/

2010

PBIT Delegation to
Australia
Visit Report
In 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.

Projects Directorate,
Punjab Board of Investment & Trade
7/9/2010
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

2
I. BACKGROUND AND VISIT OBJECTIVES

A. Background

T he Australia visit was envisaged in continuation of the Friends of Democratic Pakistan (FoDP) PPP
forum, 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 the
Gulfood exhibition Dubai 2010, the largest event of its kind in Asia in Friends of Democratic Pakistan
February 2010. The visit aimed to incentivize Dubai based companies
to migrate their production bases to Punjab. Dubai today boasts a The Punjab Board of Investment and
Trade, the Government of Punjab’s
number of reputable foods based companies with strong brands and premier Investment and Trade
elaborate distribution networks across GCC country markets and Promotion Agency took an 18 member
beyond. Under the idea opportunities would be created and incentives business delegation to Australia. The
offered to as many of these companies to migrate their production idea of developing Pakistan's Punjab
province into a food production and agri
bases to Punjab. This could typically be structured as collaboration, processing base for the UAE and the
strategic sourcing, JV, M & A or even Greenfield investments. wider Gulf Region was originated at the
FoDP PPP forum in Dubai, January 26th
A major hurdle that was identified in this objective was technology/ which was led by Pakistan’s Foreign
food standard and quality gaps that needed to be bridged. For this Minister Shah Mahmood Qureishi and
purpose, Australia was identified as source of relevant technology for hosted by the FM of the UAE. The UAE
Government and private sector
Pakistani companies where needed. Hence the Australia visit was
delegates fully supported the initiative
planned in collaboration with AUSTRADE, to address the need for and Austrade offered to assist
Pakistani companies to gain exposure to the latest practices in food with enhancing quality and standards of
production and to source technology from Australia in the food production / food processing to
materialise this initiative.
(dairy/livestock/vocational training) sectors. Australia has world class
capability in these key areas and the focus of the delegation was to The present visit was in continuation to
gain exposure to their best practices, field visits as well as face to face this initiative - Developing Pakistan's
business meetings with Australian companies with a view of Punjab province as a food production
and processing base for the Gulf region.
matchmaking.
Leading food and agri processing
companies based in Punjab visited
B. Objectives Australia with a view to sourcing
appropriate technologies and enter
Identify areas of collaboration

T
business partnerships to participate in
he main objective of the delegation was to initiate dialogue this FoDP initiative. Moazzam Husain,
Director General Projects at PBIT led the
between local companies and leading Australian companies to
delegation. Austrade hosted the
identify key areas of collaboration. At present there is a wide delegation in Australia and assisted with
gulf between the technologies used in the two countries, the visit will local contacts and business to business
help create a better understanding of the methods being used in matchmaking
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.

3
 T
Enhance Pakistan’s perception rating
he 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 countries

I
n 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 mainly
of 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

I
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.

4
 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
below.

42
36 24 16
Showed intent to
Applied for Visa Granted Visa Final Delegation
participate

Although this was 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
made 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
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 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
Chambers of Rahimyar Khan, Sargodhagodha and Bahawalpur. A complete list of delegates is attached as
Annexure 1

III. VISIT LOGISTICS

T 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
plan their trip to coincide with thee 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
bookings. Also coaches had been booked for travel
to and from airports for each
h city. An advance payment of USD 300 per head had been taken from the

5
 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

T 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 Miller
Kondinin Group Mr. Richard Price
Gulf Australia Trading Mr. Hon. Kim Chance
Hayaustralia Mr. Andrew Bolt
Australian Trade & Technology Mr. Javed Akhtar
KIMSEED Mr. Ramzi Kudera
Demeter Cormack Mr. David Oates
WAMMCO International Mr. Albert Baker
WA Department of Agriculture & Food Ms. Anne Wilkins
Ms. Kellie-Jane Pritchard
Mr. Besko (Besalet) Trhulj
Mr. 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 Brightling

TRADESTART Mr. Mark Sutherland
URQUHARTS International Mr. John Urquhart
Department of Primary Industries Mr. Peter Myers
Honorary Consul Ms. Ayesha Bux
Proventure Mr. Muhammad Khan
Austrade Mr. Brendan Egan
Austrade Mr. Shiva Nair
Austrade 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 Macpherson

Ruth Consolidated Industries Pty Ltd Mr. Brett S. Ruth
Capricorn Pastoral Ms. Fiona Lander
Stock Air Global Livestock Transport Mr. Simon Jackson
Used Oil Re-Refineries Pty Ltd Mr. Mark Glover
Ernst & Young Mr. Inam Haque

6
Austrade Mr. Steve Rank
High Commissioner of Pakistan Ms. Fauzia Nasreen
Consul General of Pakistan Mr. Azam Mohammed
Trade 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 Walton

Agrichem Mr. Simon Hales
AUSTREX Mr. Wylie Wettenhall
Australian Agricultural College Corporation Mr. Michael Skerrett
Agribusiness Consultant Mr. Barry Brooks
Cory Johnston (Aust.) Pty. Ltd Mr. Chris Coore
Blue Ribbon Mr. James Hunt
Austrade Mr. Peter Moeser

Matchmaking and B2B interaction

PERTH (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

7
  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 Visits
PERTH
Field 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 Factory

Visit to Queensland Strawberry Industry
Visit 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.

