12/12/2014 - 10:47

A yen for WA gas, ore

12/12/2014 - 10:47

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Amid all the headlines about the opportunities in China, that nation’s North Asian neighbour is retaining its influence in WA.

A yen for WA gas, ore
OPENING DOORS: JBIC has been a core investor in INPEX's Ichthys LNG project

The Japanese government has invested at least $11.6 billion in Western Australia during the past three years, with iron ore and LNG projects the main targets, but much of the investment was before 2014.

Through its wholly owned investment arm – the Japan Bank for International Cooperation – Tokyo has provided loans totalling $1.4 billion during the past 12 months.

However this year's investment is dwarfed by the $10.2 billion committed during the two previous years.

Most funds this year went the way of Roy Hill Holdings, to which JBIC loaned $US900 million for the development of its Roy Hill iron ore mine in the Pilbara.

The agreement was part of the $US7.2 billion project financing package Roy Hill announced in March this year.

One of the Roy Hill project’s joint venture partners is Japanese company Marubeni, which JBIC agreed to loan $US1 billion in March 2013 to enable its participation.

Marubeni was to subsequently receive 12.5 per cent of the iron ore produced from the mine for 17 years, but that increased to 21 per cent with JBIC’s further investment this year.

As a result, Japanese steel mills will be guaranteed 11.55 million tonnes per annum of iron ore produced from the Roy Hill mine for 17 years.

Japan is the world’s second largest consumer of iron ore behind China; it imported 136mt of iron ore in 2013, which was 11 per cent of the world’s imports.

Because of the country’s strong demand, JBIC has been working to secure future supply.

As part of this strategy it has also this year agreed to fund Mitsui & Co subsidiaries $US435 million for the development of the Jimblebar and West Angelas iron ore mines – both of which will guarantee Japan a flow of iron ore.

LNG projects have also caught the bank’s eye in recent years as it keeps to its commitment of investing strategically in projects that will benefit Japanese growth.

Since the start of 2012, JBIC has committed to loan more than $US8 billion to Japanese companies involved in LNG projects under way in, or with reliance on, WA.

They include: the TEPCO Consortium and Kyushu Electric Power (which have interests in the Wheatstone Project); Osaka Gas (which has an interest in the Gorgon Project); and INPEX, Tokyo Gas and Chubu Electric Power (which are involved with the Ichthys Project off the coast of the Northern Territory).

The largest investment has been $US5 billion in project financing for INPEX to develop the Ichthys Project.

 

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