The tentacles of multinational
corporations. reach around the
world. This story shows how U.S.
capital operates in Australia.

By TOM FOLEY

oS am mining went through a
spectacular development in the
past decade, in which both the U.S. and
Japan were deeply involved. American
capitalists provided much of the financing
for the mines, and Japan’s industry re-
ceived much of their output. Yet, few
people — Australians, Japanese or Amer-
icans — benefited very much from this
new Pacific ‘‘triangular trade.” The few
who did benefit got a big return, however.
Restrictions on mineral exports were
lifted by the Australian government in
1960, at the same time as it removed all
import barriers. That is when the U.S.
and Japan began to move into the island-
continent “Down Under”’ in a big way.
Today, American capitalists have

more than $2 billion invested in Australia, —

more than in any other Asian country in-
cluding Japan, and more than in any West
European country except Britain. Aus-
tralia, like Canada in the 1950s, is a focal
point for U.S. foreign investment.

The U.S. State Department reports
that more than 1,100 U.S. companies are
involved in Australia. A list of them
reads like a Fortune magazine survey of
the biggest U.S. corporations, from Gen-
eral Motors (auto assembly) to the King
Ranch, Inc. of Texas (cattle grazing land).

Most of Australia’s 12 million people
live in cities; 83 percent are classified as
urban residents, and 40 percent of the to-
tal national population live in the two.
cities of Sydney and Melbourne, in the
extreme southeastern part of the country.
A high proportion of the work force, 27.
-percent, is engaged in manufacturing
(compared with 21 percent in the U.S.).
Despite the stereotyped image of an Aus-
tralian as.a sheep-herder in the vast,
lonely ‘‘Outback”” — as Australians call
their bush and desert country — most
Australians are urban wage-workers.

The past decade’s mineral boom, how-
ever, took place in the almost uninhabited
northwestern corner of Australia. The
desert tablelands of the Hamersley rang-
es were found to be nearly solid iron ore:
close to 16 billion tons of ore averaging
65percentironcontent. 2.

Total known U.S. iron ore reserves are
only 5.5 billion tons, and it was said that
the few feet of dirt overlay on top of the
Hamersley ore contained more iron than
the Mesabi Range in the U:S. :

In 1963, Hamersley Iron Mines (36 per-
cent‘owned by Kaiser Steel backed by the
Bank of America) began developing
mines at (Mt. Tom Price (named after a
Kaiser Steel executive) and Paraburdoo.
Today, Hamersley has contracts to: sup-

ply 260 million tons of iron ore and pellets, ~

worth $2.3 billion, to Japanese steel mills.

+

Stranglehold
on
Australia

Nearby, at Mt. Newman, iron ore de-
velopment began a few years later: in-

volved is American Metal Climax Corp.,

a Rockefeller concern, with a 25 percent.
interest in the operation, and the big Aus-
tralian mining company, Broken Hill Pro-
prietary Co., Ltd. (BHP); MitsuiandItoh
two Japanese monopoly corporations. Mt.
Newman has sold 200 million tons of iron
ore and pellets to Japan on contract, for
an estimated $1.7 billion. The Hamersley
and Mt. Newman ores are going mainly
to the three big Japanese steel firms —
Fuji, Yawata and Kobe.

The Japanese are quite willing to pay
out whatever is necessary to get Austral-
ian ore, because they consider it a ‘‘close
source of supply.”” Even though the Aus-
tralian iron ore ports of Dampier and Port
Hedland are 2,000 miles from the Japan-
ese mills (which are built right on the

’

water’s edge), steel experts in Japan

point out that they have been bringing
their iron ore an average of 5,000 miles.

The savings realized on Australian ore
will enable the Japanese mills to cut their
prices as much as 20 percent for the fin-
ished product, and Japanese steel is sell-
ing at an average 15-20 percent below U.S.
steel prices right now.

In the last few years, Japan has moved
into third place (behind the U.S. and the
Soviet Union) in world steel production,
and in 1970, it became the world’s leading
exporter of steel, about 10 million tons out
of an 88 million ton total. Although a “‘gen-
tlemen’s agreement’’ limits Japan’s ex-
ports of steel to the U.S. to 7 percent
of total U.S. steel imports, this has not
kept the Japanese from capturing much
of the West Coast steel market.

In certain types of steel—for instance
cold-rolled sheet, which is used to make
a wide variety of consumer durables —
Japanese steel now holds 50 percent of the
West Coast market. Of course, none of
this would be possible without good old
Kaiser Steel and Australian iron ore.

So it is rather curious that last year
President Jack J. Carlson of Kaiser Steel
admitted that his corporation’s sales fell
more than $6 million and its net income
dropped .24.4- percent. Curious because
Kaiser’s- main steel market is the West

“Coast; which it supplies from its Fontana, ©

California mill. But Carlson said that
Kaiser would strengthen its Fontana pro-

‘duction by adding a new mill to turn gut—

cold-rolled sheet steel! as oe
“ Part of the answer to this apparent
riddle is that Japan’s spectacular indus-
‘trial growth, which has. varied between
13-18 percent each year for the-past dec-
ade, has been largely financed by short-

term (90-120 day) American loans. When

Japan’s heavy ipdustries need capital,
they need it in a hurry, and they are will-
ing to pay upto 15 percent interest. As
long as ~ production . booms without a

_brtak, they can pay it back with no

trouble.

