booking these coaches. It was decided that any net payable/receivable payment for these arrangements would be settled at the end of the delegations trip.

IV. B 2 B Seminars

he first B2B Seminar was organized by Austrade in Perth on June 14, 2010. Following Australian companies from the State of Western Australia participated:

Atlas Exports & Wellard International Pty Ltd Dr. Paul MillerKondinin Group Mr. Richard PriceGulf Australia Trading Mr. Hon. Kim ChanceHayaustralia Mr. Andrew BoltAustralian Trade & Technology Mr. Javed AkhtarKIMSEED Mr. Ramzi KuderaDemeter Cormack Mr. David OatesWAMMCO International Mr. Albert BakerWA Department of Agriculture & Food Ms. Anne Wilkins

Ms. Kellie-Jane PritchardMr. Besko (Besalet) TrhuljMr. Andrew Weinert

Austrade Mr. Stuart Crokett

The second B2B Seminar was held at Melbourne on June 17, 2010 and following participants from Victoria.

Elders International Australia Limited Dr. Tony BrightlingTRADESTART Mr. Mark SutherlandURQUHARTS International Mr. John UrquhartDepartment of Primary Industries Mr. Peter MyersHonorary Consul Ms. Ayesha BuxProventure Mr. Muhammad KhanAustrade Mr. Brendan EganAustrade Mr. Shiva NairAustrade Sabina Jain

The third B2B Seminar was held at Sydney on June 21, 2010 and the following companies from New South Wales participated in the seminar:

Clunyexports Mr. Angus MacphersonRuth Consolidated Industries Pty Ltd Mr. Brett S. RuthCapricorn Pastoral Ms. Fiona LanderStock Air Global Livestock Transport Mr. Simon JacksonUsed Oil Re-Refineries Pty Ltd Mr. Mark GloverErnst & Young Mr. Inam Haque

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Austrade Mr. Steve RankHigh Commissioner of Pakistan Ms. Fauzia NasreenConsul General of Pakistan Mr. Azam MohammedTrade Development Officer, High Commission of PakistanMr. Zeeshan Mahmmad

The fourth and last B2B Seminar was held at Brisbane and following companies from Queensland participated:

Australian Reproductive Technologies Mr. Simon WaltonAgrichem Mr. Simon HalesAUSTREX Mr. Wylie WettenhallAustralian Agricultural College Corporation Mr. Michael SkerrettAgribusiness Consultant Mr. Barry BrooksCory Johnston (Aust.) Pty. Ltd Mr. Chris CooreBlue Ribbon Mr. James HuntAustrade Mr. Peter Moeser

Matchmaking and B2B interactionPERTH (Western Australia State):

B2B meeting with Mr. Stephen Hills of M/s KIMSEED International B2B meeting with Mr. Andrew Bolt of M/s Hayaustralia B2B meeting with Mr. David Syme of M/s Lois Dreyfus Commodities B2B meeting with Mr. David Oates of M/s Demeter Cornmack B2B meeting with Mr. Jeff Winspear of M/s Grain Assist

MELBOURNE (Victoria State)

B2B meeting with Ms. Ayesha Bux Honorary consul Pakistan in Melbourne B2B meeting with Dr. Tony Brightling of M/s Elders International B2B meeting with Mr. Mark Sutherland of M/s Tradestart B2B meeting with Mr. Peter Myers of M/s Deptt. Of Primary Industries

SYDNEY (New South Wales State)

B2B meeting with Mr. Brett S. Ruth of M/s Ruth Consolidated Industries Pty Ltd B2B meeting with Fiona Lander of M/s Capricorn Pastoral B2B meeting with Simon Jackson of M/s StockAir B2B meeting with Mr. Angus Macpherson of M/s Clunyexports

BRISBANE (Queensland State)

B2B Meeting with Mr. James Hunt of M/s Blue Ribbon

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B2B meeting with Mr. Chris Coore of M/s Cory Johnston (Aust.) Pty Ltd B2B meeting with Mr. Wylie Wettenhall of M/s AUSTREX B2B meeting with Mr. Simon Walton of M/s ART B2B meeting with Mr. Michael Skerrett of M/s AACC

Field VisitsPERTHField visits for delegation from Pakistan were arranged for Dairy Farm of W.S. Partridge & Sons and Australian Wheat Board head office.

