Mining in the Pilbara Region - Essay Example

Economics for Managers Mining in the Pilbara Region Pilbara mining project is one of the largest projects that China has financed in a boom that has both benefited and troubled Australia. China’s high demand for mineral ores has significantly transformed it to world’s second-largest miner (Schuman & Hedland, 2011). For example, the Chinese aluminum company (Chinalco) owns nearly 9 percent of Australian mining company, Rio Tinto. Additionally, China buys $22 billion worth of iron ore, every year, from Australia.

According to 2009 export reports, Australian government reported that $42.4 billion worth of iron ore, which is almost a quarter of Australian exports, went to China (Schuman & Hedland, 2011). Chinese mining activity, in Australia, is inelastic because it does not improve Chinese economy by any substantial amount. China has always poured billion of U.S. dollars, in the Australian quarries, which has helped Australia enjoy national unemployment rate of about 5.1 percent and escape the global recession while the Chinese government records no significant change, in its economy, in relation to its mining activities, in Australia (Schuman & Hedland, 2011).

Australian chief economists have admitted that their trade relations with China has added over $3,400 to every Australian household, every year, through imports, exports, and foreign investments (Schuman & Hedland, 2011). For example, through Chinese resource investments, Australia saw a $3 billion of foreign investment, $42.4 billion in export demand, and nearly $4.9 billion in other project financing, in July 2009 (Schuman & Hedland, 2011). Australian government has realized that Chinese mining industries have significantly improved its economy.

This is the reason why Australian government always strives to improve and maintain its political and trade relations with China. For instance, the Australian Foreign Investment Review Board recently issued guidelines proposing that Chinese investment companies should not exceed 50 percent (Schuman & Hedland, 2011). This law, however, has since not been passed. It is as if China it trying to acquire Australia while the Australian government benefits more than them from their mining activities.

References Schuman M, Hedland P. (June 19, 2011). Chinas Mining Pit. Time Magazine , 24-26.