9 ms·

The Deal Is Simple. Australia Gets Money, China Gets Australia

90 points by cwan 16y ago

barredo 16y ago
Alternative Title: Chinese (amongst others) companies make money on Australian soil. Also known as "Multinationals multinationing"
- ww520 16y ago
  Alternative Title: Capitalism at work, trade instead of war, each got what they want.
  - Estragon 16y ago
    I don't think it's that simple. Consider, for example, that the Australian Prime Minister, Kevin Rudd, lost his leadership largely because mining companies were upset by his plan to tax them further. From the article: Economic and diplomatic advances, however, have not fueled a warm national glow. Australia's proposal to increase taxes on mining became a national issue, precipitating a three-month barrage of anti-government campaigns paid for by the mining industry, which in part led to the removal in June of Prime Minister Kevin Rudd, a Chinese-speaking former diplomat. In the August federal election, the ruling center-left Australian Labor Party lost its majority due in large part to massive swings against it in the resource-rich states of Western Australia and Queensland. Supporters of the tax argue that the resources are not coming back and that Australia should participate more fully in the outsize profits. Those against include the mine operators and the many who work in the mines; mining salaries are, on average, Australia's highest, according to the Australian Bureau of Statistics.
    - brc 16y ago
      There were other factors at work with Rudd's removal. The mining tax was the last act in a long play of dropping promises, reneging on commitments and policy backflips. The mining tax was a disaster and, in it's original form, was reverse nationalism by stealth. The government was going to tax profits above 6% with a 40% 'super tax' - terminology straight from a Marxist script. They were then going to reimburse Miners for losses on projects. In reality, with the government participating in 40% of the profits and 40% of the losses, it was a part-nationalisation by stealth. The reason the mining tax was so rejected, particularly by the mining states, was that it was to replace state-based mining royalties with a Federal mining tax. So instead of individual states receiving royalties for mineral wealth - as per the constitution, the tax money would be funnelled to the Federal government, which would then have power over where it was spent. The mineral states stood to lose power over their own revenues, and the non-mining states stood to gain income from activities that took place entirely outside their borders. The tax was beloved by pro-government tax-raising types and lovers of economic theory and hated by pretty much everyone else.
      - teyc 16y ago
        Not quite. Given the price rises, the shareholders would be better off if they just sat on their leases and paid a capital gain. However, there are laws against that too. I believe government policy needs to consider resources are finite. The tragedy of the commons that is being played out at the moment prices the resouces at $0 for the future generation. Just like the way we are pricing fisheries. It is insane.
      - nl 16y ago
        There were other factors at work with Rudd's removal. The mining tax was the last act in a long play of dropping promises, reneging on commitments and policy backflips. I agree with this The mining tax was a disaster and, in it's original form, was reverse nationalism by stealth. The government was going to tax profits above 6% with a 40% 'super tax' - terminology straight from a Marxist script. They were then going to reimburse Miners for losses on projects. In reality, with the government participating in 40% of the profits and 40% of the losses, it was a part-nationalisation by stealth. I agree the mining tax was a disaster, but it wasn't as bad as you are making out. The 40% thing was always something that got the headlines, but as you point out it isn't as simple as that because it would have reduced state based royalties. The reason the mining tax was so rejected, particularly by the mining states, was that it was to replace state-based mining royalties with a Federal mining tax. This is true. The mineral states stood to lose power over their own revenues, and the non-mining states stood to gain income from activities that took place entirely outside their borders. This is also true, but not necessarily a bad thing. Australian urban centres are a long, long way from the mines and some form of distribution probably makes sense. The tax was beloved by pro-government tax-raising types and lovers of economic theory and hated by pretty much everyone else. I don't think the tax was loved by anyone except Rudd's kitchen cabinet (and possibly only by 3 out of them too, judging from how quickly Gillard backed off it). But the goals of the tax are perhaps more broadly backed. The original article touched on the fact that many mining companies avoid investing in the communities (as you'd expect from a profit making entity), and this has caused some issues. From the article: One of the local councils in the Pilbara, Shire of Ashburton, recently refused permission to Rio Tinto to expand its camp around the Tom Price mine. Instead the company has been asked to invest in facilities that will remain after the mine is closed, to spend $247 million on housing, an air strip, and other infrastructure at the town of Pannawonica. This kind of investment, and the employing of locals, is the only move that is going to convince skeptics like Tony Wiltshire. "We were at a town meeting the other day when a representative from a mining company said, 'Come on, we're all up here to make a dollar.' The locals in the room looked at each other and thought, 'What?' We live here. We can cope with the hot summers. We're here for the long term. We are actually better for the multinationals than the contractors they fly in and fly out. We just need them to wake up to the fact that they, and we, are all in it for the long haul." The idea of the tax was to formalize this kind of investment. The way they went about it was probably the worst planned example of domestic politics in Australia since WW2, though!
