Industry depends on foreign investment

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Industry depends on foreign investment


Investments in Australia’s resource sector have enabled the country to develop a world-class mining industry and become a key partner for China. As the countries celebrate 40 years of diplomatic relations, Australia and China are focusing on opportunities in the mining industry.


Australia – Simon Bennison, Chief Executive, AMEC.jpg

“The first recorded European discovery of coal was at Newcastle by convicts on the run from Port Jackson”, says Stephen Galiliee, CEO of New South Wales Minerals Council. “In 1798, the first shipment of coal was exported from Newcastle, New South Wales to India.”

In the 1840s, silver and copper were discovered in South Australia. A decade later, the first of numerous “gold-rushes” started in New South Wales and Victoria, generating populous areas, wealth and the foundations of the affluent states seen today.

Australia remains one of the world’s leading mining authorities and still possesses an abundance of minerals and resources. The entire mining industry accounts for approximately 19 per cent of Australia’s GDP and 60.8 per cent of the country’s total exports. Iron ore and coal accounted for 58.2 per cent of total resource exports last year, with a combined value of US$114.37 billion.

Australia has the world’s largest reserves of brown coal, mineral sands (rutile and zircon), nickel, lead, silver, uranium, iron ore and zinc.

In recent years, China has overtaken Japan to become Australia’s largest export market. Two-way trade between the countries is valued at US$124.89 billion. Energy and minerals constitute two-thirds of Australia’s total exports to China, and more than half of Australia’s iron ore exports are bound for the country.

“The strength of the Australian economy is in large part due to China’s demand for our resources”, says Simon Bennison, CEO of the Association of Mining and Exploration Companies. “The Chinese have also been providing Australian mining companies with a lot of investor capital at a time when traditional investors have been taking a more conservative approach”.

Australia - Stephen Galilee, Chief Executive Officer, NSW Minerals Council

Australia – Stephen Galilee, Chief Executive Officer, NSW Minerals Council

Reg Howard-Smith, chief executive of the Chamber of Minerals and Energy of Western Australia, says: “China is extremely important to us as an investor base because we cannot finance all of our projects by ourselves. The industry has always been dependent on foreign investment and China today presents itself as a leading source of capital and a reliable strategic partner for our industry.”

Western Australia’s resources sector employs more than 110,000 people and accounts for 95 per cent of the state’s merchandise export income. The period 2010 to 2011 saw private investment into the state’s resource industry exceed US$50 billion, a quarter of the national total for the same period.

While companies such as gold and iron ore explorer Vector Resources have already secured strategic Chinese partners, there remain countless other companies with the expertise to provide Chinese investors with an entry into the Australian market. Peak Resources, having brought their expertise and exploration capabilities overseas, are now seeking strategic partners and off-take customers in China and other markets in the Far East for their rare earth discovery.

“We are a secure destination for Chinese investment and encourage them to continue to view Australia as a reliable partner and supplier. China is our number one customer and we expect to continue to collaborate with them moving forward,” Howard-Smith says.

Queensland is promoting itself as a hub for the growing “fly-in fly-out” mining workforce created by the 177 resource industry companies based in the state.

“Our state is a one-stop shop for all minerals which now includes LNG. We have numerous projects in the pipeline and these require substantial investment in infrastructure which could be an opportunity for Chinese investors,” says Michael Roche, chief executive of the Queensland Resources Council. Just as the last 40 years have proven, Australia and China are well positioned to work even more closely together in the future.

Australia - Michael Roche, Chief Executive, Queensland Resoures Council

Australia – Michael Roche, Chief Executive, Queensland Resoures Council

Australia - Reg Howard-Smith, Chief Executive, CME

Australia – Reg Howard-Smith, Chief Executive, CME

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