China 'needs more WA iron ore'

Angela Pownall

WA's mining boom is not over because China's high demand for iron ore is still growing, the head of an Australian chamber of commerce in Shanghai says.

AustCham Shanghai chairman Peter Arkell said the Chinese Government's urbanisation policy was driving continuing demand for WA's high-quality iron ore.

Almost half China's population of 1.4 billion live in rural areas and many are impoverished subsistence farmers.

Their low productivity prompted the Government to move millions of people into cities to boost their contribution to the nation's economy as workers and consumers.

Mr Arkell told _The West Australian _he was disappointed with the perception in Australia that the mining boom was over. "We are selling more iron ore here year on year," he said. "Last month's was far greater than the month before."

Mr Arkell, who has headed AustCham in Shanghai for 12 years, compared China's current state of development to that of the US in the mid-1800s.

"To feed a population, you don't need more than 10 per cent of the population doing rural activities. But in China, it's just under 50 per cent (doing rural work)," he said.

"These are unproductive, not contributing much to the GDP of the nation. It's very important for the economy to get to the point where the rural workforce is also 10 per cent, and get the other 30-40 per cent into the cities doing something more productive."

China's population is expected to keep rising until 2030 when it is projected to peak at 1.53 billion people.

WA accounts for 80 per cent of China's investment in Australia's mining and energy sectors.

Last year, WA exported 550 million tonnes of iron ore, 59 per cent of the total volume of China's iron ore imports. Mr Arkell said China produces 300 million tonnes of iron ore a year, but at a much higher cost than in WA because it has to dig up one billion tonnes of material to produce that.

"China is shifting to a domestic market," he said. "The fire has been lit under the economy so we are going to be using all the resources."

But a return to high iron ore prices cannot be expected.

"We got caught. The price went to extreme because we could not meet it (demand)," Mr Arkell said.

Sam Phoen, ANZ China's head of global markets, said Australia seemed to be more worried about China's economic growth slowdown than China was.

Angela Pownall travelled to China as a fellow of the Asia-Pacific Journalism Centre