PREMIER Colin Barnett is considering another visit to China to spruik investment in Western Australia, most likely including his pet Oakajee port project, which needs a major capital injection to get off the ground.
While Mr Barnett’s office would not provide details of the trip or even confirm it was taking place, such a visit would underscore the importance of China to WA, especially in the Mid West where development has partly stalled as Chinese, Japanese and local interests have battled over infrastructure.
Murchison Metals, a local partner in Oakajee with Japan’s Mitsubishi, has admitted it can’t fund its agreed portion of the port, a project Mr Barnett has stated would be better off with direct Chinese investment. Also, Chinese miner Sinosteel has put its Weld Range project on hold, citing infrastructure issues.
Mr Barnett travelled to China in July 2009 in a high-profile trip that coincided with a low point in Sino-Australian relations.
At the time, the relationship was under stress due to: high pricing of contracted iron ore exports to China; the detention of Rio Tinto’s iron ore manager Stern Hu in Shanghai; moves to allow the merger of Rio Tinto and BHP Billiton’s iron ore operations; and resentment in China over the federal government’s approach to Chinese investment, especially around Chinalco.
Mr Barnett arrived after Chinalco’s deal to take a big stake in Rio Tinto at the depths of the GFC in early 2009 was abandoned, a failure that was partly viewed as being due to the discouragement of the Australian government, even though it had not yet made a decision to formally block the deal.
Mr Barnett found himself playing a diplomatic role due to the way all these issues were linked to the resources sector in which this state is dominant.
According to a classified US diplomatic cable detailing discussions between Mr Barnett and then Perth-based US consul-general Ken Chern, much of the visit was occupied by sensitive issues relating to issues of national importance.
In the cable released recently by Wikileaks, Mr Chern reported that Mr Barnett “was forced to do triage” following the rejection of a bid by Chinalco to boost its share in Rio Tinto, which then sought an iron ore joint venture with BHP Billiton.
Even with so much else going on during that 2009 visit, less than a year after Mr Barnett won office, Oakajee’s development and the nearby mines that would use it were a major element of the tour.
During the trip he signed an agreement with Ansteel, a partner in the Karara iron ore project, to conduct a feasibility study for an integrated iron and steel plant and rolling mill at the Oakajee industrial estate.
According to the US cable, Mr Barnett also had to deal with concerns about Mid West development from Chinese-owned Sinosteel.
“Further complicating Barnett’s trip was an unusual protest read by the Chinese Consulate General in Perth at an official pre-visit briefing, complaining about delays by the WA Environmental Protection Authority in approving iron ore mining investments by state-owned Chinese company Sinosteel in WA’s Mid West region,” the cable stated.
“After arriving in China, Barnett said Sinosteel’s treatment had been disgraceful, adding that his office was intervening, not to limit the EPA’s independence, but to negotiate better outcomes. ‘We should not be leaving our major trading partner alone trying to work its way through the maze of our environmental protection processes’.”