    - nl 16y ago
      It pretty much is that simple. The way the tax was presented it made it look like a punitive grab for mining companies profits. In the mining-rich states people started worrying about their jobs, and so the government changed Prime Minister and policy to try and head off the issue. The fact that the Labor party screwed up pretty badly is kind of irrelevant to the idea that this is pretty straight forward international trade. There are questions about how and how much of those profits should be spread around the country but I think that's pretty standard when there is an economic boom.
    - ww520 16y ago
      That's run-of-the-mill politics, corporatism, and special interests. It just means everyone is fighting to dip into profit from China. Prime minister Rudd was the casualty of socialism (sharing the profit wider) vs. corporatism (mining companies wanting to keep more). Replacing the profit from China with another source would have the same argument and same political fight.
  - stretchwithme 16y ago
    The only 2 options, really. We can trade with our fellows and produce total results that exceed our wildest dreams. Or we can take what we want and eventually be reduced to fighting over scraps.
- metamemetics 16y ago
  The original title is best. It conveys the point that China is literally and physically getting Australia. The country of Australia is an object decreasing in size and mass, due to the super-barge-2mile-long-train-robo-dumpster IV China has paid to stick in it.
jakarta 16y ago
It's pretty interesting to see how intertwined China is with Australia. If you ever want to short China, your best bet is to target Australia which already has a bit of a property bubble, mining companies that are dependent on Chinese demand, and a currency that is buoyed by commodity prices. If China is indeed a bubble (at least in the medium-term) Australia is going to experience a world of hurt.
- nl 16y ago
  If China is indeed a bubble (at least in the medium-term) Australia is going to experience a world of hurt. Yes, but... Australian is a commodity exporter. If China is a bubble, then yes, Australia will be hurt unless another country (US/India/Japan/Korea) picks up demand. Also, it's not a property bubble when there are less houses than people who want them. Because the population growth rate in Australia is (comparatively) high for a developed country we have high intrinsic demand for new housing.
  - jakarta 16y ago
    Do you realistically expect the US, Japan, or Korea to somehow fill the gap if China suddenly drops its demand for Australian commodities? India might pick up some of the slack, but I would bet against it. Household debt / disposable income in Australia is 157% versus 133% for the US shortly before the financial crisis. That level of debt combined with ever increasing home prices should create a pretty volatile situation.
    - nl 16y ago
      Do you realistically expect the US, Japan, or Korea to somehow fill the gap if China suddenly drops its demand for Australian commodities? Probably not, but it depends. If you think the "China bubble" is because of Chinese domestic demand (ie, construction in China) then it will be hard to replace. If you think it is because of Chinese exports then it's possible another country could substitute. Personally I reject the idea of a Chinese bubble altogether. Household debt / disposable income in Australia is 157% versus 133% for the US shortly before the financial crisis. It would be great if that was lower, but there are reasons for it. It's mainly because of high house prices. Unlike the US we don't have a housing bubble, because of our increasing population. Average household debt is around 20% of household assets (http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features60March%202009 http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Fe...). While the asset prices (ie houses) keep increasing that level of debt remains serviceable.
ryanwaggoner 16y ago
The geopolitics are interesting, of course, but this was really interesting to me: He now oversees a test project of driverless Komatsu trucks that cart out 300 tons at a time, moving 80,000 tons over two 12-hour shifts. When the drilling is good, he says, they can shift 120,000 tons in 24 hours. Without drivers, the trucks are more reliable, with radar sensors stopping them from crashing. They roll 24 hours a day.
- teyc 16y ago
  some drill rigs are semiautonomous, with GPS. The control systems were priced around $120k the last time I looked about 10 years ago. Any HN'ers want to disrupt this? I know some drillers out this way.
  - nl 16y ago
    They have similar technology for farming, too. If you wanted to disrupt this, I suspect you don't want to make it cheaper (the mining companies have plenty of money), but to do a better job somehow. (Where are you?)
    - CamperBob 16y ago
      I assumed that 'disrupt' meant 'jam the GPS and watch the carnage.' Thought it was an odd choice of wording at best.
    - jamesbritt 16y ago
      What's the insurance liability for somewhere like that?
    - w00pla2 16y ago