MELBOURNE

A visit to a 550 animal Dairy Farm was arranged by Elders Int. This dairy farm has daily milk production of 11,000 liters and is managed by 5 persons only. The trip included a visit to the head office of Elders International.

SYDNEY

Visit to manufacturing plant of Arnotts Biscuits FactoryVisit to Queensland Strawberry IndustryVisit to 51 Acres residence of Pakistani born Australian Businessman Mr. Akhlaq Ramay.

BRISBANE

Delegation visited Australian Reproductive Technology (Embryo Transfer Technologies) and visited head office of ART and held B2B meeting with MD-ART.

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Moazzam Husain, Director General Projects Development, Punjab Board of Investment & Trade presents momento to Fauzia Nasreen, High Commissioner of Pakistan to Australia

Outcomes1. Wellard an Australian Company exports dairy cattle and has already exported cattle to Pakistan.

Dairy Solution/Syed Traders has started negotiations with Wellard to represent them in Pakistan and Wellard has also shown interest in this regard.

2. Genetoics an Australian Company mainly involved the semen business and Davis Way a Dairy Equipment Company has signed agreements with Dairy Solutions to represent them in Pakistan.

3. Dairy Solution has started discussion with Elders International Australia Limited to represent them in Pakistan or dealership for Pakistan.

4. Habib Sharif Company has started negotiations with Wellard to import Australian Jersy Dairy Cows for their upcoming dairy farm in Pakistan

5. Habib Sharif Company discussed the possibility of importing butter oil and dry milk powder from Proventure Australia.

6. Challenge Seed Corporation has shown interest to import Horticultural Machinery for Fruits Processing in Pakistan from MAF Group Australia

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7. Al-Mukhtar Flour got prices of different grains and they are interested in importing grain from Australia & also discussed the possibility of importing Laboratory Machinery for Seed Processing

8. Al Mukhtar also discussed with Elders for importing Australian Dairy Semen to Pakistan.

9. Fadul Al Dehlawi EST wants to establish a used mobil oil refinery either in Pakistan or in KSA and has first meeting with Used Oil Re-Refineries Pty Ltd for future joint venture.

10. Ms. Aysha Bux Honorary Consul Pakistan wants to start IT Diploma in Pakistan from September 2010 and University of Management & Technology Lahore will be partner institution in Pakistan.

11. UMT is planning to start Master in Agribusiness and PBIT has arranged University of Queensland Gatton for future collaboration between two universities.

12. Tazij Meats & Foods has already discussed with hayaustrlia (An Australian Company) for setting up a joint venture in Pakistan on Wheat straw.

13. Tazij Meats and Foods has already started discussions with Australian Companies to import live animals for their slaughterhouse project.

14. Tazij Meats and Foods discussed with Australian Companies to upgrade their existing Slaughterhouse and they want to introduce value added meat processing/ by products processing.

15. Tazij Meats and Foods in future planning to establish a breeding farm in Punjab and Embryo Transfer Technology will be adopted in collaboration with Australian Reproductive Technologies.

16. Tazij also wants to import Australian Pasture Grass to introduce it in collaboration with Blue Ribbon for grazing purposes.

V. DISCUSSIONS WITH AGWEST

GWEST International works in partnership with government agencies, international funding agencies and organizations in Africa, the Middle East and Asia to provide project management, specialist professional and technical services as well as capacity building services and customised

training packages.

Western Australia (WA) at a glance:

Gross State Product (GSP): A$156.7 billion GSP growth rate: 5.2 per cent (2008-09) Population: 2.22 million (March 2009) Imports: A$33.1 billion Exports: A$86.9 billion

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Land area: 2 532 400 km² Life expectancy at birth: Males 78 years Females 83 years Unemployment rate: 5.8 per cent (September 2009) Inflation rate: 1.4 per cent (2008-09) Average weekly earnings: A$1363 (Annual increase - 7.5%, May 2009) Western Australia’s contribution to Australian exports: 37.7 per cent

Agricultural Production and Exports from WA-An Overview

Western Australia is an important producer and supplier of high quality grains, wool, meat, live animals and fish in the international arena.

The state exports 80 per cent of its agricultural production and has an international reputation for meeting the specific requirements of overseas customers.

Western Australian farmers lead the world in sustainable agriculturalproduction.

