Senin, 28 November 2016

Australia's Mining-Heavy State Looks Elsewhere for Growth

Australia's biggest resources state has long relied on China's hearty appetite for raw materials for its wealth but with growth in its main trading partner slowing Western Australia is trying to cultivate other trading partners such as Indonesia. The state's top political leader and premier, Colin Barnett, this week visited Indonesia to promote everything from agriculture and tourism to overseas education and real estate. The state recorded its first budget deficit in 15 years last year and fiscal 2016 could be worse as royalties from mining and oil and gas tied to international prices decline.

It's been more than two years since the state saw its AAA credit rating from Standard & Poor's stripped to AA+. In Indonesia, the state has long been a supplier of millions of tonnes of wheat annually and has even devised a noodle specific to local tastes. No industry more than iron ore rode the double-digit wave of growth that gripped China in the last decade and no place mines more of the steel-making raw material than Western Australia. The state reaped hundreds of millions of dollars in royalties each year as annual production surpassed a half-billion tonnes. China's still buying, but with so much iron ore around and industrial growth contracting each quarter, prices are down 75 percent from 2011 peaks, translating into much lower royalties.

Now, China has come back to slower growth rates. I agreed with what Barnett said that he had spent most of his time as premier dealing on that relationship with China and Japan, because in the last decade iron ore production would have doubled and liquefied natural gas production would have trebled. I think it is good for him to put more of his time into broadening and diversifying the economy

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