At the mercy of Chinese bureaucracy

Australia has one of the world's largest and most profitable mining industries, which, in its 160-year history, has produced some colourful characters. Mining magnate Andrew Forrest is one such individual. A dynamic, risk-taking and pugnacious entrepreneur from the home of mining in Australia - Western Australia - Mr Forrest's latest incarnation is as a would-be iron-ore baron. But right now, his vision of becoming a major producer to rival the likes of global giants BHP Billiton and Rio Tinto, depends on how he deals with the Chinese.

While things had been going swimmingly over the past 12 months, at Easter his Chinese investors gave the slick marketer a severe jolt that sent the share price of his company, Fortescue Metals Group (FMG), tumbling.

Mr Forrest has been promoting his A$2 billion ($11.8 billion) Western Australian iron-ore project on the basis that China Metallurgical Construction Corporation (MCC) was going to lead a Chinese consortium that would build a port facility, processing plant and railway plant between the iron-ore mine and the nearby town of Port Headland. But on March 24, the Australian Financial Review's Shanghai correspondent reported that the president of MCC, Shen Heting, had said the Fortescue project contained too many risks at this stage.

Mr Shen said that, despite Mr Forrest's claims that the MCC and two other Chinese state-owned corporations were locked in to fund the project, these commitments were 'still in the process of discussion [with FMG] and no material results have been achieved yet'. And even if MCC signs up to the project, it needed Chinese government approval, Mr Shen said. Worse still, Mr Shen added that Fortescue Metals had not yet secured contracts to supply its product to Chinese iron-ore mills.

Things have not been getting any easier for Mr Forrest. Last week, a Chinese steel company delayed a A$13 million prepayment for a deal for 2 million tonnes of iron ore because it had not received Beijing's authorisation for the agreement with Fortescue.

The saga has been front-page news in Australia for the past couple of months, and it has provided a sobering contrast with the voluminous number of upbeat stories about China and Australia's broadening economic relationship.