Japan ratchets up sales pitch as resources investor

A VISIT by one of Tokyo's top bankers signals the launch of a charm offensive

JAPAN Inc is up-selling itself as a customer and investment partner in Australian resources, particularly in Western Australia where it has a decades-long record of successful partnerships.

The sales talk to local companies and officials is: Japan is reliable, we are peaceful capitalists, we have the capital to make you richer and, more subtly, we are not China.

The strategic charm offensive by Australia's No 1 buyer and largest Asian shareholder is being led by the Japanese government's lender for foreign projects, which last year committed $11 billion to natural resource and energy projects around the world and is determined to become an underwriter for the expansion of Australia's mining and energy sectors.

The chief executive of the Japan Bank for International Co-operation, Hiroshi Watanabe, spent a week in Australia late last month, meeting senior executives and visiting mines and natural gas projects.

He also met Reserve Bank of Australia governor Glenn Stevens in Sydney and West Australian Treasurer Troy Buswell in Perth.

With global credit markets still tight, Mr Watanabe told a private gathering of Perth's business leaders that for resources projects beyond the five-to-seven year horizon of commercial banks, companies needed financiers such as JBIC.

"The message Watanabe brought to companies such as Rio Tinto and Woodside was that not only is Japan one of your best customers, it is prepared to share the risk for new projects through either debt or equity," said Manuel Panagiotopoulos, a long-time adviser to both sides of the Australia-Japan relationship. "To have someone of Watanabe's seniority in Australia for a week is an important sign of Japan's long-term commitment to Australia and how vital securing a stable supply of resources and energy is to their nation."

At the November 24 event with Rio Tinto Iron Ore chief executive Sam Walsh, Mr Watanabe highlighted JBIC's ability to finance large-scale resource projects over many years and restated his country's continued hunger for Australia's iron ore, coal, liquefied natural gas and uranium.

Mr Walsh is one of the most respected and powerful figures in WA and has been a strong advocate for Japanese investment.

JBIC has funds invested in 13 Australian ventures, mostly in WA, including Woodside's Pluto and North West Shelf gas projects, BHP Billiton's Yandi iron ore mine and Worsley alumina joint venture. JBIC typically funds projects or makes acquisitions in developing countries, but Australia is a special case because it is resource-rich and a capital importer.

As well, according to a Japanese government source, Japan Inc is keen to shift more of its foreign natural resources and energy assets into Australia, where geopolitical differences are miniscule.

Having watched China swing from being the flavour of the times to the focus of populist fears over foreign ownership, Japanese officials believe they need to be more active now in selling their nation's advantages.