West Australian Government Plays it Safe on Pilbara Iron Ore

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Have things changed much in Australia over the last twenty years? We ask because we don’t know. Last night we read a few more chapters of Robert Duffield’s book about Lang Hancock (Rogue Bull). Hancock railed against the West Australian government (under Sir Charles Court) for adopting a “spheres of influence policy to developing the iron ore of the Pilbara”. That policy favoured the big four: Hamersley Iron, Mt. Newman, Mt. Goldsworthy, and Robe River.

Hancock advocated a plan that would send ore mostly downhill along the path of the Sherlock River, through a gap in the Chichester Ranges previously unnoticed. Except for a brief haul at the beginning, the rest of the route put gravity to work and required less energy to transport the high-grade ores deep in the Pilbara.

But the project required a new port. Hancock, in a spectacularly bizarre twist, brought Dr. Edward Teller to Western Australia to investigate the use of ‘nuclear tools’ to expedite the development of the Pilbara. One plan, for example, was to bury a nuclear charge deep under one of the region’s high-grade haematite formations and then cook off the bomb. Teller told Hancock there would be no release of radioactive dust into the air because a silicon bubble would form around the immediate area of the blast, while the rest of the deposit/mountain would be reduced to convenient, human-head sized boulders of iron ore.

The craziest application of ‘nuclear tools’ was Hancock’s suggestion of detonating five 200-kiloton nuclear bombs at a depth of 800 feet off Cape Keraudren. This was designed to create a deep water report that could handle the massive freighters hauling ore from the Pilbara. For the rail line through the Chichester Ranges, though, Hancock suggested a new port at Rosnard, where the downhill run from Wittenoom would end.

The WA government played it safe, though. And today, similar plans about expanding port capacity in WA are still being discussed. Is this prudent government stewardship, not rushing to export all the region’s riches in one go? Or is there something else going on?

Hancock even founded two separate newspapers to try and break-up the cosy threesome between the mining community, the government, and the press. The Sunday Independent and the National Miner were probably just ahead of their time, though. Today, though we’re not sure the Australian media is always aware of it, the cost of production and distribution of news and information has dropped to nearly zero with the Internet.

This means genuine, independent analysis of financial and stock markets is possible without having to tow a company line in the pages of a major newspaper that doesn’t want to upset advertisers. Independent financial publishers can also say bad things about companies without fear of losing investment banking business.

But breaking up this cosy monopoly on investment information – where the facts and analysis are embargoed and protected by artificial green fields – only benefits the retail investor if he’s actually interested in getting beyond the front page. Is he?

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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