The Cold War gave us proxy wars between the Soviet Union and the United States in Afghanistan and Nicaragua and countless other places. The commodities boom has given us the iron ore wars. This was doesn’t have soldiers with guns. It has Japanese and Chinese capitalists with deep pockets…and rival plans to secure Australian resources.
With the iron ore of the Hammersley Range locked up between BHP (ASX:BHP), Rio Tinto (ASX:RIO) and a handful of other players, Japan and China have begun a proxy war for control of the iron ore in West Australia’s Mid West region. “Japanese interests have made a strategic play to head off Chinese rivals in the race to build $3 billion of infrastructure,” report Kevin Andrusiak and Nigel Wilson in today’s Australian.
“Murchison Metals (ASX:MMX), backed by Japanese trading giant Mitsubishi, yesterday launched a $1 billion bid for Midwest (ASX:MIS) Corporation—backed by Sinosteel. This threatens to spoil the hopes of Yilgarn Infrastructure and its Chinese backers to secure rights to build iron ore and rail facilities near Geraldton.”
It is eerie how the development of WA’s resources is playing out along exactly the same lines as it appears to have played out in the late 1960s and early 1970s. At that time, it was Japanese, British and American steel makers trying to make cosy deals with a West Australian government that had clear favourites. The Brits and the Americans have given way to the Chinese—but you still have an erratic WA government that can’t decide whether it wants to welcome foreign capital to WA, or just lock up lucrative royalty payments.
Outgoing Environment Minister Malcolm Turnbull and outgoing resources minister Ian Macfarlane gave the Federal government’s approval yesterday for the massive Gorgon Gas project on Barrow Island off Western Australia. We get the feeling Australia might be on the cusp of an even larger offshore gas and oil drilling boom.
The Daily Reckoning Australia