Australia and China have inked commercial deals worth more than $10 billion, largely in mining, in another sign that a new Australian mining tax has failed to dampen inward Chinese investment.
The signings, witnessed by visiting Chinese Vice-President Xi Jinping, included deals for state-owned China Development Bank to provide financing for several major mining projects, including a $US1.2 billion ($1.36 billion) loan for an iron ore development.
The 10 deals signed today
Prime Minister Kevin Rudd, who is fighting a fierce mining backlash against the proposed 40 per cent resources super-profits tax, highlighted that seven of the 10 bilateral deals signed today cover the resources and energy industries.
"The Chinese are still active partners with all of our resource companies. There is a lot of good stuff going on out there," Mr Rudd told reporters after the signings.
"It is important to separate the facts of what's going on from some of the fear that is being pushed by some companies who object to paying a bit more tax."
Miners have threatened to axe more than $US20 billion in new projects if the tax is introduced in its current form. The world's second biggest iron ore miner, Rio Tinto, has said that Australia is now its top sovereign-risk issue worldwide.
The miners' warnings, backed up by a multimillion-dollar industry ad campaign, has unnerved the public ahead of a general election expected to be held late this year, with opinion polls showing almost half voters against the new tax.
But the industry's campaign has begun to be undermined by a continued wave of investment into the sector since the tax was first unveiled on May 2. Even while campaigning against the tax, miners have announced project advancements or deals with foreign investors worth more than $US10 billion.
China stepping up
Far from being spooked by the new tax, due to apply from mid-2012, Chinese firms could see it as a chance to strengthen their grip on Australian raw materials, especially iron ore, by providing financing in return for long-term supply agreements.
The China Development Bank agreed today a $US1.2 billion loan facility for the $US2 billion Karara iron ore project in Western Australia, which is being developed by Australia's Gindalbie Metals and China's Angang Steel.
The bank also inked a preliminary deal to help fund projects for miner Aquila Resources, including its $US3.45 billion West Pilbara iron ore project, also in WA.
Another deal commits Chinese experts and engineers to work on the expansion of Fortescue’s iron ore projects in the Pilbara region of Western Australia, which Mr Rudd says will be worth $5 billion a year in exports.
Fortescue boss Andrew ‘‘Twiggy’’ Forrest is a vocal opponent of the government’s proposed new mining tax.
Mr Rudd, who aims to use the mining tax to help fund his re-election platform this year, oversaw the signings along with Mr Xi, regarded as heir apparent to China's President Hu Jintao.
Not all of the deals involve resources. A new quarantine arrangement will allow for Tasmanian apples to be exported to China, while other deals aim at cooperation in education and telecommunications.
Today’s agreements also included an expanded partnership between Telstra and China's ZTE Corp, whereby Telstra would become preferred telecoms supplier to ZTE worldwide.
In addition, Qantas announced an expanded code-sharing alliance with China Eastern Airlines.
Reuters, AAP