China - Friend or Foe?

For Australia this is a very pertinent question.  We sell a lot of resources to China and import considerable amounts of finished goods.  There has been somewhat of a question mark about Chinese companies involved in electronics and communication equipment with one recently being excluded on security grounds from the new NBN network in Australia.  And there is a lot of chatter about the illicit cyber activities of China.

A recent US publication seems to state in no uncertain terms that China's territorial ambitions are somewhat worrying.

See below where part of the material is reproduced.

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The US trade publication Defense News last week posted a video on its blog from a US Naval Institute conference featuring an extraordinarily blunt assessment of China's maritime strategy and ambitions from US Navy Captain James Fanell, Deputy Chief of Staff for Intelligence and Information Operations for US Pacific Fleet. The moderator describes Fanell as the 'top intelligence officer' in the Pacific Fleet, which means he is advising some of the US military's senior decision-makers on China's military strategy and capability.

Fanell's language is, well, bracing. He calls China 'hegemonic' and says it displays 'aggression'; he claims China 'bullies adversaries' and that it has become a 'mistrusted principal threat'. Watch Captain Fanell's presentation from about 21 minutes into the above video, or read below for some more select quotes:

• '(China's) expansion into the blue waters are largely about countering the US Pacific fleet.'
• 'The PLA Navy is going to sea to learn how to do naval warfare...Make no mistake: the PRC navy is focused on war at sea, and sinking an opposing fleet.'
• On China Marine Surveillance, which supervises and patrols China's claimed maritime territory: 'If you map out their harassments you will see that they form a curved front that has over time expanded out against the coast of China's neighbours, becoming the infamous nine-dashed line, plus the entire East China Sea...China is negotiating for control of other nations' resources off their coasts; what's mine is mine, and we'll negotiate what's yours.'
• 'China Marine Surveillance cutters have no other mission but to harass other nations into submitting to China's expansive claims...China Marine Surveillance is a full-time maritime sovereignty harassment organisation'.

'In my opinion, China is knowingly, operationally and incrementally seizing maritime rights of its neighbours under the rubric of a maritime history that is not only contested in the international community but has largely been fabricated by Chinese government propaganda bureaus in order to "educate" the populous about China's rich maritime history, clearly as a tool to sustain the Party's control.'
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Northern and Western Australia has embraced Chinese businesses [mostly state owned enterprises] to invest in resource development, including land development.  Are we adequately assessing the longer term risks versus the shorter term gains, especially in light of assessments such as that above?

Many say it is the same as Japanese investment in the period 1960 - 1980.  But in those times, it was private capital, not government capital that was taking the risk. 

The issue of Chinese investment is something to consider, especially in light of security assessments and I have no doubt that the debate will continue. 

With Chinese New Year rapidly approaching, and a strong Chinese influence in the development of the NT over the past 150 years, we have definitely benefitted from the people of Chinese ethnicity in the NT as well as in cities like Darwin, and there is a strong Chinese influence locally......for the better. 

BUT......private citizens are not the same as a government, in most people's view.  

Gas to Diesel Fuel - Is There a Case for a Plant in Australia?

There is a lot of gas in Australia, and less it seems of liquid fuels suitable for diesel or petrol.  Could there be a case for gas to diesel conversion? Economics seem to be positive, particularly for remote areas.  Surprise suprise - that is where the gas is, as well as there being major needs for diesel for transport fuel for trucks and power generation, all of which is trucked in from refineries located a long way from where the fuel is used.

A recent article explores this in some detail -
 http://www.miningnewspremium.net/storyview.asp?storyid=9590380&sectionsource=s0 .

The major Australian engineering group GHD has been examining this idea in some more detail, and presented some results of a study focused on the WA Canning Basin recently.

“The miners are very reliant on diesel. Some use it for their trucks, some use it for power generation and it’s costing them a lot of money,” GHD studies manager Jonathon Beales said at the Australian Gas Technology conference in Perth  recently.

“Talking to a number of our clients, we’ve estimated the cost of transporting diesel from Port Hedland or Kwinana adds 25 per cent to the cost they have to pay for it.”

Add to the fact that 40-50% of diesel is currently imported and there’s currently a shortage of diesel – also in the order of 40-50% – and there’s a compelling case for miners to subtly encourage gas producers to consider Gas-To - Liquids [GTL] projects for their commercialisation plans.

GHD estimated a 55 tonne iron ore project could use up to 1 million litres of diesel per day.

As an industry, Beales reckoned, the iron ore sector used 11.1 billion litres of diesel in 2010.

Beales said synthetic diesel delivered from a GTL plant could cost miners a whopping 85% less than having to import their fuel, given the right circumstances.

But what’s in it for gas producers?

“In a number of discussions with companies we’ve had in that region, we’ve found that they are sitting on a great resource but are struggling to find a way to get it to market,” Beales said.

It seems to be a win-win for both industries and would increase Australia’s liquid fuels security to boot.

While the cost of developing a plant is high - possibly $1 billion - it would add to Australian local fuel supplies while offering some real cost savings along the west coast of Australia for mining and other resource projects including agricultural and pastoral developments.

Developing the GTL plant close to the gas seems sensible, but will it happen?  Do not hold your breath, yet! 

Should Australia Be Selling the Farm??

Not according to a leading American resources analyst, anyway. And many Australians probably agree.

Leading American investment analyst James Dines has criticised Australia for allowing China to buy large swathes of its natural resources in what he calls "resource imperialism".

Australia was in danger of squandering its "irreplaceable inheritance ... traded for easily printed paper", Mr Dines said.

Mr Dines, the keynote speaker this week at the RIU Victorian Resources Roundup conference, told an audience of mining executives, brokers and investors that the end of capitalism as we knew it had arrived and that we were in the second great economic depression.

His entertaining, if alarming, speech would have prompted mixed feelings among a crowd that included executives with a strong Chinese presence on their share registries.

State-owned Chinese companies are also becoming a major foreign investor in Australia.

Mr Dines, editor of the Dines Letter and author of numerous books, described natural resources, including farmland, as a source of real wealth that should be kept for "your descendants".

By pursuing resource imperialism, China was building stockpiles of commodities well above its immediate needs, such as rare earths - it already produces 97 per cent of the world total - and copper.

The Australian Foreign Investment Review Board blocked a $252 million bid by state-owned China Nonferrous Metal Mining to acquire Australian rare earth miner Lynas in 2009.

So, what is motivating China?

The world's most populous country wants to secure its resource needs for centuries to come.

More in the article here -
http://au.news.yahoo.com/thewest/business/a/-/national/10369499/australia-shouldnt-sell-farm-analyst/

And it is not only Australia.......China [mostly through state owned enterprises - and that is the nub of concerns] is much more active in many less developed countries, especially in Africa and South America, even Afghanistan which seems to have some large mineral deposits that are largely unexplored, and which the Chinese are eyeing off.

Some say they have stuffed their own land for agriculture and horticulture with poor farming practices and pollution and they need to find other soils........to do the same???

Definitely resources imperialism!