Japan Plugs A Gap Left By China In Australian Resources

Forbes

25-03-2025

Japanese trading companies have emerged as big winners from lingering mistrust between Australia and China, using the rift to make a series of major investments in Australian resources which might previously have attracted Chinese companies.
Mitsui's $5.3 billion acquisition last month of a 40% stake in a world-class but undeveloped iron ore project is the highlight of Japan's plunge into Australian resources ranking as the biggest investment ever made by Mitsui.
Iron ore stockpiles at the Parker Point export loading facility in Western Australia. (Photo by ... More)
Mitsubishi, Sumitomo, and Sojitz have also been building on their exposure to Australian resources, especially in the fields of energy and critical metals.
A long-term investor in Australian resources, Japan was crowded out for several years by China, but a trade dispute four years ago which saw China ban the import of some Australian raw materials, soured that relationship, clearing the way for a Japanese return.
The close relationship between Australia and Japan is being reinforced by both countries having long standing connections to the U.S. which has become increasingly distrustful of China.
Sojitz led the way into critical metals with its support 15 years ago for Australia's leader in that field, Lynas Rare Earths, providing the capital to help build the Mt Weld mine in Western Australia, and continue to pump in funds to pay for expansion of the business which has emerged as the world's biggest rare earth producer outside China.
The Japan/Australia connection in rare earths, which have multiple industrial and military uses, is also of interest to the U.S. with Lynas and the U.S. Defense Department working on a solution to a wastewater disposal issue at the planned Seadrift rare earth processing plant being built by Lynas in Texas.
The plunge by Japanese companies deep into Australian resources goes beyond the simple purchasing of raw materials though those transactions are also expanding with Nippon Steel and JFE Steel last year buying a combined 30% stake in the Blackwater coal mine, and Woodside Energy selling a 15.1% interest in the Scarborough gas project to JERA, a major Japanese power company.
Australian coal being railed to port for shipping to Asia. Photo by Saeed Khan/AFP (via Getty ... More Images)
It's the growing interest of Japan's trading houses in early-stage resources exploration and project development which points to even closer future ties with Australia.
Mitsui's investment in the Rhodes Ridge mine is the deal which will finally see an asset, dormant for 50 years, brought into production with construction and future operation of the mine being managed by Rio Tinto, a major Australian iron ore miner.
Mitsubishi has at least two Australian resources deals moving through the early stages of planning, a non-binding understanding with Australia's Chalice Mining over the Gonneville palladium, nickel, cobalt and copper project and the Goongarrie nickel project where it is partnering with Sumitomo and the Australian company, Ardea Resources.
Gonneville has attracted Mitsubishi because it is seen as a future source of metals deemed to be critical with the supply of palladium controlled by Russia and South Africa, while nickel, cobalt and copper are key ingredients in rechargeable batteries.
Australian nickel is attracting Japanese investment, partly because China dominates Indonesia ... More production
Goongarrie is a pure nickel opportunity which has been 30 years in the exploration and evaluation phase but is currently working towards completion of definitive feasibility study which could lead to construction of a mine able to compete with Indonesia's low-cost nickel mines which are largely Chinese controlled.
Increasing involvement in Australian resources has been welcomed by the Australian Government, which is also closely monitoring Chinese investment in critical metals, sparking a dispute with Chinese investors in Northern Minerals, an Australian company proposing to develop the Browns Range rare earth project in the Northern Territory.
Five Chinese investors in Northern Minerals were last year ordered by the Australian Government to sell their shares, but not all have complied with the failure to comply stoking Australian Government concern.
The rare earth dispute with China gained further traction earlier this month when a former Australian Defense Minister, Linda Reynolds, accused China of manipulating the critical minerals sector.
It's incident like the trade clash of four years ago and the current dispute involving Northern Minerals which has thrown the Australian resources door wide open for Japan.