Australian Iron Ore Key to China’s Economic Empire

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Here’s a question for you to think about. Did China’s economic empire begin in 1952? At first it doesn’t seem likely. But in 1953, Mao introduced his first five-year plan for China, modelled closely on Soviet-style industrial development. By then his political control of China was strong enough to introduce the basics of collectivisation in the Chinese economy. The first five-year plan boosted production of pig iron, steel, and oil.

It was also in the first few years of the 1950s that production of the high-grade iron ore at the fabled Mesabi Iron Range in the American mid-west peaked out. It’s one of the world’s most famous iron ore bodies, first discovered by the wonderfully named Leonidas Merritt in 1887. Merritt was later bought out by John D. Rockefeller.

The high-grade ore was key to the American war effort against the Nazis and the Japanese. In addition to building the skylines of eastern cities, this iron ore found its way into the battleships and tanks that powered the American war effort. It was Mesabi iron ore and anthracite coal from western Pennsylvania that led directly to huge American production or water material. And it’s no accident that the American auto industry was born in the same region, so near huge steel and iron deposits.

It was also in 1952 that Lang Hancock identified the huge iron ore deposits in the Hamersley range in the Pilbara. Today, Australian iron ore makes the skyscrapers of Shanghai possible.

How ironic that the peak of American economic and military power coincided with the exhaustion of the high-grade iron ore of the Mesabi. And how ironic that the iron ore of Australia’s Pilbara region – equally fabled – is the key ingredient of the emergence of another kind of Empire. And how fortunate we are to be able to invest in the boom.

Dan Denning
The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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