Bank­ing on re­cov­ery

Townsville Bulletin - - Investor - by Martin Rasini martin. rasini@ townsville­bul­letin. com. au

JA­PAN’S earth­quake - in­duced re­cov­ery is likely to be a dou­ble-edged sword for Queens­land, strength­en­ing de­mand for metal and coal ex­ports, but hav­ing the po­ten­tial to dam­age other in­dus­tries.

James Cook Univer­sity as­so­ciate pro­fes­sor of eco­nom­ics Natalie Stoekl said yes­ter­day the re­build fol­low­ing Ja­pan’s earth­quake and tsunami disas­ter would spur ex­panded de­mand for raw ma­te­ri­als while fall­out from its atomic en­ergy woes could well see coun­tries shelve atomic power plans, ex­pand­ing de­mand for coal.

Her ex­ports fore­cast was echoed by Peter Drys­dale, emer­i­tus eco­nom­ics pro­fes­sor at Aus­tralian Na­tional Univer­sity, and Aus­tralian Bu­reau of Agri­cul­tural and Re­source Eco­nom­ics and Sci­ences ( ABARES) chief com­mod­ity an­a­lyst Jamie Penm who fore­cast a rise in cok­ing coal and iron ore ex­ports to Ja­pan.

They told Lloyd’s List DCN raw ma­te­ri­als for re­con­struc­tion would spur the in­crease.

Ja­pan ac­counted for 38 per cent of Aus­tralia’s en­ergy ex­ports, and 12 per cent of its min­eral ex­ports in 2009-10, Mr Penm said.

Iwaki, Townsville’s sis­ter city, is one among many cen­tres on Ja­pan’s east coast to be re­built.

The city was dev­as­tated by the tsunami spawned by the mag­ni­tude nine, March 11 earth­quake and lies about 30km from the Fukushima No 1 nu­clear power plant, d a maged by ex­plo­sions , where re­ac­tors are at risk of melt­down. The in­dus­trial city of 345,000 is home to Nis­san and Mazda ve­hi­cle plants, as well as chem­i­cal, phar­ma­ceu­ti­cal and elec­tron­ics fac­to­ries, and pa­per milling.

Ms Stoekl said ex­panded de­mand for re­sources, while a boon for the min­ing in­dus- try, car­ried dan­gers for Aust ralia in the form of a stronger cur­rency, which could hurt agri­cul­ture, ed­u­ca­tion and tourism.

‘‘ A min­er­als boom can push up the value of the A-dol­lar, so while it is good for one sec­tor it may be detri­men­tal to oth­ers,’’ she said.

Ms Stoekl said the ele­phant in the room in wake of ex­plo­sions at the Fukushima power plant was the en­ergy plans of other na­tions.

‘‘ If there is a back­lash against nu­clear power, it will have a pro­found ef­fect on the level of ex­ports of coal from Queens­land,’’ Ms Stoekl said.

‘‘ It hap­pened in the 1960s in Aus­tralia and, given the present tight labour mar­ket, the more the min­ing sec­tor booms, the more other sec­tors are likely to bleed.’’

Ms Stoekl said in terms of the speed of re­cov­ery in Ja­pan, much would de­pend on how the Ja­panese re­sponded to the disas­ter.

She said psy­chol­ogy could play a big role and it was a mat­ter of how ef­fec­tively and how quickly a pop­u­la­tion was able to move for­ward.

The Port of Townsville in the 2009-10 fi­nan­cial year shipped to Ja­pan 200,000 tonnes of lead, zinc and cop­per con­cen­trate and 500 tonnes of re­fined cop­per as part of 571,000 tonnes of to­tal ex­ports, with sugar con­sti­tut­ing the bulk of the ad­di­tional ton­nage.

Ex­ports to Ja­pan from the port to date in the 2010-11 year to­tal 153,899 tonnes, com­pris­ing mainly sugar.

WIN­NERS, LOSERS: Port’s min­eral ex­ports could in­crease while other in­dus­tries may suf­fer

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