24/09/2009 - 00:00

Court central to relationship with Japan

24/09/2009 - 00:00

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Former premier Sir Charles Court’s long association with Japan and his role in WA’s development are chronicled in a new book.

THE relationship between Sir Charles Court and the Japanese brought outstanding benefits to Australia and Western Australia and was probably the most remarkable involving any politician in Australia's history. It grew out of need on both sides, and was sustained by mutual respect, which continued until Sir Charles' death in 2007, aged 96, although its effects will remain always.

In 1953, Court won the Legislative Assembly seat of Nedlands for the Liberal Party at the state elections, but spent six years in opposition before the Liberal and Country League won government in 1959. David Brand (later Sir David) became WA's premier, and Court was made minister for industrial development and the north-west, and for railways.

Before the 1959 WA election, Court had played a major role in setting the election policy, which included a focus on the north based on his vision that it was vital it be developed for economic and defence reasons. He knew money could be made from the state's vast iron ore resources, particularly in the Pilbara.

In 1938, Japanese Nippon Mining exported iron ore from Koolan Island in WA's north, but prime minister Joseph Lyons banned its export shortly afterwards with Japan at war with China. Court wanted to persuade the federal government to lift that embargo.

Court's first official visit to Japan was in January 1961 for trade talks, and to visit steel mills and iron smelters. The state government introduced temporary (iron ore) reserves in March 1961 with the aim of attracting developers.

Western Mining Corporation won the first tender but, as the ore was for the Australian market, there was no change to Commonwealth policy. To force the removal of the embargo, tenders were called for deposits at Mt Goldsworthy in the Pilbara. The successful tenderer was Goldsworthy Mining, a consortium of American and Australian companies. Some relaxation of the iron export ban followed but it was not completely removed until 1966.

In 1962, the Hamersley Iron company was formed, owned 60-40 by Conzinc Riotinto and Kaiser Steel of the US. While Hamersley sold ore to other countries, sales to Japan, worth around $540 million over 16 years, were by far the most significant and the largest contracts written by any company then operating in Australia.

Before moving into the final stages of the Hamersley Iron agreement, Makoto Watanabe, representing nine steel mills, visited Perth to get answers to three vital questions. Minister for mines, Arthur Griffith, and Court had been forewarned about the questions and discussed how to respond. Court then surprised Watanabe by answering either 'yes' or 'no'; talks he expected to take all week had been resolved in one meeting. During a later visit to Japan, Court found his reputation as a 'yes/no' man preceded him. This time the steel company presidents had nine questions. Very aware of how vital the negotiations were, Court was 'extremely nervous' as he greeted the presidents, not knowing what questions would be asked until they were revealed on a board. He quickly realised how to respond. Against six he wrote 'yes' and 'no' alongside the remaining three. There were audible gasps and looks of amazement; it had been expected that each question would take days to negotiate.

Hamersley shipped its first ore to Japan in August 1966, having in 19 months built two towns, an open-cut mine, 320-kilometres of the heaviest duty railway in the world, two power stations and a port. Further reserves were then developed at Paraburdoo.

Another major iron ore development was the Mt Newman project based on Mt Whaleback deposits and started by a consortium of American and Australian companies. When the agreement was finalised in 1964, Mitsui-Itoh Iron, later Itochu, had a 10 per cent interest. This time, Japanese steel mills entered into a 15-year contract for 100 million tons of ore worth well over $750 million, which was said to be one of the biggest single raw material purchases in the world.

Further deposits were found in the Robe River valley in the West Pilbara. Court recalled years of frustration and arguments about allocation of leases, delicate negotiations with the Japanese, and bringing together a committed and viable group of participants.

Finally in 1969, the world's biggest iron ore sales contract to that time was finalised with the Japanese and Robe River Iron Associates. A new partner was Mitsui Iron Ore Development (30 per cent). While Court praised the parties involved and the achievement the agreement represented, US-based Cleveland-Cliffs Iron president Stu Harrison acknowledged another factor in a letter to Court:

"It must be a source of great satisfaction to you to ... realize what a vital part you had in making this whole thing come true. It is not an over-statement to say that if it had not been for you, I believe very little of it would have come to pass."

Court believed passionately that WA must not become a quarry. To ensure the long-term future of communities in the north, commitments to process iron ore were included in agreements.

