Interview: Chinese Investment in Australian Resources Benefit Both: Australian Expert

HONG KONG, June 5 -- Chinese companies' investment in Australian resources will not only benefit companies involved but also both countries in the long run, said Owen Hegarty, a senior Australian expert in resources.

    "China needs the resources and Australian companies need the capital. So it's a good marriage," said Hegarty, chief executive officer and vice chairman of the Hong Kong-listed G-Resources Group, in an exclusive interview with Xinhua.

    Hegarty was the founding managing director and CEO of OXiana Limited, which has now merged with Zinifex to become OZ Minerals Limited, the 3rd largest mining company in Australia. Prior to Oxiana, he has 25 years of experience in Rio Tinto Group.

    Chinese companies' interest in investing in Australian resources seems to be growing. Chinalco, a leading Chinese diversified resources company, has proposed to invest 19.5 billion U.S. dollars in debt-laden Rio Tinto. And China Minmetals, another major Chinese resources company, has proposed to spend 1.206 billion U.S. dollars to buy assets of OZ Minerals which is also experiencing financial difficulties.

    "It's a long-term investment and very supportive investment," said Hegarty, "it's a very cooperative marriage of demand and supply."

    He said that most people and institutions in Australia believe in the long-term interest and benefits for companies involved and both countries.

    "I don't think there's any doubt about that. Of course, foreign investment needs to be done on commercial terms and on right conditions," he said.

    Hegarty pointed to the fact that the standard of living throughout the world has been dependent on foreign investment and development. "it's very important to keep that foreign investment capital flow going."

    "China has the capital, it has the surplus and it has the requirement for materials. Australia has the materials and the requirement for funding. And that has been history of Australian resources industry. It has been dependent, relied on and needed foreign capital," he said.

    "But in term of Chinese ownership of Australia assets, it's really quite small compared with the U.S. and U.K.," he said.

    Hegarty said that he believed it is now the right time for Chinese companies to invest in Australian resources, suggesting that Chinese companies should adopt long-term strategy, purchase quality assets and look for good partners.

    "If they got that criteria, they will be always successful," he said, noting that Australia has most of the metals and mineral commodities China is looking for.

    Hegarty said that the current depressed prices of resources is a temporary phenomenon. "I think you are going to see prices continue to improve, and demand will be strong in the long-term."

    He said that apart from Australia, Asia has also great potential for resources industry. "This part of the world has not had enough exploration, not enough development and investment in the resources industry."

    On May 13, G-Resources, previously known as Smart Rich Energy, announced the acquisition of 95 percent interest in Martabe gold- silver project owned by OZ Minerals. The project is located on the western side of the island of Sumatra, Indonesia. The acquisition has been approved by the Australian government.

    "Martabe project has great starter assets to build the business," said Hegarty, adding that the project will be put into operation by the end of 2010 and will be "almost immediately profitable."

    "There are a number of opportunities in the Asian region, because it's a highly mineralized region," he said.

    "We are confident in secure decent returns for our shareholders and becoming an Asian-based multilateral gold-mining corporation," said Hegarty.

    (Source: Xinhua)