      > They have similar technology for farming, too. This is called "Precision agriculture". Tractors and equipment enabled with this can throw the precise amount of fertilizer/seeds at specific points. Probably quite a hot topic in farming... Go to any farming show and you will see this. http://en.wikipedia.org/wiki/Precision_agriculture http://en.wikipedia.org/wiki/Precision_agriculture
brc 16y ago
I'm not sure of what the point this article is trying to raise? Is it that Australia is not in recession? Is it some sort of suggestion of xenophobia on the part of Australians? Australians have all seen this before in the 1980's when the Japanese were buying real estate, companies and generally splashing cash around. I think this time around most people are more relaxed about it, and a feeling of 'make hay while the sun shines' is probably the most prevalent. While the imagery of large parts of Australia being dug up forever are evocative, it's not very realistic for anyone who has visited this part of the world to think it's all going to run out soon. It's a massive, virtually uninhabited area and the ground you walk on is literally red from iron ore.
- kentosi 16y ago
  I have to agree with you. The title itself feels like the author's taking a biast stand that s/he wants to vent. But the article itself is completely indecisive. Almost as if the author wants to speak ill of Chinese hands in Australian soil, but can't. Either way, I found the article's facts interesting. I don't think many people know the scale of these operations, not the history of similar events with the Japanese. Both of these were news to me.
  - brc 16y ago
    If you want a fascinating readup on the impact of Japanese investment in Australia, the effects and outcomes, read up on the Multi-Function polis. http://en.wikipedia.org/wiki/Multifunction_Polis http://en.wikipedia.org/wiki/Multifunction_Polis In short, it was a plan to build a high-tech city in order to better integrate Australian-Japan relations. In the end, a complete farce, but at the time regular front-page news. It did expose an ugly side to foreign investment in Australia, but things are very much different now - probably as a direct result of nothing very much at all occuring from all the Japanese investment. Mostly the Japanese did their dough, went bankrupt and left behind some big shopping centres, resorts and golf courses which Australians of all colours continue to use and enjoy to this day. A good companion would be the re-reading of the Micheal Crichton novel "Rising Sun" - written at the peak of the 'Japan to take over the world' thought bubble, before the Japan bubble popped.
sliverstorm 16y ago
Exporting all your resources, particularly a staple like iron, seems like a bad plan for Australia in the long run. Particularly because it is a raw material.
scn 16y ago
"A 20-year-old off the street can come up to the Pilbara and earn A$92,000 a year," says Boxy. The median household income in Australia is A$67,000. Talk about inflationary pressures.
- nl 16y ago
  Those jobs are well paid for a reason. They are in the middle of nowhere (unless you've been there you have no idea how isolated the Pilbara is), and the climate is less than ideal: The climate of the Pilbara is semi-arid and arid, with high temperatures and low irregular rainfall that follows the summer cyclones. During the summer months, maximum temperatures exceed 32°C (90°F) almost every day, and temperatures in excess of 45°C (113°F) are not uncommon. The Pilbara town of Marble Bar set a world record of most consecutive days of maximum temperatures of 100 degrees Fahrenheit (37.8 degrees Celsius) or more, during a period of 160 such days from 31 October 1923 to 7 April 1924.[5] http://en.wikipedia.org/wiki/Pilbara http://en.wikipedia.org/wiki/Pilbara In the non-open cut mines, many jobs are underground and a lot of people don't seem to cope well with being 1km underground. A few well-paid jobs don't create inflation on their own. The inflation rate remains a steady 3%.
  - scn 16y ago
    I'm not saying they're easy jobs but two weeks on one off with no expenses for the two weeks on makes for a lot of disposable income even without those salaries. Inflation remains a steady 3% with a cash rate of 4.5% way above comparable economies, with a high chance of further raises. People not in the mining industry can't expect to compete with the salaries they're earning and the high interest rates and Australian dollar are hurting households and other exports. Housing prices in Perth: http://reiwa.com.au/res/res-salesgraph-display.cfm http://reiwa.com.au/res/res-salesgraph-display.cfm Does that look sustainable?
    - nl 16y ago
      Our rates aren't high by Australian historical standards: http://www.loansense.com.au/historical-rates.html http://www.loansense.com.au/historical-rates.html Regarding the house price graph, I think you are being misled slightly by the scale. If you magnified the 1978-1993 graph it would look very similar - a HUGE ramp up in the prices in the late 1980's, and then stagnant in the early 1990's. Compare that to how the current graph looks: HUGE ramp up in 2003-2007, and then stagnant. I agree with what you are saying about the inequalities of mining salaries and the problems with the crowding out effect. I think that contributes more to the stratification of society rather than inflation, though.
maxklein 16y ago
The first page of the article uses various journalistic tricks to make the Australians seem like nice homely people, while the Chinese seem like faceless big corporations.
adrianwaj 16y ago