Western Australia is a world leader in dry land farming and now exports this technical expertise.

Western Australia is one of the most pest- and disease-free agricultural production areas in the world. Strict quarantine requirements ensure this status is maintained for the benefit of local producers and consumers around the world.

Western Australia is well positioned to take advantage of the growing world consumer demand for clean and safe quality food.

The subtropical and tropical areas of Carnarvon and Kununurra are noted for the production of a wide range of tropical fruits, sugar cane and other irrigated tropical crops.

Western Australia’s southern hemisphere location means that the

state is well placed to take advantage of seasonal export opportunities into northern hemisphere markets.

Minerals and energy is the largest sector, contributing 88 per cent of total Western Australian exports.

Agrifood and fibre contribute seven per cent to total exports.

The majority of agricultural commodities and fish products are exported including 95 per cent of grain production, 77 per cent of livestock production, 65 per cent of production from fisheries and 17 per cent of horticulture production. All agrifood and fibre industries are highly focused on export.

Over the six years from 2002–03 and 2008–09, the largest export region for Western Australia has consistently been North-East Asia. Exports to the South-East Asian nations and the Middle East region are the second and third most important export regions respectively. Since 2002–03 the Asian continent has accounted for almost 70 per cent of Western Australian agrifood exports.

In 2008–09, the top export markets for Western Australia agrifood products were Indonesia, China/Hong Kong, Japan and Iran.

Western Australia has a unique freight advantage as it is very close to the Asian markets.

The department of Food and Agriculture Western Australia has shown a keen interest to work with PBIT for future collaboration in Agribusiness, Dairy & Livestock sectors. They have almost the same problems which our agriculture sector is facing now a day and they have come out with good strategies and are ready to support our agriculture sector for making successful sector. Australia is also a water scare country and they have adopted high efficiency irrigation system and using irrigation water on judicious application not flood irrigation in Pakistan. WA contributes 38% of the Australian GDP. Grain is main strength of Australia like Wheat, Maize, Pulses and Peas. They have built silos with millions of tons storage capacity and these silos are owned by the cooperatives of the farmers and the farmers are share holders and gets profit from exporting these grains to rest of the World. Australia exported about 2 millions of Wheat to Iran last year. Australia is exporting about 7 million tons of grain to Indonesia, Japan, Korea & South East Asia. Australia wants to introduce sweet Lupin to Pakistan for not only dairy and poultry feed ingredient but also for human consumption also. In this regards, WA Agri department will contact PBIT for facilitating Austrade Pakistan to launch an introductory campaign on Lupin. They have also shown interest to strengthen our century old irrigation system to develop it on modern lines.

VI. DISCUSSIONS WITH AUSTRADE

uccessive discussions were held with senior Austrade officials. The notes of some of these discussions follow:

Austrade is the trade and investment promotion agency of the Commonweath of Australia. In addition the federating states and in many cases individual regions and cities carry out their own investment promotion activity.

Austrade is a statutory body within the Department of Foreign Affairs and Trade (DFAT). It works closely with the Department (equivalent to our Ministry) of Industry, Innovation, Science and Research that works on enhancing industrial competitiveness. Its human resource of 1000 is a mix of government and private sector, although the compensation levels are identical for both cadres and all staff is permanent employees. It is an employer of choice in the market for talent. Its mandate includes building the Australia brand overseas and building the Austrade brand in Australia. It is a relatively flat organization (in this context flatness is measured with regards to the decision structure not only the org structure) State Managers manage geographic regions and National Managers manage industry verticals. In addition it has overseas staff in 55 countries tasked with investment attraction and trade promotion and officers posted overseas also provide consular functions (passports issuance, performance of notarial acts etc). This reduces the need to maintain / duplicate extensive consular staff in key missions.

According to Austrade International firms based in Australia contribute 23 percent to Australia’s GDP, 50 percent to exports, 42 percent to R & D and 14 percent to employment. The US, Europe and Japan have traditionally been major investors in Australia. While FDI accounts for 44 percent of total investment in Australia, and Australia receives 2 percent of global FDI inflows.

