This week's landmark decision on the preferred developer for the Oakajee port project has reminded Western Australians that Japan still plays a very big role in the state's economy.
This week's landmark decision on the preferred developer for the Oakajee port project has reminded Western Australians that Japan still plays a very big role in the state's economy.
It has also highlighted the critical role played by foreign capital in this state's development.
In the lead-up to the Oakajee decision, it was often characterised rather simplistically as a choice between China and Japan, since Chinese entities backed the losing Yilgarn consortium while Japan's Mitsubishi backed the winning consortium.
The takeover battle involving China's Sinosteel and local companies Midwest Corporation and Murchison Metals added spice to the issue.
Sinosteel obtained federal government approval earlier this year to buy Midwest and has since moved to a controlling 54 per cent shareholding, in what was the first hostile Chinese takeover in Australia.
Sinosteel has also applied to acquire a big stake in Murchison but, at the time of writing, Treasurer Wayne Swan, who oversees these matters, had not made a decision.
In the absence of a decision, policy observers have pored over Mr Swan's public comments and speeches to try and decipher the government's policy on Chinese investment.
Most observers have concluded that the feds are uncomfortable about the rising number and value of Chinese investment proposals in Australia.
It has been suggested that Sinosteel's Murchison proposal is a bridge too far, because it could enable 'China Inc' to gain control of a big chunk of the Mid West's potentially lucrative iron ore deposits.
That, in turn, could allow Sinosteel to sell the iron ore to itself at below-market prices, thereby robbing Australia of export sales and tax revenue.
The intense focus on Sinosteel is, to some degree, surprising, because most of what it's doing is not new.
Sinosteel is not the first big company trying to build a vertically integrated business, from mine to finished product, and it won't be the last.
Nor is it the first big investor in WA to come from a non-market economy.
And nor is Sinosteel a new investor in Australia.
Sinosteel broke new ground more than 20 years ago, in 1987, when it signed the Channar mining joint venture with Rio Tinto subsidiary Hamersley Iron.
The Channar project was one of the largest Chinese overseas investments undertaken to that time.
Other Chinese investors have followed Sinosteel's lead.
BHP Billiton signed its own landmark deal in 2004 when it established the Wheelarra joint venture with four Chinese steel mills.
More recently, Chinese metals group Chinalco acquired a 9 per cent stake in Rio, and Rio said it was looking for a Chinese partner to help develop the giant Simandou iron ore project in Africa.
A host of smaller mining and exploration companies - and some very big oil and gas developers - have signed their own deals with Chinese partners.
All of this suggests that industry in WA is keen to build close ties with China, to gain financial and technical backing and secure sales contracts.
As well as the increased Chinese investment, Russian and Ukrainian companies have become big investors in WA.
Russia's Norilsk Nickel is WA's third largest nickel producer after paying $8 billion for the LionOre group last year, while the Ukraine's Gennadiy Bogolyubov is the new owner of Consolidated Minerals after his Palmary Enterprises completed its takeover earlier this year.
One of the biggest Chinese investors has been sailing under the radar.
Hong Kong-listed China-based steel producer Citic Pacific Ltd is spending $5.2 billion developing its Sino Iron project in the Pilbara from the ground up.
These examples add to the many investments in Australia by foreign entities.
Japanese companies have been at the forefront of this investment, and while Japan has been in the economic doldrums for some years, it remains a huge export market and powerful source of capital.
Australia has a lot to gain by working constructively with international capital, on the premise that Australia can also protect its own interests.
That is partly influenced by the ownership of Australian assets but is more fundamentally determined by the regulatory framework in this country.
All investors, local or foreign, should be subject to the same legal and commercial responsibilities.
