80 Ambassadors making the acquaintance of kangaroos, koalas and wombats. Foreign Minister Julie Bishop certainly knows how to show the diplomatic corps a good time. The get to know you session with a collection of iconic Australian marsupials was a fitting end to a fascinating trip to her home state of Western Australia.
We had an in-depth discussion on Australia defence and security policy, joined by Defence Minister Senator David Johnston, also a Perth-based politician. And we were briefed on the State’s economy by Premier Colin Barnett and his officials. WA has immense natural resources. With only 10% of Australia’s population, it produces around half of the country’s exports, and around half of those are iron ore alone.
A huge wave of capital investment has flowed into mining and oil & gas projects over the last five years. The wave is now past its peak, but there are still $149bn of resource projects underway or committed at present. And as the new production capacity comes on stream, it will make a major contribution to the state’s economy.
With Chinese growth slowing, commodity prices have come off the peak they achieved at the height of the boom. Companies are focused on cutting costs and improving productivity. But it all still looked pretty healthy to the visiting Ambassadors. And as our hosts were quick to point out, it’s the part of Australia that feels closest to Asia – both physically and in terms of economic ties.
We had a chance to travel to the Pilbara to see a BHP iron ore mine, a Rio Tinto port-loading facility, and a Woodside processing facility for offshore LNG, as well as Rio Tinto’s Operations Centre at Perth Airport, which looks a bit like Mission Control Houston. Everything about the scale is immense: the distance you have to travel to get to the resource sites; the scale of the mines; and even the vast construction equipment, against which the diplomatic corps felt like a swarm of ants.
Afterwards I stayed on in WA for a couple of days to call on a number of British linked companies like BP, Arup, Shell and Rio and give a talk on foreign policy at Murdoch University. I also managed to visit Kalgoorlie, 600km inland, with its main street full of grand 19th century hotels reflecting its status as the site of Australia’s last major gold rush.
Visiting the La Mancha gold mine I learnt that the economics of gold mining are very different. For iron-ore you talk about percentage iron content; with gold it’s parts per million. Rio Tinto are currently gearing up to produce 360 million tonnes of iron ore a year here. The gold mine produces only 5 tonnes a year. But at $1400 an ounce, that’s still a lot of money.
I have been a regular visitor to WA given its importance to British business, and the high concentration of British citizens here, but for some of the Ambassadors it was their first trip. Julie Bishop was a very gracious host in her home state. We appreciated her very evident enthusiasm for WA and the energy and warmth she brought to the visit.