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The advice to PBIT was for Punjab to play on similar strengths. For example, Australia’s strengths are Stability, Resilience and Innovation. This is underpinned by six credible factors:

1. Strong economy2. Liquid markets

a. Banksb. M & A’sc. Pension funds, mutual fundsd. High net worth individualse. REITs, Securities, Hedge funds

3. Skilled workforce4. Advanced Infrastructure5. Stable environment6. Quality of life

Going forward, Austrade has now prioritized a few sectors for investment attraction where Australia - as the world’s 15th most competitive economy - enjoys a distinct competitive advantage. These are:

1. Advanced Manufacturing2. ICT3. Biotech4. Financial Services5. Agriculture6. Mining7. Biofuels8. Oil and Gas9. Higher Education10. Creative Industries (Film, Music)

Advice to PBIT was to similarly identify priority sectors for investment attraction- where a visible and crediblecompetitive advantage exists - and aim to build a global(or regional) edge here.

The state of Western Australia for example is rich in iron ore, energy, offshore oil and gas. Every element in the periodic table can be found in Western Australia. The state government has worked on developing an enabling infrastructure; railways, roads and ports. All the major players in mining (BHP, Rio Tinto and

A POSSIBLE APPROACH TO POSITIONING PUNJAB?

1. If three overlapping circles are drawn, representing West Asia, Central Asia and South Asia, then Pakistan occupies the space where the three circles intersect.

2. 60 percent of this population lives in Punjab, which represents the key region in this intersection and a stabilizing geopolitical force in a turbulent region.

3. For 200 years it has been a regional transport and communications hub, a railway junction, with developed and complex trade and market mechanisms with other regions.

4. Punjab is a pluralistic society, not a polarized society, where gender differences are relatively small and has traditionally been a centre of education, arts and literature.

5. Punjab offers a vast skilled segment of population, professional managerial cadres, endless arable, irrigated farmland, a diversified service industry and manufacturing clusters in textiles, light engineering and agro processing.

6. These factors have somewhat “shock proofed” Punjab form the security and economic challenges being faced by the wider region, however it is imperative that its capacity and institutions are substantially upgraded so as to reinforce Punjab’s role as a stabilizing factor in the region.

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Fortescue Metals) have extensive operations and have made further investments in improving thisinfrastructure. The latest entrant to Perth is Chevron, the US energy giant. Perth is now positioned after Houston (Gulf of Mexico) and Aberdeen (North Sea) as the world’s number three location for offshore oil and gas. As a result of this positioning, today the Government of Western Australia can go to the US, to tradeshows and talk to any energy company or investor and be taken seriously. Advice to PBIT was to find a similar positioning statement.

The new kid on the block is Peru. The country is now doing extensive international road shows offering offshore exploration. As a maritime state, it was suggested that Pakistan do the same i.e. create exploration blocks within territorial waters (200 mile limit) and market exploration licenses at international road shows.

In the end however, success really comes when ALL levels of government work together and everybody pulls in the same direction. This includes all federal departments, state governments, parliamentary committees and secretaries.

The Department of Foreign Affairs and Trade (DFAT) provides strategic direction and Austrade is responsible for implementation and delivery. In a light hearted analogy it was explained that “one is the exhibit under the banner of Austrade which manages the Australian pavilion.

Austrade doesn’t engage in feasibility studies or specific Greenfield projects but instead deals with overall country and sector attractiveness. The state governments and agencies may develop feasibilities but ultimately individual investors develop their own feasibilities.

With an overall Departmental budget of AUD 200 million per annum, Austrade has a fully automatedpaperless information environment whereby broadly 2 types of leads are received; 1) Foreign investment leads and 2) Trade leads. These are routed through an electronic ticket system to the relevant federal, state or regional level, often leaving the Austrade system and entering the system of other government departments. However, thanks to system integration, the status remains visible and can be tracked at all times.

Austrade also provided two specific project leads to PBIT:

1. CBH (Cooperative Bulk Handling) for Punjab’s grain silos project and subsequent integration with the National Commodity Exchange.

2. Austral Insulation: For a refrigerated cool chain grading, packing, storage and transport infrastructure for Punjab’s vast horticulture produce.

The other important scheme that Austrade administers is the Export Market Development Grants (EMDG). Lack of access to capital is often cited by Australian SME’s as the most significant barrier to international business growth. The EMDG is therefore a financial assistance programme for current and new exporters that reimburses up to 50% of all eligible export promotion expenses.