The key issue for me here is that Australia's not getting the same infrastructure projects that China's African resource partners are getting (eg roads, schools, hospitals.) Australia's probably getting more money instead. For example: "Abuja — The Chinese government has concluded arrangements to spend about $50 billion on development of infrastructure in Nigeria through SINOSURE, the Export Credit Guarantee Agency of China." http://allafrica.com/stories/200803310705.html http://allafrica.com/stories/200803310705.html "Of some 900 projects China built in Africa, more than half are aimed at improving local people's livelihoods." http://www.china.org.cn/opinion/2010-07/04/content_20416315.htm http://www.china.org.cn/opinion/2010-07/04/content_20416315....
- etherael 16y ago
  Why would you think that Australia would have the same demand for basic infrastructure that Africa does, considering the relative economic positions of the vendors in each instance?
  - adrianwaj 16y ago
    Unpredictability brings anxiety and hope in equal measure to the 8,000 Aborigines in the Pilbara, who hope their third-world living conditions might be raised by the China boom. Tony Wiltshire, an indigenous mechanic who runs a guild of Aboriginal businesses and tradesmen in the Pilbara, says the mining boom's benefits could sidestep the local population.
adrianwaj 16y ago
"My total salary and superannuation is A$145,000 a year, and when I'm in the Pilbara I don't have to put my hand in my pocket. I have a house in the city and an investment property and a 1972 Falcon pickup. I couldn't have had this life without mining." and devastating the environment (and human and animal health) with all the land-clearing, power consumption, water consumption, massive pollution and toxic waste that comes with this and connected industries.
nicko 16y ago
I worked in the Pilbara for one of the big miners in an 'automated' laboratory for a couple of years after graduating. AMA. Couple of quick points for anyone tempted to make the move: As an employee you get to interact with some pretty amazing tech, but most of it is created by other firms. Direct employees typically end up operating, maintaining and fixing things when they break. It's a great place to get hands on experience solving problems under time pressure. If you want to work heavily in the code base of automated robots/ trucks / trains, find a firm that does the contracting work to work for. Secondly, don't do it just for the money, the job becomes your life. The article wasn't really about employee benefits but they did mention a salary without saying exactly what it was for. Michael, after 35 years earns 145,000 p.a. including superannuation.A typical truck driver on a FIFO (fly in fly out) roster will fly up to the mine and work 7 12.5 hour day shifts, followed by 7 12.5 hour night shifts, and then fly back to the city to recover for a week (6 1/2 days). This is repeated about 17 times a year. 14days * 12.5hour shift * 17 stints = 2975 hours. $145, 000 / 2975 = approx AU$48 dollars per hour, including super. For that 20 year old on $92,000 it works out about $31 an hour, assuming the same roster. getting that job is not exactly easy either. The money is not bad, especially since you have nowhere to spend it on while at the mine, but the guys who do this long term have it in their blood and live to work at the mine. Your social and dating life ( if you have one at all) gets fairly messed up on that roster, and fatigue from night shift can get to you after awhile. Fun Fact: The mines tend to prefer female truck drivers as they are more gentle on the equipment.
- adsyoung 16y ago
  Hi nicko. Do you have an email address I could ping you on. Would love to quiz you about your experience :)
  - nicko 16y ago
    No probs, I just updated my profile with my email.
Volscio 16y ago
I know this is not exactly a new phenomenon for those who live in mining areas (northwestern Canada, Australia, etc.) but I found it interesting when going on a trip in the Outback that 3 of the men with us were miners (one from Canada, one from the UK, one from Australia) who do the tough mining tour of duty for part of the year and then travel for fun the rest of the year, rinse repeat. It's an odd life.
c00p3r 16y ago
It is better to say - Australia gets all those Treasures (American debt) and China gets Australia - resources. It is really a good deal!
cletus 16y ago
Honestly this kind of article annoys me. It's split across 5 pages (more page views anyone?) and meanders through largely meaningless anecdotes without ever really getting to the point. The whole stream of anecdotes style of journalism is one I abhor. It's lazy, can easily be abused (you can use anecdotes to prove anything) and is often just cheap theatre to try and humanize something otherwise without substance.
- bl4k 16y ago
  Blame Malcolm Gladwell and Chris Anderson. Those guys sold a ton of their books (airport books) and now their style is creeping into journalism. The stories are not used as supporting evidence, references or as facts to build an overall conclusion to some new idea - but rather as infotainment, where the anecdotes are the whole point of the story and there is no real firm conclusion or over-arching theme that is proven. The anecdotes are easy to digest and repeat, which helps not smart people sound smart when they tell the same stories to a group of people.
helmut_hed 16y ago
I was struck by this quote (in regards to Rio Tinto): Until last year, China was trying to buy more of the company As far as I know "China" does not buy things. Their government, maybe. I'd like to know if a Chinese government entity or connected company was truly involved in this. If not, the reporter is speaking carelessly...
Charuru 16y ago
A less sensationalist title: Australia gets Chinese Money, China gets Australian Ore.

