ABSTRACT
This chapter tells the story of how Australia rose to become the centre of the Asian iron ore export market. It relates how Australian government interventions aimed at grabbing quick rents, without considering the long-term implication or competitiveness of the global market, and how these interventions catalysed the development of competitors to Asian iron ore market which remain today. The chapter describes how Japan's contractual arrangements with various suppliers shaped the development of the global iron ore market and how interventions in that market often had unintended consequences. The relative geographic closeness between Japanese and Australian iron ore traders was basis of enduring cost advantages over other competitors in Brazil, Africa and Europe. Despite the nature of the Australia-Japan cost advantage, the development of the Asian iron ore market was influenced by government interventions, which driven by short-term rents. The rise of the Asian iron ore market and eventual consolidation laid foundation for supply response to China's coming demand boom.
