Colin Barnett, Premier, Western Australia and Kevin Rudd, Minister for Foreign Affairs open major energy and resources conference.
Colin Barnett, Premier, Western Australia and Kevin Rudd, Minister for Foreign Affairs, Australia are joined by Andrew Forrest, CEO, Fortescue Mining Group, Yasuo Fukuda, Chairman, Boao Forum for Asia (and former Japanese PM) and Wang Jiaxiang, Assistant Manager of CNOOC. Colin Barnett said that Perth was a "natural' choice for hosting the first Boao Conference outside China. Australia is the world's leading mining economy, the figures speak for themselves: Australia produces 15% of the world's aluminium, 12% of nickel, 9% of LNG. Its scale and diversity make for a potentially significant relationship with China. Kevin Rudd mentioned the just introduced carbon tax. He said that Australian business needs to recognise the profound changes that have taken place in China. With its sustained economic growth, increase in domestic consumption and increase in Chinese services sector.
Wang Jiaxiang, Assistant Manager, CNOOC said that Asian demand is as strong as ever, with the volatility in energy prices posing the biggest threat.
Session: Demand for Resources in a Transforming Asia Asia, the world's manufacturing centre, is undergoing significant transformation. What impact will this have on its demand for resources? Andrew Forrest, CEO, Fortescue Mining Group said that supply is likely to run ahead of demand, which he said was a good thing because it would ensure security of supply. Wayne Goss, Chairman, Deloitte Australia said that the challenges for Australia is to increase its population, and skills levels. He added that infrastructure was an area where Australia can, and should do better. Rajiv Kumar, Secretary General, FICCI said that India's demand for resources had yet to be realised and that the supply side needs to be prepared for this. Akio Mimura, Chairman, Nippon Steel Corporation said that the industry - both on the supply and demand side - needs to continue to invest in technological innovation because this would improve efficiency. Overall, the panellists agreed that demand would continue to grow across Asia, in particular India, Japan and China, and that a partnership between the supply side, and the demand side was key. When discussing the issue of technology, Andrew Forrest commented that 10b tonnes of iron ore had been discovered in areas that had been previously overlooked because on the ground, there was no evidence of the deposits. These 'blind deposits' were found because of the application of innovative technology. He added that sovereign risk / title risk was an issue and that rising tax and an increase in nationalism would increase prices, with the customer ultimately wearing the cost. Zhang Guobao, Chairman, Advisory Board, National Energy Commission said that sovereign risk was unavoidable and that it would take political will to drive this - particularly in India.
Session: Nuclear Energy - the way forward Speaking about the Fukushima nuclear plant disaster in Japan, after the tsunami, Zhang Guobao, Chairman, Advisory Board National Energy Commission said that we needed to learn lessons, but the world needs nuclear energy. Knowing that mankind will run out of fossil fuel eventually, he said that we have a responsibility to explore safe nuclear power solutions. China, he noted, already has 13 nuclear power stations, with a further 28 under construction by 2015. Jack Allen, President, Asia Region, Westinghouse Electric Company was living in Japan when the tsunami struck, and saw first hand the devastating consequences of both the tsunami, and the Fukushima nuclear power plant. He and other panellists, including Andy Lloyd, Chief Development Officer Uranium, Rio Tinto Energy agreed that we need to learn lessons from Fukushima, and that we need to learn these lessons quickly. Andy Lloyd said that safety was an issue running throughout the whole supply chain. Ian Duncan, former Chairman of the Uranium Institute said that future nuclear power plant construction will be one of differentiation - where all aspects of the site, including the proclivity for natural disaster, will become increasingly important. Zhang Guobao concluded that power plants need to be commercially and economically viable, but that decision making in the future needs to be based on openness, transparency, integrity and fact. He summed up the panellists views by saying that the whole industry had a responsibility to share R&D, lessons learnt and best practice. He cautioned that if any one company, or country failed to do this, then they would put the future of mankind in jeopardy.
Session: Seizing the Australian Opportunities Stuart Fuller addressed the forum this morning, and underpinned the need for Australia and China to have a deeper, more sustainable relationship moving forward. He said that investment into Australia is a 'level playing field' with FIRB a hurdle, not a roadblock for inward investment. He highlighted that the race for capital is being run, and that Australia needs to be proactive in courting Chinese investment. This needs to be done in a spirit of transparency and openness. The challenge for FIRB, he said, is to provide clear guidelines which will increase clarity which in turn will lead to long term sustainable success. Stuart was joined on the stage by Duncan Calder, President, Australia China Business Council (WA) who added that one issue about investment into Australia is emotional. He said that we need to be careful about how we manage brand Australia and how we manage the perception of sovereign wealth issues and particularly the introduction of new taxes. He added that we need to speed up the investment approval process and better skill our workforce. Philip Kirchlechner, Director, Confucious Institute, University of Western Australia said that Australians need to be aware that foreign ownership and investment isn't being used for political purposes. The rationale behind investment is a good rate of return. He said that Chinese investors into Australia should proceed slowly and carefully, choose local advisers, develop a media strategy and build on the ground intelligence about the market. Yang Zhizhong, Chairman & CEO, Nomura China said that there was a potential misunderstanding about the state owned sector in China. He clarified that Chinese state owned enterprises are independent from the state, and are subject to market forces, and even compete with each other. He added that Chinese companies are eager to invest to secure important resources for the future. Li Jiange, Chairman, China International Capital Corporation Limited added that China doesn't have to come to Australia for investment. There are many other countries that could make good investment opportunities. He added that what Chinese investors are looking for is stability and that Chinese companies who invested in foreign business during the global financial crisis had struggled. Responding to a question from the floor, he added that China had "no shortage of liquidity".
Panel from left to right: Moderator - Steve Howard, Secretary General, the Global Foundation; Duncan Calder, President, Australia China Business Council (WA); Stuart Fuller, Manaing Partner, Mallesons; Philip Kirchlechner, Director, Confucius Institute, University of WA; Li Jiange, Chairman, China International Captial Corporation; and Yang Zhizhong, Chairman & CEO, Nomura China.
Kevin Rudd, Minister for Foreign Affairs
Colin Barnett, Premier of WA
For further information on the Boao Conference, and to view the conference program and full list of speakers, please click here.
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