The article incorrectly said that an Australian mining company had announced a $60 billion deal to ship 30 tons of coal a year to China. The multiyear deal was for 30 million tons of coal a year.
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Australia welcomes China's investment, if not its influence
Statewide, projects worth more than $95 billion are transforming the economy of the region and contributing to a historic shift in power from "old Australia" -- around Victoria and New South Wales in the southeast, to the resource-rich Australia in the north.
For their part, Chinese investors are bullish on Australia and say they are learning to work the system.
Lai Cunliang is the Chairman Mao-quoting chief of operations for a Chinese coal company that acquired an Australian competitor for $3 billion in the midst of the global financial crisis. "We've got capital, we've got talent and now," he said, "we're coming out. We are driving change."
A steel company from China's Hunan province sank $580 million into Fortescue Metals Group last year, turning the company's chairman, Andrew "Twiggy" Forrest, into Australia's richest man. Chinese firms also snapped up a uranium mine, gold and coal mines, off-shore natural gas fields, real estate and wineries. This month, an Australian mining company announced a $60 billion deal to ship 30 tons of coal a year from a proposed mine in Queensland.
"The numbers are so big it's deceptive," said Sam Walsh, who runs iron ore operations for Rio Tinto, the Anglo-Australian mining giant in which a Chinese firm, Chinalco, tried unsuccessfully to buy an 18 percent stake last year. "No one has seen this before. It is manna from heaven."
The growth has been so robust that Rio and its old competitor BHP Billiton now want to merge their iron ore operations, allowing them to extract an even higher price from the Chinese. Spot prices for iron ore are already more than $100 a ton and officials from both companies predict that in a few years their total production could hit 1 billion tons a year.
"Slice it, dice it, whatever you want, it's staggering," said Ian Pearson, the acting general manager of BHP's mine at Mount Whaleback.
Despite its economic inroads, China has made economic and political blunders that have infuriated, and occasionally amused, many Australians.
Being Australia's primary market for iron ore, the Chinese assumed last year that they would be able to get a good deal on the price. So China rejected as too high a benchmark price that had been accepted by Japanese and South Korean firms. That decision cost China dearly when the spot price of ore rose 90 percent in the past year.
"The Chinese thought they'd be in the driver's seat on this," said Kenneth Lieberthal, a China expert at the Brookings Institution. "Who knew they'd find themselves in the trunk."
The Chinese government and its state-owned businesses were enraged at their failure to push down the price. In July, a month after the Tinto and Chinalco deal collapsed last year, Chinese security agents detained Stern Hu, a Rio Tinto executive in China, on suspicion of espionage. Australian newspaper commentators speculated that Beijing was punishing the mining giant for the high price of iron ore, further increasing public skepticism about China. Last week, Chinese prosecutors charged Hu with accepting bribes.
And it's not just ore that has Australians worried.