News reports in the AFR and commentary at Macrobusiness suggest that Chinese interests have made FIRB applications to buy up some chunks of our iron ore industry in the form of FMG now that it is struggling for breath as our mining industry competes against itself on the world market.
If these reports are true they cast an interesting light on the media campaign by Twiggy in recent weeks and confirm that we need an open inquiry into Iron Ore but not because Twiggy wanted it – perhaps despite the fact that Twiggy was asking for it.
Some have suggested that Australia is being played and they are right but the truth is our leaders put on the tutu and started skipping around the stage before the orchestra sounded a note.
We are most certainly being played and have been ever since we got this crazy idea that one of our major resources could be managed by reference to ‘free market’ principles instead of the national interest.
It doesn’t really matter which mining companies we employ to dig up our dirt they are just contractors.
It doesn’t matter if they come from London, America, South Africa or even China.
What matters is how much they are allowed to dig up and export and how they pay for the right to do so.
And when you think about it in those terms the answer is straightforward. National export volume caps with the miners bidding for volumes within those caps.
As that Brazilian article I linked to last week made clear, China manages what resources it will allow into the international market all the time.
Australia has a simple choice be ‘free market’ fanatics and sell at OUR marginal cost of production or be a smart manager of its national resources and ensure that we never compete against ourselves on the world market.
Now more than ever we need a Proper Inquiry into the Iron Ore industry.