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CSCEC signs US$4.6 billion MoU to construct Australian iron ore project
China State Construction Engineering Corporation (CSCEC) has signed an MoU with Balla Balla Infrastructure Group (BBIG) to build the port, rail and mining infrastructure for the Balla Balla iron ore project in Western Australia. The construction of the project will cost approximately A$6billion (US$4.6 billion).
Michael Marray 29 Mar 2017

China State Construction Engineering Corporation (CSCEC) has signed a memorandum of understanding with Balla Balla Infrastructure Group (BBIG), an Australian infrastructure development company, to build the port, rail and mining infrastructure for the Balla Balla iron ore project in Western Australia. The construction of the project will cost approximately A$6billion (US$4.6 billion).

The MoU was signed on March 24 by CSCEC president Wang Xianming and BBIG chairman Jon Young at a ceremony attended by Prime Minister Malcolm Turnbull and Chinese Premier Li Keqiang in Canberra.

BBIG is building the new iron ore export facility on the Pilbara coast between Karratha and Port Hedland. The project will include the construction of a 162km railway linking the iron ore deposits in central Pilbara to the new Balla Balla port facility. Custom-built barges will be used to transfer the iron ore onto ships, thus reducing the cost and environmental impact.

The agreement includes a requirement for the use of local sub-contractors from the Pilbara area, while making use of CSCEC's experience in delivering large integrated projects. An estimated 3,000 jobs will be created during the construction phase, with 900 permanent jobs once operational. An estimated 50 million tonnes of ore could be exported annually once the greenfield project is up and running.

BBIG is controlled by Todd Corporation, a family owned conglomerate based in New Zealand.

This is the latest in a series of deals in the mining sector involving close cooperation between Australia and China. Chinese companies have been acquiring gold mines over the past two years, and Chinese construction firms are looking for more involvement in major infrastructure projects.

CSCEC is China’s largest construction and real estate conglomerate, and biggest building work contractor. It is also the largest transnational construction company active in developing countries.

Chinese Premier Li Keqiang arrived in Australia on March 24 accompanied by a high-level business delegation, and participated alongside Australian Prime Minister Malcolm Turnbull at the sixth CEO Roundtable in Sydney, the second China-Australia State/Provincial Leaders Forum, and the China-Australia Economic and Trade Cooperation Forum.

During Li's visit the two countries agreed to commence discussions in 2017 to update the Australia-China Tax Treaty, with formal negotiations to start in 2018. They also agreed to establish an Australia-China Ministerial Energy Dialogue.

At a time when the new Trump administration in the United States has announced an America First policy, and is threatening protectionist measures, China has been trying to increase its influence globally as a defender of free trade.

Li Keqiang said during his visit that against the background of a weak global economic recovery and the rising trend of anti-globalization and protectionism, China and Australia have built a consensus, deepened cooperation, and jointly sent a positive signal of facilitating trade and investment liberalization and fighting against protectionism.

Eight of China's Provincial Governors were with the delegation, and attended the China-Australia Provincial/State Leaders Forum in Sydney, where Li called on the Chinese and Australian governments to enhance cooperation at provincial level.

As part of this process, Australia announced that it will open a new consulate in Shenyang, Liaoning Province, bringing the number of Australian diplomatic and consular posts in mainland China to five.

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