90 points by cwan 16y ago

Alternative Title: Chinese (amongst others) companies make money on Australian soil. Also known as "Multinationals multinationing"

ww520 16y ago
Alternative Title: Capitalism at work, trade instead of war, each got what they want.
- Estragon 16y ago
  I don't think it's that simple. Consider, for example, that the Australian Prime Minister, Kevin Rudd, lost his leadership largely because mining companies were upset by his plan to tax them further. From the article: Economic and diplomatic advances, however, have not fueled a warm national glow. Australia's proposal to increase taxes on mining became a national issue, precipitating a three-month barrage of anti-government campaigns paid for by the mining industry, which in part led to the removal in June of Prime Minister Kevin Rudd, a Chinese-speaking former diplomat. In the August federal election, the ruling center-left Australian Labor Party lost its majority due in large part to massive swings against it in the resource-rich states of Western Australia and Queensland. Supporters of the tax argue that the resources are not coming back and that Australia should participate more fully in the outsize profits. Those against include the mine operators and the many who work in the mines; mining salaries are, on average, Australia's highest, according to the Australian Bureau of Statistics.
  - brc 16y ago
    There were other factors at work with Rudd's removal. The mining tax was the last act in a long play of dropping promises, reneging on commitments and policy backflips. The mining tax was a disaster and, in it's original form, was reverse nationalism by stealth. The government was going to tax profits above 6% with a 40% 'super tax' - terminology straight from a Marxist script. They were then going to reimburse Miners for losses on projects. In reality, with the government participating in 40% of the profits and 40% of the losses, it was a part-nationalisation by stealth. The reason the mining tax was so rejected, particularly by the mining states, was that it was to replace state-based mining royalties with a Federal mining tax. So instead of individual states receiving royalties for mineral wealth - as per the constitution, the tax money would be funnelled to the Federal government, which would then have power over where it was spent. The mineral states stood to lose power over their own revenues, and the non-mining states stood to gain income from activities that took place entirely outside their borders. The tax was beloved by pro-government tax-raising types and lovers of economic theory and hated by pretty much everyone else.
    - teyc 16y ago
      Not quite. Given the price rises, the shareholders would be better off if they just sat on their leases and paid a capital gain. However, there are laws against that too. I believe government policy needs to consider resources are finite. The tragedy of the commons that is being played out at the moment prices the resouces at $0 for the future generation. Just like the way we are pricing fisheries. It is insane.
    - nl 16y ago
      There were other factors at work with Rudd's removal. The mining tax was the last act in a long play of dropping promises, reneging on commitments and policy backflips. I agree with this The mining tax was a disaster and, in it's original form, was reverse nationalism by stealth. The government was going to tax profits above 6% with a 40% 'super tax' - terminology straight from a Marxist script. They were then going to reimburse Miners for losses on projects. In reality, with the government participating in 40% of the profits and 40% of the losses, it was a part-nationalisation by stealth. I agree the mining tax was a disaster, but it wasn't as bad as you are making out. The 40% thing was always something that got the headlines, but as you point out it isn't as simple as that because it would have reduced state based royalties. The reason the mining tax was so rejected, particularly by the mining states, was that it was to replace state-based mining royalties with a Federal mining tax. This is true. The mineral states stood to lose power over their own revenues, and the non-mining states stood to gain income from activities that took place entirely outside their borders. This is also true, but not necessarily a bad thing. Australian urban centres are a long, long way from the mines and some form of distribution probably makes sense. The tax was beloved by pro-government tax-raising types and lovers of economic theory and hated by pretty much everyone else. I don't think the tax was loved by anyone except Rudd's kitchen cabinet (and possibly only by 3 out of them too, judging from how quickly Gillard backed off it). But the goals of the tax are perhaps more broadly backed. The original article touched on the fact that many mining companies avoid investing in the communities (as you'd expect from a profit making entity), and this has caused some issues. From the article: One of the local councils in the Pilbara, Shire of Ashburton, recently refused permission to Rio Tinto to expand its camp around the Tom Price mine. Instead the company has been asked to invest in facilities that will remain after the mine is closed, to spend $247 million on housing, an air strip, and other infrastructure at the town of Pannawonica. This kind of investment, and the employing of locals, is the only move that is going to convince skeptics like Tony Wiltshire. "We were at a town meeting the other day when a representative from a mining company said, 'Come on, we're all up here to make a dollar.' The locals in the room looked at each other and thought, 'What?' We live here. We can cope with the hot summers. We're here for the long term. We are actually better for the multinationals than the contractors they fly in and fly out. We just need them to wake up to the fact that they, and we, are all in it for the long haul." The idea of the tax was to formalize this kind of investment. The way they went about it was probably the worst planned example of domestic politics in Australia since WW2, though!
  - nl 16y ago
    It pretty much is that simple. The way the tax was presented it made it look like a punitive grab for mining companies profits. In the mining-rich states people started worrying about their jobs, and so the government changed Prime Minister and policy to try and head off the issue. The fact that the Labor party screwed up pretty badly is kind of irrelevant to the idea that this is pretty straight forward international trade. There are questions about how and how much of those profits should be spread around the country but I think that's pretty standard when there is an economic boom.
  - ww520 16y ago
    That's run-of-the-mill politics, corporatism, and special interests. It just means everyone is fighting to dip into profit from China. Prime minister Rudd was the casualty of socialism (sharing the profit wider) vs. corporatism (mining companies wanting to keep more). Replacing the profit from China with another source would have the same argument and same political fight.
- stretchwithme 16y ago
  The only 2 options, really. We can trade with our fellows and produce total results that exceed our wildest dreams. Or we can take what we want and eventually be reduced to fighting over scraps.
metamemetics 16y ago
The original title is best. It conveys the point that China is literally and physically getting Australia. The country of Australia is an object decreasing in size and mass, due to the super-barge-2mile-long-train-robo-dumpster IV China has paid to stick in it.

