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China urged to sink cash into WA
WA News / Matt Jelonek China urged to sink cash into WA

Colin Barnett says China should emulate the way Japan became a "foundation investor" in WA and has nominated two projects in which to plunge its cash - the stalled Oakajee port and rail project and the Browse gas project.

The Premier said China had learnt from the way Japan got involved in "true frontier" projects such as iron ore projects at Tom Price and Mt Newman in the 1960s and later the North West Shelf.

Such investments in high-grade projects saw Japan make good returns, even though the Japanese companies involved took relatively small shareholdings, he said.

Addressing a Sydney conference about China, Mr Barnett said the early experience of Chinese investment involved sometimes aggressive sharemarket action and the purchase of low-grade reserves.

"I think it's fair to say that many of the state-owned enterprises that invested paid too much, got involved with companies that lacked real balance sheet substance and bought reserves they really didn't know exactly what they were," he said.

He said a more mature approach had seen Chinese companies now buying higher grade resources and partnering "quality" international and Australian companies.

"For China to truly match Japan, there is one more task ahead and that is for China, through its state-owned enterprises, banks and other organisations to be truly a foundation investor and foundation customer for a truly pioneering frontier project," he said.

He said two projects came to mind - development of the offshore gas reserves in the Browse Basin and the $6 billion Oakajee project.

With Federal Treasurer Wayne Swan in the audience, Mr Barnett again criticised the mining tax, saying it had offended Australia's Chinese customers because it targeted coal and iron ore - their main interests.

"It was the first time in my 20 years around the mining industry I have ever heard the term 'sovereign risk' applied in an Australian context," he said.