Here again Japanese expertise and money were needed. A pellet plant was built by Robe River, but when Hamersley Iron agreed to build another, the Japanese had to modify contracts after intervention from the federal government. Having given assurances that Australia honoured contracts and there would be no interference from the Commonwealth, Court felt betrayed. To him, the Commonwealth did not understand what a triumph it was to achieve the building of two pellet plants because of the capital expenditure required. Rocketing world oil prices in the late 1970s prevented the opening of further pelletising plants and forced the closure of the two existing ones. While fostering relationships with the Japanese, Court invited up-and-coming Japanese executives to visit, realising some would one day be chief executives and chairmen, and their decisions could be influenced if they were well informed about WA. One, Takashi Imai, became head of Nippon Steel and the senior and most influential industrialist in Japan, representing it internationally.

In a personal letter to Court in 2005, Imai wrote: "You really are the one who fought and built the foundation for the relationship between Australia and Japan, which, today, has become so firmly cemented as to make our two nations irreplaceable trade partners."

During his time as a minister in the Brand government from 1959 to 1971, other resource needs led to Court having further rewarding contacts with the Japanese. Solar salt, bauxite, nickel and woodchips were other lucrative exports to Japan in which Court was involved.

The relationship did not stop during Court's three years in opposition, from 1971 to 1974. During this period he continued to inform Japanese corporations of progress in projects and wrote letters of congratulation about milestones achieved.

With the return of a coalition government in 1974, Sir Charles Court (knighted in 1972) became premier. The major achievement of his premiership was the North West Shelf gas project, which had its origins a decade earlier, and came from another Court obsession, to find a major source of environmentally acceptable energy.

Woodside Oil and the North West Shelf joint venture found major gas reserves at North Rankin off the north-west coast in 1964. The domestic market was small and eastern Australia had other sources, so gas needed to be exported to sustain a development project of the size required. Court turned to Japan as a major buyer of liquefied natural gas (LNG).

The project was seriously hampered when the Labor Party, led by Gough Whitlam, won the 1972 federal election and Rex Connor became minister for minerals and energy. He wanted to control Australia's resources, and announced that the government would buy and distribute all gas.

In addition, companies became frustrated by Connor's rudeness and the delay in getting decisions.

In contrast, Court had set up a most successful arrangement where only one department, headed by John Parker, had to be dealt with over projects. The speed with which matters were investigated and answers given, and then brought to conclusion by Court, became legendary among resource companies and financiers.

Disillusioned at the Common-wealth's attitude, the joint venturers mothballed the North West Shelf gas project in 1973. Shortly afterwards, gas prices doubled after a dramatic jump in oil prices. Encouraged by the return of Court to government in 1974, the joint venturers reactivated plans.

The North West Shelf was a project of considerable magnitude and complexity. Without sales to Japan, it would not have gone ahead when it did.

With Court's encouragement, Mitsubishi Corporation and Mitsui & Company (MIMI) were appointed in 1979 to advise on the LNG phase of the project, and eventually became partners. The joint venturers agreed to go ahead, supplying gas to the WA market first (at Court's insistence), from which it was not expected to make a profit, and marketing LNG to Japan in a second phase. After nearly a decade of planning, it was announced in September 1980 that the North West Shelf development project would proceed.

Many difficulties had to be overcome but spoils were shared. Court fought for WA and the nation to properly share both the risks and the rewards. The hardest and most traumatic fight was to ensure that WA received the major share of royalties in exchange for building and operating the Dampier-to-Perth pipeline, without which the project could not proceed.

Court resigned as premier in January 1982, but the relationship with the Japanese did not cease when he left government, just as their respect for him remained. On Hideaki Ueda's first visit to WA as Japan's new ambassador to Australia, he met with Court as a 'demonstration that Japan valued old friends'.

Besides Court's amazing passion and energy, he had the ability to think more clearly than most, and to learn and adapt. The relationship he had with Japan was remarkable, particularly in light of his wartime experiences, when he had fought against the Japanese and seen evidence of their cruelty and brutality. He showed wisdom in the choices he made about WA's relationship with Japan, and zealously pursued the goals he believed would bring the most benefit. It is not possible to judge accurately, but it is certainly likely that, without Court, the iron ore industry would not have started when it did, lasted as long, developed as rationally, and benefited as many.

Equally, it is certain the North West Shelf gas project would not have eventuated when it did, nor would Western Australians and Australians have gained so much.

n This is an edited extract from Ronda Jamieson's 'Charles Court and the Japanese: Personal and Commercial Friends', a chapter in the book An Enduring Friendship, Western Australia and Japan - Past, Present and Future.

 

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