Japanese steel maker warns of Chinese investment

The chairman of one of Japan's biggest steel producers has warned that state-controlled Chinese investment in WA's resources must be monitored carefully because of its potential to create "intense strain" with nations in the region competing for Australian minerals.

And in a thinly veiled threat to BHP Billiton and Rio Tinto, Akio Mimura said countries must be wary of letting major resources companies grow to a size where they could abuse their market power.

Mr Mimura, of Nippon Steel, told the University of WA's In the Zone conference yesterday that Japan and Australia's long-term relationship, which had helped develop many of the State's major resources projects, must not be taken for granted in the rush to embrace the rapidly expanding Chinese economy. "The rapid expansion of the presence of China seems to have the potential to create intense strain," he said.

Mr Mimura said that market-based countries such as Japan would watch "with great concern" how the Federal Government would handle this investment and the risk that state-owned companies may seek to "lock away" resources.

He also said there was a grave risk to the international resources trade if miners grew so big as to dominate their markets and charge extortionate prices.

But Premier Colin Barnett played down concerns about relations with WA's two major trading partners, saying they were part of normal commercial pressures and he expected them to "wash over" in the long term.

Des King, the head of Chevron's division developing renewable energy technologies, told the conference that even though Chevron was the biggest producer of geothermal power in the world it would take decades to supplant traditional power sources.