jakarta 16y ago

It's pretty interesting to see how intertwined China is with Australia. If you ever want to short China, your best bet is to target Australia which already has a bit of a property bubble, mining companies that are dependent on Chinese demand, and a currency that is buoyed by commodity prices. If China is indeed a bubble (at least in the medium-term) Australia is going to experience a world of hurt.

nl 16y ago
If China is indeed a bubble (at least in the medium-term) Australia is going to experience a world of hurt. Yes, but... Australian is a commodity exporter. If China is a bubble, then yes, Australia will be hurt unless another country (US/India/Japan/Korea) picks up demand. Also, it's not a property bubble when there are less houses than people who want them. Because the population growth rate in Australia is (comparatively) high for a developed country we have high intrinsic demand for new housing.
- jakarta 16y ago
  Do you realistically expect the US, Japan, or Korea to somehow fill the gap if China suddenly drops its demand for Australian commodities? India might pick up some of the slack, but I would bet against it. Household debt / disposable income in Australia is 157% versus 133% for the US shortly before the financial crisis. That level of debt combined with ever increasing home prices should create a pretty volatile situation.
  - nl 16y ago
    Do you realistically expect the US, Japan, or Korea to somehow fill the gap if China suddenly drops its demand for Australian commodities? Probably not, but it depends. If you think the "China bubble" is because of Chinese domestic demand (ie, construction in China) then it will be hard to replace. If you think it is because of Chinese exports then it's possible another country could substitute. Personally I reject the idea of a Chinese bubble altogether. Household debt / disposable income in Australia is 157% versus 133% for the US shortly before the financial crisis. It would be great if that was lower, but there are reasons for it. It's mainly because of high house prices. Unlike the US we don't have a housing bubble, because of our increasing population. Average household debt is around 20% of household assets (http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features60March%202009 http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Fe...). While the asset prices (ie houses) keep increasing that level of debt remains serviceable.

ryanwaggoner 16y ago

The geopolitics are interesting, of course, but this was really interesting to me: He now oversees a test project of driverless Komatsu trucks that cart out 300 tons at a time, moving 80,000 tons over two 12-hour shifts. When the drilling is good, he says, they can shift 120,000 tons in 24 hours. Without drivers, the trucks are more reliable, with radar sensors stopping them from crashing. They roll 24 hours a day.

teyc 16y ago
some drill rigs are semiautonomous, with GPS. The control systems were priced around $120k the last time I looked about 10 years ago. Any HN'ers want to disrupt this? I know some drillers out this way.
- nl 16y ago
  They have similar technology for farming, too. If you wanted to disrupt this, I suspect you don't want to make it cheaper (the mining companies have plenty of money), but to do a better job somehow. (Where are you?)
  - CamperBob 16y ago
    I assumed that 'disrupt' meant 'jam the GPS and watch the carnage.' Thought it was an odd choice of wording at best.
  - jamesbritt 16y ago
    What's the insurance liability for somewhere like that?
  - w00pla2 16y ago
    > They have similar technology for farming, too. This is called "Precision agriculture". Tractors and equipment enabled with this can throw the precise amount of fertilizer/seeds at specific points. Probably quite a hot topic in farming... Go to any farming show and you will see this. http://en.wikipedia.org/wiki/Precision_agriculture http://en.wikipedia.org/wiki/Precision_agriculture

brc 16y ago

I'm not sure of what the point this article is trying to raise? Is it that Australia is not in recession? Is it some sort of suggestion of xenophobia on the part of Australians? Australians have all seen this before in the 1980's when the Japanese were buying real estate, companies and generally splashing cash around. I think this time around most people are more relaxed about it, and a feeling of 'make hay while the sun shines' is probably the most prevalent. While the imagery of large parts of Australia being dug up forever are evocative, it's not very realistic for anyone who has visited this part of the world to think it's all going to run out soon. It's a massive, virtually uninhabited area and the ground you walk on is literally red from iron ore.

