TPT November 2009

to the same degree as their counterparts in the US and the UK. Canberra was able to extend guarantees to various parts of the financial system, as required, at relatively low cost. As a result, in comparative terms Australia has remained “surprisingly strong” during the global economic crisis. This analysis, by the strategic-consulting firm Oxford Analytica, is supported by Reserve Bank of Australia (RBA) forecasts for gross domestic product growth. If these prove accurate, Australia will have regained its average real growth rate of 3% to 3.5% by the end of 2010. The RBA now foresees a gradual pick-up in growth, led by government infrastructure spending, housing construction, and a modest rise in exports. Just a quarter-year before, Oxford Analytica noted, the central bank was expecting a contraction over the course of 2009. (“Australia’s Economic Forecast,” 12 August) A major factor in Australia’s good fortune is, of course, the plenitude of its natural resources, notably iron and aluminium ore and concentrates, and crude petroleum. The sharp fall in Chinese exports has not affected demand for these raw materials as China’s fiscal stimulus – focused on infrastructure – is heavily reliant on Australia as supplier. Although Australian export prices are down from the 2008 peaks, merchandise export volumes rose in the nine months through June. Any retailer knows that reliance on a single free-spending customer can be a risky business. And, over the past two years, China’s share of Australia’s merchandise exports has risen from 15% to 20%. Oxford Analytica, which draws on a network of scholar-experts worldwide, noted that this increasing dependence on China “exposes [Australian] policy to new pressures, requiring skilful management.” One of these pressures was in fact brand-new. On the day before “Australia’s Economic Forecast” was published, the Chinese news agency Xinhua reported that prosecutors in China had approved the formal arrest of four employees of the British-Australian mining giant Rio Tinto Ltd on charges of bribery and infringing trade secrets. Among the four, who were detained since 5 July on indeterminate grounds, is an Australian citizen and Rio Tinto general manager, of Chinese descent, who led the company’s multibillion-dollar mineral sales business in China. Whether the matter will yield to skilful management is yet to be seen. As of this writing it remains unresolved.

Global manufacturers face a scarcity of rare earth elements as China moves to limit their availability

China is not entirely dependent on Australia, or any other supplier, for raw materials. In several of the world’s most obscure but valuable minerals she is self-sufficient, and very much more. China currently accounts for 93% of production of so-called rare earth elements; and over 99% of the output of dysprosium and terbium, elements vital for a wide range of green-energy technologies and military applications. Now signs are strong Australia has avoided worst of the recession

that China is building up its already considerable presence in the market for exotic minerals. Keith Bradsher, chief Hong Kong correspondent of the International Herald Tribune , reported that, in

83

www.read-tpt.com

N ovember 2009

›