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VII. MINING CONSULTATIONS

STRIKE RESOURCES PTY LTDStrike Resources Limited is a publicly listed Australian based mineral development company with iron ore interests in Peru and Australia and thermal coal projects in Indonesia.

Synopsis of discussions is as follows:

There are presently two major iron ore producing regions in the world:

1. Belle Horizonte, Brazil. (62 – 68% Fe)2. Western Australia (59 – 62% Fe)

The Punjab iron ore projects are “marginal’ on a world scale. After recent rise in the price of this commodity (from $ 40 per ton to $ 140 per ton), there are presently 40 – 50 Australian companies that want to get their magnetite mines in Australia into production. Nevertheless, mining of marginal deposits in West Australia’s Pilbara region has started. Punjab will face competition for investment dollars from similar mines available elsewhere particularly where deposits are closer to the surface and of a higher Fe content.

A key concept in mining economics is the strip ratio, ie how many tons of overburden needs to be removed to get to 1 ton of iron ore. For instance for 10 m MT of ore if you have to remove 300 m MT of overburden then the ratio is 30:1. The 10 m MT ore is then beneficiated to 5 m MT of steel (equivalent to local demand).

To obtain a value of the resulting ore, multiply the current price of the iron ore fines ( d mtu) by the percent content of iron in the ore and then multiply by 100. For example if the price of iron ore fines is 97 c / Fe d mtu, then the value per ton of ore at 62% Fe is 97 c x 100 x 62% = 6014 c or US $ 60.14 per ton.

On top of this, inland freight is added to arrive at FOB price. In May 2010, Rio Tinto offered China a three month contract price for fine iron ore (63.5%) of $ 123 per MT FOB. Typically sea freight from Australia to China is US $ 12 pmt and from Brazil it is US $ 30 pmt.

The investor in Punjab will seek to work towards a significantly lower FOB price as it may not have the supplier bargaining power of Rio Tinto. Additionally, the inland transport system will need major investment in heavy haul railway. This may be included as part of the concession agreement.

The strip ratio of Chiniot and Rajoa appears to be high to make open pit mining economical. In such cases, underground mining may be more economical but the presence of water tables may add to extraction costs. In Rajoa and the remaining shield, the advice was for the Punjab government to locate ore deposits closer to the surface.

On its front, the Government can expect to benefit as follows:

1. Royalty (In Australia this does not exceed 5 percent).

2. Taxes3. Development of social and physical infrastructure

Outcomes1. Strike Resources asked to be provided a data dump and all information, even if in raw form of all

available resources on Rajoa iron ore. They have offered to review this for irefer the GoPN to other iron ore companies who might be interested in such opportunities.

2. Strike Resources also expressed an interest in coal mining and requested to be provided with the interim report on re authenticatquality and availability. Strike Resources would be Punjab; however their main concernefficiency mines are operating

SNOWDEN MINING CONSULTANTSSnowden are presently carrying out which were earlier estimated to be around 235 m MT. Snowden explained that to qualify as reserves,grid mesh of drill holes (or other observed sedrawn as follows:

Drill holes/ Sections1 at Classification

2000 m spacing INFERRE

1000 m spacing INDICATED500 m spacing MEASURED

As against this, Snowden explained the present position was as under

1Sections can consist of outcrops, trenches, pits

Over 200 sections have been observed 139 were boreholes

Development of social and physical infrastructure

Strike Resources asked to be provided a data dump and all information, even if in raw form of all available resources on Rajoa iron ore. They have offered to review this for interest or else may refer the GoPN to other iron ore companies who might be interested in such

Strike Resources also expressed an interest in coal mining and requested to be provided with authentication of coal resources in Punjab to get a view into deposit

quality and availability. Strike Resources would be interested to set up a mining operationain concern was how to obtain a concession when multiple smaller

operating everywhere.

