WHEN Tom Albanese talks, markets usually listen. However, this week when the chief executive of Rio Tinto, the world's third-largest miner, warned that Australia represented the company's greatest sovereign risk, the scepticism was immediate
Australia? Sovereign risk? Surely not. The mere mention of sovereign risk sparks images of war-torn African nations, crippled and impoverished regions where the risk of civil revolt is high.
Guinea, one of the least stable economies in the world, fits the definition of having a high sovereign risk.
Rio Tinto was stripped of half of its Simandou iron ore project in the region in 2008 because of political demands and upheaval there.
But, Australia? An economy that has powered through the global downturn, is close to full employment and was among the first countries to start tightening interest rates because growth was so strong?
True father of our minerals miracle
May 29, 2010
Men of steel: Hu Yaobang and Bob Hawke survey the Pilbara's mountains of iron in 1985.
THE seeds of Australia's resources boom were sown a quarter of a century ago by two visionary leaders on an outback hill.
China's then Communist Party boss, Hu Yaobang, had flown with then prime minister Bob Hawke to see for himself the mountains of iron that were said to cover the Pilbara in Western Australia.
''If we take the long-term perspective, the profits will be huge,'' Mr Hu told his host on his 1985 Australian tour, according to Chinese records of the trip.
And he added: ''If someone asks me whether our opening policy will change, my answer is no.''
Mr Hawke's invitation to premier Zhao Ziyang a year earlier to invest in an Australian iron ore mine had helped give the Chinese leadership the assurance of supply they needed to open up and then hugely expand their steel industry.