kentosi 16y ago
I have to agree with you. The title itself feels like the author's taking a biast stand that s/he wants to vent. But the article itself is completely indecisive. Almost as if the author wants to speak ill of Chinese hands in Australian soil, but can't. Either way, I found the article's facts interesting. I don't think many people know the scale of these operations, not the history of similar events with the Japanese. Both of these were news to me.
- brc 16y ago
  If you want a fascinating readup on the impact of Japanese investment in Australia, the effects and outcomes, read up on the Multi-Function polis. http://en.wikipedia.org/wiki/Multifunction_Polis http://en.wikipedia.org/wiki/Multifunction_Polis In short, it was a plan to build a high-tech city in order to better integrate Australian-Japan relations. In the end, a complete farce, but at the time regular front-page news. It did expose an ugly side to foreign investment in Australia, but things are very much different now - probably as a direct result of nothing very much at all occuring from all the Japanese investment. Mostly the Japanese did their dough, went bankrupt and left behind some big shopping centres, resorts and golf courses which Australians of all colours continue to use and enjoy to this day. A good companion would be the re-reading of the Micheal Crichton novel "Rising Sun" - written at the peak of the 'Japan to take over the world' thought bubble, before the Japan bubble popped.

sliverstorm 16y ago

Exporting all your resources, particularly a staple like iron, seems like a bad plan for Australia in the long run. Particularly because it is a raw material.

scn 16y ago

"A 20-year-old off the street can come up to the Pilbara and earn A$92,000 a year," says Boxy. The median household income in Australia is A$67,000. Talk about inflationary pressures.

nl 16y ago
Those jobs are well paid for a reason. They are in the middle of nowhere (unless you've been there you have no idea how isolated the Pilbara is), and the climate is less than ideal: The climate of the Pilbara is semi-arid and arid, with high temperatures and low irregular rainfall that follows the summer cyclones. During the summer months, maximum temperatures exceed 32°C (90°F) almost every day, and temperatures in excess of 45°C (113°F) are not uncommon. The Pilbara town of Marble Bar set a world record of most consecutive days of maximum temperatures of 100 degrees Fahrenheit (37.8 degrees Celsius) or more, during a period of 160 such days from 31 October 1923 to 7 April 1924.[5] http://en.wikipedia.org/wiki/Pilbara http://en.wikipedia.org/wiki/Pilbara In the non-open cut mines, many jobs are underground and a lot of people don't seem to cope well with being 1km underground. A few well-paid jobs don't create inflation on their own. The inflation rate remains a steady 3%.
- scn 16y ago
  I'm not saying they're easy jobs but two weeks on one off with no expenses for the two weeks on makes for a lot of disposable income even without those salaries. Inflation remains a steady 3% with a cash rate of 4.5% way above comparable economies, with a high chance of further raises. People not in the mining industry can't expect to compete with the salaries they're earning and the high interest rates and Australian dollar are hurting households and other exports. Housing prices in Perth: http://reiwa.com.au/res/res-salesgraph-display.cfm http://reiwa.com.au/res/res-salesgraph-display.cfm Does that look sustainable?
  - nl 16y ago
    Our rates aren't high by Australian historical standards: http://www.loansense.com.au/historical-rates.html http://www.loansense.com.au/historical-rates.html Regarding the house price graph, I think you are being misled slightly by the scale. If you magnified the 1978-1993 graph it would look very similar - a HUGE ramp up in the prices in the late 1980's, and then stagnant in the early 1990's. Compare that to how the current graph looks: HUGE ramp up in 2003-2007, and then stagnant. I agree with what you are saying about the inequalities of mining salaries and the problems with the crowding out effect. I think that contributes more to the stratification of society rather than inflation, though.

maxklein 16y ago

The first page of the article uses various journalistic tricks to make the Australians seem like nice homely people, while the Chinese seem like faceless big corporations.