SNOWDEN MINING CONSULTANTSSnowden are presently carrying out study to re authenticate Punjab’s coal resources which were earlier estimated to be around 235 m MT. Snowden explained that to qualify as reserves,grid mesh of drill holes (or other observed sections) would need to be observed to see if a picture can be

Classification Category of reserve

INFERRED Does not qualify for reserve

INDICATED ProbableMEASURED Proven

Snowden explained the present position was as under:

Sections can consist of outcrops, trenches, pits and drill holes

139 were boreholes 56 boreholes had coal intercepts

Only 16 contained

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Strike Resources asked to be provided a data dump and all information, even if in raw form of all nterest or else may

refer the GoPN to other iron ore companies who might be interested in such types of

Strike Resources also expressed an interest in coal mining and requested to be provided with in Punjab to get a view into deposit

to set up a mining operation in how to obtain a concession when multiple smaller low

te Punjab’s coal resources in the Salt Range, which were earlier estimated to be around 235 m MT. Snowden explained that to qualify as reserves, a

ctions) would need to be observed to see if a picture can be

reserve status

Only 16 contained quality data

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Snowden explained that most of the reporting took place in the 1980’s and in fact the present global standards no longer accept this type of reporting. In 1995 the standards became much more stringent and mineral resource classifications (CIM, JORC, SAMREC etc are some of the more recognized classifications for bankable studies).

Classification, because it is an economic function, is governed by statutes, regulations and industry best practice norms. This means effectively that both much more and better quality data will be needed or the coal resources may only be classified as inventory, which is a lower level of certainty than a reserve.

COLIN ROBERTS

r Colin Roberts is Honorary Consular in Australia for the Board of Investment, Prime Minister’s Secretariat, Islamabad and is based in Perth. He had earlier indicated that an Australian investor was interested in obtaining an exploration licence for Rajoa which would

convert into a mining lease after the deposit is proven. A meeting was held with Mr Roberts in Perth in which he was informed that the Punjab government was embarking on a drilling programme for Rajoa and once this is completed, a mine development plan and a bankable feasibility study would be prepared. Investors would then be able to bid for a concession. However in the meantime, theinterested investor is welcome to talk to the GoPN.

VIII. KEY LEARNINGS

n order to take advantage of group discount rates, hotel bookings in Australia typically are neededbe done well in advance to guarantee rooms availability. Room rates also vary depending on the size of the group booking. Accordingly, Austrade had originally made bookings for --- delegates as early as

--- against guaranteed payments. Some of these were on twin sharing basis. Due to last minute drop outs, the total confirmed delegates fell to 16 members. Accordingly in most cities delegates were requested to take up rooms on single occupancy basis to minimize “no shows” and to keep the group rate at the agreed competitive level. This often caused consternation among the delegates.

In future it is recommended hotel room bookings should only be made against an advance deposit at the time of visa application as it is felt that some delegates may only have applied for the visit so as get an Australian Business visa stamped on their passport.

It was felt that perhaps the number of Australian companies attending information/ matchmaking seminars would have been larger. On average, less than 10 companies attended each seminar. There may be 3 reasons for this:

1. The general perception of the security situation in Pakistan and its attractiveness as a place to do business

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2. The vast size of Australia its agribusiness sector is spread across a vast area often several driving hours away from the city.

3. The general perception that Pakistani companies and marketplace are extremely price sensitive and therefore reluctant to pay for Australian products and services which are typically of a higher quality

Even though a pre-departure briefing was held with the participants, it is felt that in future, other than business content, such briefings should include guidance on the destination country’s customs and regulations and the softer social and cultural do’s and don’t’s.

With regards to the mining sector, the termination of the lease agreement for Reko Dik to Tethyan copper of Australia by the Government of Balochistan was also a concern.

Therefore, a policy of continuous engagement with Australia ( in tandem with the Ministry of Foreign Affairs) ought to be pursued in order that some of these concerns, in particular those relating to the security issues are mitigated. More Australian companies coming to Pakistan will also encourage others to follow suit.

IX. ACTION POINTS GOING FORWARD

PBIT should arrange mutual visits of Pakistani and Australian private sector companies for future technical assistance and this should be included in our annual events calendar

The Australian Government has extended ASLP (Agriculture Sector Linkages Program) for next 4 years till 2013 and we are in consultation with Australia to involve PBIT as an active partner

In terms of Trade we have to get access to Australian Markets for our horticultural products.With its location in the Southern hemisphere, Australia and Pakistan have reverse seasons and Australian fruit and horticulture brands can leverage opportunities in Pakistan.

Dairy, Seed, Grains, Post Harvest and Irrigation Technologies are strengths of Australia and in future we can get benefit from their expertise in these sub-sectors

Australia which used to be a main player of raw cotton is now diverting to high valued cash crops due to scarcity of irrigation water and we have to follow Australian Model in this regards also.