8
 Moazzam Husain, Director General Projects Development, Punjab Board of Investment & Trade presents
momento to Fauzia Nasreen, High Commissioner of Pakistan to Australia

Outcomes
1. 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

9
 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

A
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

10
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 state is well placed to take advantage of

producer and supplier of high quality seasonal export opportunities into
grains, wool, meat, live animals and fish northern hemisphere markets.
in the international arena.  Minerals and energy is the largest
sector, contributing 88 per cent of total
 The state exports 80 per cent of its Western Australian exports.
agricultural production and has an
international reputation for meeting  Agrifood and fibre contribute seven per
the specific requirements of overseas cent to total exports.
customers.
 The majority of agricultural
 Western Australian farmers lead the commodities and fish products are
world in sustainable agricultural exported including 95 per cent of grain
production. production, 77 per cent of livestock
 Western Australia is a world leader in production, 65 per cent of production
dry land farming and now exports this from fisheries and 17 per cent of
technical expertise. horticulture production. All agrifood
and fibre industries are highly focused
 Western Australia is one of the most on export.
pest- and disease-free agricultural
production areas in the world. Strict  Over the six years from 2002–03 and
quarantine requirements ensure this 2008–09, the largest export region for
status is maintained for the benefit of Western Australia has consistently been
local producers and consumers around North-East Asia. Exports to the South-
the world. East Asian nations and the Middle East
region are the second and third most
 Western Australia is well positioned to important export regions respectively.
take advantage of the growing world Since 2002–03 the Asian continent has
consumer demand for clean and safe accounted for almost 70 per cent of
quality food. Western Australian agrifood exports.
 The subtropical and tropical areas of  In 2008–09, the top export markets for
Carnarvon and Kununurra are noted for Western Australia agrifood products
the production of a wide range of were Indonesia, China/Hong Kong,
tropical fruits, sugar cane and other Japan and Iran.
irrigated tropical crops.
 Western Australia has a unique freight
 Western Australia’s southern
advantage as it is very close to the Asian
hemisphere location means that the
markets.

11
 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

S
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.
The advice to PBIT was for Punjab to play on similar
strengths. For example, Australia’s strengths are Stability,
A POSSIBLE APPROACH TO
Resilience and Innovation. This is underpinned by six POSITIONING PUNJAB?
credible factors:
1. If three overlapping circles are drawn,
1. Strong economy representing West Asia, Central Asia and
2. Liquid markets South Asia, then Pakistan occupies the
a. Banks space where the three circles intersect.
b. M & A’s
c. Pension funds, mutual funds 2. 60 percent of this population lives in
d. High net worth individuals Punjab, which represents the key region in
e. REITs, Securities, Hedge funds this intersection and a stabilizing
geopolitical force in a turbulent region.
3. Skilled workforce
4. Advanced Infrastructure
3. For 200 years it has been a regional
5. Stable environment
transport and communications hub, a
6. Quality of life railway junction, with developed and
complex trade and market mechanisms
Going forward, Austrade has now prioritized a few sectors
with other regions.
for investment attraction where Australia - as the world’s
15th most competitive economy - enjoys a distinct 4. Punjab is a pluralistic society, not a
competitive advantage. These are: polarized society, where gender
differences are relatively small and has
traditionally been a centre of education,
1. Advanced Manufacturing arts and literature.
2. ICT
5. Punjab offers a vast skilled segment of
3. Biotech
population, professional managerial
4. Financial Services
cadres, endless arable, irrigated farmland, a
5. Agriculture diversified service industry and
6. Mining manufacturing clusters in textiles, light
7. Biofuels engineering and agro processing.
8. Oil and Gas
9. Higher Education 6. These factors have somewhat “shock
10. Creative Industries (Film, Music) proofed” Punjab form the security and
economic challenges being faced by the
Advice to PBIT was to similarly identify priority sectors for wider region, however it is imperative that
investment attraction- where a visible and credible its capacity and institutions are
competitive advantage exists - and aim to build a global substantially upgraded so as to reinforce
(or regional) edge here. Punjab’s role as a stabilizing factor in the
region.
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

13
Fortescue Metals) have extensive operations and have made further investments in improving this
infrastructure. 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 automated
paperless 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.

14
VII. MINING CONSULTATIONS
STRIKE RESOURCES PTY LTD
Strike 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).

15
 2. Taxes
3. Development of social and physical infrastructure

Outcomes
1. 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 iinterest
nterest or else may
refer the GoPN to other iron ore companies who might be interested in such types of
opportunities.
2. Strike Resources also expressed an interest in coal mining and requested to be provided with
the interim report on re authenticat
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 operation in
Punjab; however their mainain concern was how to obtain a concession when multiple smaller low
efficiency mines are operating everywhere.

SNOWDEN MINING CONSULTANTS

Snowden are presently carrying out study to re authenticate 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
grid mesh of drill holes (or other observed se
sections)
ctions) would need to be observed to see if a picture can be
drawn as follows:

Drill holes/ Sections1 at Classification Category of reserve

2000 m spacing INFERRE

INFERRED Does not qualify for reserve status

1000 m spacing INDICATED Probable

500 m spacing MEASURED Proven

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

under:

Over 200 sections 56 boreholes had Only 16 contained

139 were boreholes
have been observed coal intercepts quality data

1
Sections can consist of outcrops, trenches, pits and drill holes

16
 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

M 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, the
interested investor is welcome to talk to the GoPN.

VIII. KEY LEARNINGS

I
n order to take advantage of group discount rates, hotel bookings in Australia typically are needed
be 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

17
 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.

18