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Tuesday, 24 February 1987
Page: 578

Mr McVEIGH —My question is directed to the Prime Minister. In view of Australia's disastrous trade figures released recently and the need to improve our exports, will he inform the House about the current state of negotiation regarding the integration of the Chinese and Australian steel and iron ore industries with the reopening of the Kwinana steel mill and the development of the Channar iron ore deposits?

Mr HAWKE —I thank the honourable member for his question and for the spirit in which it has been put. China is an outstanding example of the potential market available to Australian industries which are prepared to go after exports in our region. Iron and steel making is one of the four key areas of possible co-operation which China and Australia are currently examining. The Australia-China Iron and Steel Joint Study Group has spawned several very worthwhile projects. For example, it is now likely that Australian companies will collaborate with the Chinese Ministry of Metallurgical Industry in developing the Meishan iron works into a major steel producing centre. In respect of Channar, I would say to the honourable member that discussions are currently continuing between Hamersley Iron Pty Ltd and the Chinese Metallurgical Import and Export Corporation about the prospects for a joint venture to develop the iron ore deposit. I think the honourable member will appreciate that those are commercial matters and, while we are obviously not privy to all the detail in regard to those commercial negotiations that are going on in regard to Channar between Hamersley and the relevant Chinese authority, I can say to the honourable member that I have a considerable degree of optimism as to the outcome of that matter.

Also I can say in regard to the Kwinana pig-iron venture that again that is a matter of commercial negotiation, but I understand that that project is not likely to go ahead until there has been some improvement in pig-iron prices. I note, and I think the honourable member would be aware, that currently the market prices for pig-iron are very depressed and not least, as he would know, because a number of suppliers including the Soviet Union, Turkey and Brazil are said to be tendering on non-commercial terms.

I understand that the Chinese Vice-Minister of Metallurgical Industry, Wang Rulin, visited Australia from 10 February to 21 February. I can convey to the honourable member that I believe the discussions that he engaged in included discussions with Broken Hill Proprietary Co. Ltd on the Kwinana project. Out of those discussions it was agreed, again as I understand it, that prices had not recently moved in favour of the project but that they would continue to keep the project and the possible co-operation under periodical review in the light of movements in pig-iron prices. I understand also that other possible areas of co-operation between BHP and the Chinese steel industry were also discussed in that period earlier this month but, as I say again, the details of those discussions between BHP and the Chinese remain confidential to the parties.

I believe that what is happening can only encourage BHP, and we would certainly encourage it and others to pursue those matters vigorously. I would point out, and I think the honourable member may be aware of this, that Australia has already increased its exports to China of iron and steel making materials by some 300 per cent between 1983 and 1985, and I hope that the honourable member will agree that that is a very significant achievement.