PACIFIC TRIBUNE—FRIDAY, JANUARY 28, 1972—PAGE 8

Clockwise, from bottom left: Pelletizing plant of Kaiser
affiliate; Hamerseley Iron, at Dampier; General
Motors’ Holden passenger car, designed and
manufactured in one of GM’s seven

Australian plants; National
Lead at Hawks Nest;
Geelong smelter of
Alcoa of Australia;
one of American
Oil’s Amoco
stations at
Adelaide.

A loan of $1 million at 15 percent,
sure to be paid back in 90 days, is an Amer-
ican banker’s dream. It is%4 nightmare
for Japan’s exploited workers, subjected
to a ferocious speed-up, a Sharply mount-
ing accident and sickness rate, and an in-
credible pollution of the environment
about which the Japanese government,
naturally, is doing nothing.

Japan lacks both iron ore and coking
coal, so it is not surprising to find that
Australia last year sold Japan about 16
million tons of coking coal. Much of this
came from northeast Australia, from the
central Queensland belt which is esti-
mated to contain more than four billion
tons of coking coal alone. Thiess Holdings,
Ltd. owns much of this, and is a monopoly
holding company run by the Peabody
Company of the U.S. and Mitsui, Ltd. Al-
so involved in Australian coal is Armco
Steel (U.S.).

While Australia at present supplies
Japan with 28 percent of its iron ore and
39 percent of its coking coal, it provides
more than 50 percent of Japan’s bauxite
needs. Bauxite is the ore used to make
aluminum.

~ You were right if you guessed ‘that

' American capitalists must be involved in

this too. Alcoa already has one refining
plant with a 1.25 million ton’ capacity at

‘Kwinana, in southwest Australia, and is

building another at Pinjarra nearby.
Swiss interests are developing new baux-
ite finds on the Gove Peninsula in Aus-

tralia’s Northern Territory, but the con- —

struction work of building an entire new
town there is being done by Dillingham of

‘Hawaii, the big U.S. construction corpora-

tion. And in Queensland, Alcan (tied in
with Alcoa) together with Kaiser Alu-
minum and British and French interests,
-» building the biggest bauxite-processing
plant in the world.

&

Not all the U.S. Capitalist involyement.

in Australia is in mining, of course: Amer-

ican capitalists are buying up or leasing -

Australian land at such a fast clip they

_ May well literally own the country if the

pace continues. In the vast Northern Ter-
ritory (capital: Darwin), Americans al-
ready hold 70 percent of the total land
area. This. is roughly the same as for-

eigners owning most of Illinois, Ohio and
. J

Indiana.

Biggest U.S. landholder, with seven

million acres, is the King Ranch, Inc.,

of Texas. Texas is also represented by the

_ HL, Hunt interests, which own more than —

2,200 square miles. The Dillingham Corp.
of Hawaii owns more than 1,600 square
miles, i.e., slightly more than the area of
Rhode Island. Then there are somewhat
‘smaller land barons — David Rockefeller,
the Chase Manhattan Bank, W.R. Grace
and Co., Kaiser Aluminum, and others.
All of this has not caused any concern
to Australia’s Minister of National Devel-
opment, Reginald Swartz, who in Decem-
ber pointed out that Australia’s earnings
from minerals exports had risen in five

_ versity, said in its latest issue tha

Q70)

years from $320 million to about $2"
lion, jumping its share of the total
ings from 12 to 25 percent.

Others do not share Mr. Swat’
thusiasm. The conservative Far
Economic Review (Hong Kong),
cized those who praised Americal
talism’s massive involvement in AU
ia and pointed out that the U.S. “
port most of the profits’ from Al
along with the iron ore and coal,
the case of mineral developmen
in the ground is of little use to full
erations.”

Another cause for concern is
that U.S. exports to Australia @
manufactured goods) have risen *
in the past five years, to $1.12 bl!
1970, while Japan sold more #
million to Australia last year. Au
are aware that the Japanese and
cans manufactured a good part
commodities from Australian raw”
ials and then. shipped them back ®
tralia. : ;

Then the question arises: sine
Australians’ are urban wage-W?
wouldn’t they have gained mor
having these goods manufactured
tralia? Wouldn’t this help to cré
strong, integrated national econo™
tralia needs to survive? :

As things stand now, Australia
omy is almost totally at the mercy.
ces beyond its control: a growing P
tionism in the U.S. or a recession J!
the U.S. or Japan would have a
dous impact on- Australia. Somé
has been felt already: inflation ee
had been running. around 3 per
nually. until 1970, when it SU
jumped to 6 percent. :

The Australian Economic Rev
quarterly published. by Melbou

future of the economy we are bu
at stake.” It warned that Austral
an economic crisis potentially 4
trous as the Great Depression of thé
Then, Australia’s economy was b@
wool and wheat exports, and bes
prices on world markets fell by 50 P
in 1929-31, Australia was ruined..
same pattern of excessive relian©
few primary materials exports &™
the Australian economy today.

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