Foreign investment necessary for Australia’s growth
The deputy managing director of Citic Pacific Limited has told a conference in Perth that Australia’s foreign investment regulations are stringent and appear to cause confusion among investors.
Peter Lee told the In the Zone conference at The University of Western Australia that Australia has one of the most stringent regulatory systems in the world.
“Australia needs a first class regulatory regime,” he said.
Lee said that decisions about foreign investment should be based, subject to the national interest, on commercial considerations and be made on a timely basis.
“The question should not be whether we should have Chinese investment but how Chinese investment should be attracted.”
He said that Chinese investment currently delivered the best outcome for Australians and there were a number of advantages.
“China is well and truly ‘open for business’. While international investors face major challenges securing finance, Chinese funding is available,” Lee said. “Chinese projects have more flexibility to get development projects under way, for example, undertaking engineering and design work while obtaining project approvals.”
He drew on the experiences of CITIC Pacific’s Sino Iron Project, a massive magnetite iron ore project under construction in the state’s north-west that, once complete, will become the first 100 percent Chinese-invested mining company to ship iron ore products from WA to China.
The project, with a capital cost investment of approximately US$4 billion, will include an open pit mine, concentrator, pipeline, pellet plant, gas-fired power station, desalination plant and port facility. It will create some 4,500 jobs, contracts for local industry and economic, social and environmental benefits.
“Major investments such as the Sino Iron Project are among those that prove just how successful collaboration between China and Australia can be,” Lee said.
In a session moderated by Sam Walsh, chief executive Rio Tinto Australia Operations, the President of the North West Shelf Australia LNG, Peter Cleary, said Australia needs to continue to develop a relationship with its Asian neighbours that is based on mutual respect, trust and understanding.
Cleary said it was important to overcome the cultural distance between Australia and its Asian trading partners.
“Through the rise of Asia we are now in the right place at the right time and we should capitalise on that,” Cleary said. “We need ambassadors to Australia. Through the Australia-China gas fund we train Chinese executives who remain the greatest ambassadors to Australia when they return home.”
Gualdino da Silva, President, National Petroleum Authority, Timor Leste, said that despite his country being a relative newcomer to the region, as an independent state, it would become increasingly significant to regional resources activity.
He said the country was benefiting from international support and investment, including the assistance of researchers from UWA in geological mapping.
Despite the inadequate infrastructure and other limitations for the fledgling country, Da Silva believed the country was an attractive place for investment and was a stable exploration area that would continue to be improved.
“One day we will become real player and real supplier of resources to the region,” he said.
FIRB approves A$271 million China investment in Centrex
Australia’s Foreign Investment Review Board (FIRB) has approved a Chinese-based investment worth up to A$271 million in South Australia iron ore developer, Centrex Metals Limited.
The FIRB decision is unconditional and has cleared the way for China’s third largest steel group, Wuhan Iron & Steel (Group) Co (WISCO), to earn a 60 per cent stake in the iron ore rights to five Centrex-owned tenements on South Australia’s southern Eyre Peninsula.
WISCO has informed Centrex that China’s National Development Reform Commission (NDRC) has also approved its investment in the Australian iron group. WISCO is in the process of gaining approval by the State Department of Commerce.
The placement will inject up to an additional A$186 million directly into Centrex, with staged payments based on achieving progressive JORC Inferred resource milestones ranging up to two billion tonnes.
Centrex and WISCO will also form another joint venture on a 50:50 basis, to build a cape size capable deep water export port north of Tumby Bay, at Centrex’s wholly owned gulf-front land at Sheep Hill.
“What this means is that Centrex will enter 2010 with a well funded iron ore growth strategy that under existing contracts and commitments, is already a minerals export business worth around $500 million in the next few years,” Centrex chairman, David Lindh, said.
“Significantly, all of the cornerstones are now in place to rapidly escalate our iron ore growth on Eyre Peninsula into a billion dollar business with further and considerable multi-project development opportunities.,”