adrianwaj 16y ago

The key issue for me here is that Australia's not getting the same infrastructure projects that China's African resource partners are getting (eg roads, schools, hospitals.) Australia's probably getting more money instead. For example: "Abuja — The Chinese government has concluded arrangements to spend about $50 billion on development of infrastructure in Nigeria through SINOSURE, the Export Credit Guarantee Agency of China." http://allafrica.com/stories/200803310705.html http://allafrica.com/stories/200803310705.html "Of some 900 projects China built in Africa, more than half are aimed at improving local people's livelihoods." http://www.china.org.cn/opinion/2010-07/04/content_20416315.htm http://www.china.org.cn/opinion/2010-07/04/content_20416315....

etherael 16y ago
Why would you think that Australia would have the same demand for basic infrastructure that Africa does, considering the relative economic positions of the vendors in each instance?
- adrianwaj 16y ago
  Unpredictability brings anxiety and hope in equal measure to the 8,000 Aborigines in the Pilbara, who hope their third-world living conditions might be raised by the China boom. Tony Wiltshire, an indigenous mechanic who runs a guild of Aboriginal businesses and tradesmen in the Pilbara, says the mining boom's benefits could sidestep the local population.

adrianwaj 16y ago

"My total salary and superannuation is A$145,000 a year, and when I'm in the Pilbara I don't have to put my hand in my pocket. I have a house in the city and an investment property and a 1972 Falcon pickup. I couldn't have had this life without mining." and devastating the environment (and human and animal health) with all the land-clearing, power consumption, water consumption, massive pollution and toxic waste that comes with this and connected industries.

nicko 16y ago

I worked in the Pilbara for one of the big miners in an 'automated' laboratory for a couple of years after graduating. AMA. Couple of quick points for anyone tempted to make the move: As an employee you get to interact with some pretty amazing tech, but most of it is created by other firms. Direct employees typically end up operating, maintaining and fixing things when they break. It's a great place to get hands on experience solving problems under time pressure. If you want to work heavily in the code base of automated robots/ trucks / trains, find a firm that does the contracting work to work for. Secondly, don't do it just for the money, the job becomes your life. The article wasn't really about employee benefits but they did mention a salary without saying exactly what it was for. Michael, after 35 years earns 145,000 p.a. including superannuation.A typical truck driver on a FIFO (fly in fly out) roster will fly up to the mine and work 7 12.5 hour day shifts, followed by 7 12.5 hour night shifts, and then fly back to the city to recover for a week (6 1/2 days). This is repeated about 17 times a year. 14days * 12.5hour shift * 17 stints = 2975 hours. $145, 000 / 2975 = approx AU$48 dollars per hour, including super. For that 20 year old on $92,000 it works out about $31 an hour, assuming the same roster. getting that job is not exactly easy either. The money is not bad, especially since you have nowhere to spend it on while at the mine, but the guys who do this long term have it in their blood and live to work at the mine. Your social and dating life ( if you have one at all) gets fairly messed up on that roster, and fatigue from night shift can get to you after awhile. Fun Fact: The mines tend to prefer female truck drivers as they are more gentle on the equipment.

adsyoung 16y ago
Hi nicko. Do you have an email address I could ping you on. Would love to quiz you about your experience :)
- nicko 16y ago
  No probs, I just updated my profile with my email.

Volscio 16y ago

I know this is not exactly a new phenomenon for those who live in mining areas (northwestern Canada, Australia, etc.) but I found it interesting when going on a trip in the Outback that 3 of the men with us were miners (one from Canada, one from the UK, one from Australia) who do the tough mining tour of duty for part of the year and then travel for fun the rest of the year, rinse repeat. It's an odd life.

c00p3r 16y ago

It is better to say - Australia gets all those Treasures (American debt) and China gets Australia - resources. It is really a good deal!

cletus 16y ago

Honestly this kind of article annoys me. It's split across 5 pages (more page views anyone?) and meanders through largely meaningless anecdotes without ever really getting to the point. The whole stream of anecdotes style of journalism is one I abhor. It's lazy, can easily be abused (you can use anecdotes to prove anything) and is often just cheap theatre to try and humanize something otherwise without substance.

bl4k 16y ago
Blame Malcolm Gladwell and Chris Anderson. Those guys sold a ton of their books (airport books) and now their style is creeping into journalism. The stories are not used as supporting evidence, references or as facts to build an overall conclusion to some new idea - but rather as infotainment, where the anecdotes are the whole point of the story and there is no real firm conclusion or over-arching theme that is proven. The anecdotes are easy to digest and repeat, which helps not smart people sound smart when they tell the same stories to a group of people.

helmut_hed 16y ago

I was struck by this quote (in regards to Rio Tinto): Until last year, China was trying to buy more of the company As far as I know "China" does not buy things. Their government, maybe. I'd like to know if a Chinese government entity or connected company was truly involved in this. If not, the reporter is speaking carelessly...

Charuru 16y ago

A less sensationalist title: Australia gets Chinese Money, China gets Australian Ore.