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Legislative Council - Fifty-First Parliament, Second Session (51-2)
2008-05-01 Daily Xml
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Question Time

MINERAL RESOURCES

The Hon. D.W. RIDGWAY (Leader of the Opposition) (14:19): I seek leave to make a brief explanation before asking the Minister for Mineral Resources Development a question about foreign investment in our mineral resources.

Leave granted.

The Hon. D.W. RIDGWAY: Minister Holloway led a delegation to China last month that was aimed at boosting China's investment in South Australia's iron ore, uranium and renewable energy industries. His visit coincided with reports that 10 Chinese companies have been forced to withdraw their foreign investment applications to buy into Australian resource companies after pressure from the Rudd government. In fact, one of the companies that has stalled its investment is China Metallurgical, the same company minister Holloway met with last month. My question is: does the minister agree with federal Labor that China's push to buy Australian resource companies is not in the national interest?

The Hon. P. HOLLOWAY (Minister for Police, Minister for Mineral Resources Development, Minister for Urban Development and Planning) (14:20): The question of foreign investment in Australian companies is, of course, a matter for the Foreign Investment Review Board, which comes under the federal government. That board has been in place for decades now; I think it was set up originally in the 1970s when there was some concern about Japanese investment into Australia's iron and coking coal industries.

In relation to foreign investment, it is my personal view that the commonwealth government is correct in carefully considering that. If, for example, a company (say, a Chinese company) were to control a major resource company such as BHP or Rio Tinto—and one can argue about what control is, whether it is more than 15 per cent or 20 per cent, and even that is a moot point—obviously that would inevitably raise concerns. However, it is interesting that just recently Sinosteel, a Chinese company which I visited on my trip and which has opened an office here in Adelaide, has taken over a smaller iron ore company within Western Australia. Clearly, China will be the purchaser of about 40 per cent of many of the world's resources, so it is by far the largest player in the resources market.

With rising commodity prices, Chinese companies will inevitably seek an equity position within Australian companies. That could be good in terms of ensuring there is a long-term relationship between these contracts, and that is important for the country. At the same time, if Chinese companies, particularly the government-owned, as many or most of them are, were to control our larger companies, that would be of great concern to this country. So, I believe the commonwealth government is right in giving this matter some careful consideration.

As we have already seen with the Sinosteel case, inevitably, I think each case will be considered on its merits, as happened under the previous federal government which I think refused the takeover of Woodside by Shell because that was deemed not to be in the national interest. I think these matters will need to be determined on a case-by-case basis but, as I said, whatever my personal views might be, which I have shared with the council, the fact is that it is a matter for the commonwealth government, which I am sure will have a much greater level of input into the debate than I have been able to get. I am sure that it will, through its review, come to the right decision.

In relation to my visit to China, I am obviously seeking investment—not necessarily equity or control over companies within the state—through the purchase of their long-term contracts. Foreign companies can be involved in resource exploitation in many ways. It could be through joint ventures on new projects, take-up contracts (long-term contracts) and so on which will, in turn, provide the capital to pay for much of the infrastructure development we need in the state. The debate is much more complicated than one simply about equity or control, but I have full confidence that the federal government will give this matter very careful consideration, particularly in relation to Rio and BHP, and come out with the right decision.

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