Minerals - A Dynamic Partnership

Japan and Australia’s forward-looking and dynamic relationship owes much to Australia’s reliability as a commodity exporter.

The growth of Australia’s minerals sector in the 1960s was spurred by Japan’s post-war economic expansion, which created a large and geographically-accessible market for minerals such as iron ore and coal.

Well located to take advantage of Japan’s developing market, Australia also has a history of responding well, with the right resources at competitive prices. It is a partnership that has grown over the past four decades, and today Japan is Australia’s leading trading partner.

Sustainable development

The trade relationship has further evolved as the speed and depth of globalisation have increased.

Globalisation has reshaped the way our nations achieve development, growth and prosperity. In particular, a shared commitment to sustainable development has seen purely economic considerations complemented by the responsibilities of social and environmental stewardship.

The Australian minerals industry’s embrace of sustainable development has led to a paradigm shift in its approach to building international competitiveness, securing market access, the safety and health of its employees, and its interaction with the environment and the communities in which it operates.

It sees its contribution as going beyond the economic dimensions of wealth creation to the wider considerations of society and the environment within which it operates.

This is considered essential to the industry’s continued ‘social licence to operate’, including its ability to access capital, people, land, ore, and markets. It is also critical to overseas confidence in our continued capacity to supply products to meet market needs.

Australia’s minerals industry

Today, the Australian minerals industry is the world’s third largest by value (>> panel p221). It represents around 8.5% of Australia’s GDP, and over the past 20 years has contributed some A$500bn directly to Australia’s wealth.

In financial year 2003/4, the minerals industry generated exports of around A$42bn, about 35% of Australia’s total merchandise exports, or 28% of total exports of goods and services.

More than a quarter of our minerals resources exports, including oil and gas, went to Japan (2002/3 figures). Our major minerals exports to Japan (2003) were:

• coal (A$4.5bn);
• iron ore (A$2.0bn);
• aluminium (A$1.3bn); and
• liquefied natural gas (export details are confidential).

Japan is also a key source of direct foreign investment in Australia – about A$48bn as at 30 June 2003.

Developing countries

Much is made of China’s extraordinary growth and demand for minerals products. Yet China is ranked only third as a customer of Australian resource products, behind Japan and Korea.

Certainly we have seen the shifting of metals consumption from the powerhouses of Japan, the USA and Germany to developing countries, particularly China. But much of this industrialisation relates to foreign direct investment from these and other developed economies, notably Japan.

Asia’s higher-income economies remain important growing markets for new Australian export sales, while the high value-adding manufacturing of Japan’s car makers and steel industry remain a major market for Australian minerals and metals.

However, Australia knows only too well that these export markets are not there for the taking. There is no inherent loyalty to Australia, nor should we expect any. Nor is there any guarantee that Australia’s inherent comparative advantages in natural geological wealth will secure any international company’s choice of a strategic location from which to supply global markets.

Rather it is the Australian minerals industry’s record of proactive change that speaks to both customers and investors. Innovation and technology underpin much of the industry’s sustained competitive strength in operational efficiency and its high labour and capital productivity. Technology is also fundamental to meeting our responsibilities for improved environmental management, particularly in managing climate change (see panel). The industry has gone from strength to strength in greater inclusion of neighbouring communities, and in creating infrastructure, wealth and jobs in regional Australia.

The stature of the relationship between Japan and Australia and, in particular, our respective business communities, is strong and continues to grow. The Australian minerals industry is keen to cultivate and promote our mutually beneficial partnership, to pursue our common interests, and advance the prosperity of both countries and our contribution to the global community through sustainable development.

Mitchell H Hooke, Chief Executive,
Minerals Council of Australia.
>> www.minerals.org.au