HunterNet Newsletter – October 2024

Japan

Good News from Japan!

Australia has been put back on the Tier 1 list for Japanese energy transition. Although there is a touch of Stephen Bradbury about it. We haven’t so much improved, rather other jurisdictions have been relegated due to surrounding geopolitical risks. Still, this is a great opportunity to reset our image to them and to take a bit of reality on how we must work hand-in-hand in transition, especially G2G.

Japan is soon to release its 7th Strategic Energy Plan which will focus on “affordability and accessibility” as opposed to dogged determination to put the expensive decarbonisation transition as a priority. They are committed to the journey but realise that it is impossible without pragmatism. The 2021 6th energy plan can be found here. https://www.enecho.meti.go.jp/en/category/others/basic_plan/pdf/6th_outline.pdf

Over the past two weeks I have been with senior executives from Japanese and Korean corporates and their government officials in Sydney, Brisbane and Tokyo. They have all remarked on the above. They are prioritizing grey and blue hydrogen/ammonia ahead of green to build the industry. Get the industry going and let’s see where we get.

There is a clear message. Japan knows that with its weak currency, global competitiveness will be compromised with expensive energy. So coal and gas remain a feature and nuclear, despite resistance at home, will likely head beyond 20% of the generation mix.

Nippon Steel’s purchase of 20% (and JFE Steel’s 10%) of Whitehaven’s Black Creek mine in QLD is a strategic purchase. On the tech front, DRI requires 65-68% Fe content coal when combined with LNG or hydrogen to make green steel. The journey will likely take at least 20 years to be produced at scale.

NSW has a new Japanese Consul-General, Mr Osamu Yamanaka. He started last week. I was privileged to be the first Australian he has met formally, and he is very keen to travel to the Hunter and see the industries there – especially coal and hydrogen/ammonia capabilities. I have also implored he put pressure on the NSW Government to send our political class into Japan and Korea to accelerate the mutual need for understanding on what energy transition looks like with our biggest export customers. They believe we simply don’t understand it.

I will get dates of a potential visit when CG Yamanaka comes to the Hunter. No doubt Aerologistics should start to refuel the chopper.

Fukuoka Prefecture is looking to host a business cooperation plan in Japan to meet with the hydrogen supply chain in late November. Fukuoka signed a MoU with NSW Government on hydrogen last year. I have encouraged Fukuoka to start to build connections sooner rather than later and those in the supply chain would get value out of forming relationships by visiting.

I have also been active speaking to the Japanese home builders. There are a lot of opportunities for supply chains to address the housing crisis from social to high rise to BTR/BTS and everything in-between. Sumitomo Forestry just bought 51% of #1 home builder Metricon.

I had a good conversation with Rose Jackson MP’s staff about how Japan can help with social housing transition. Urban Renaissance, a Japanese government agency has built 700,000 social homes in Japan and they will hopefully guide the discussion which will lead to positive outcomes.

Japan has appointed a new prime minister – Shigeru Ishiba. He has called for a snap election to consolidate power, but it is likely the ruling LDP may slip may lose its majority. Although politics rarely changes in Japan.

Korea

When STIC, many of you may recall conversations around tri-lateral cooperation extending to energy security and defence cooperation. South Korea has appointed Park Cheol-hee and Sim Seung-seob as ambassadors to Japan and Australia, respectively. Park, currently the president of the Korea National Diplomatic Academy, is an expert in South Korea-Japan relations and served as director of the Institute for Japanese Studies at Seoul National University and a professor at the Graduate School of International Studies.

Ambassador Sim served as Commander of the First Fleet, Chief of Personnel at the Naval Headquarters and Director-General for Strategic Planning at the Joint Chiefs of Staff, culminating in his role as Chief of Naval Operations. Both appointments are expected to strengthen South Korea’s diplomatic and defence relations with Japan and Australia, respectively.

Park’s expertise in South Korea-Japan relations and his close connections within Japanese political circles are expected to facilitate diplomatic interactions and reinforce trilateral security cooperation with the U.S.

Sim’s appointment highlights South Korea’s focus of enhancing defence cooperation and arms sales with Australia. Although Sim is not a former minister, unlike his predecessor who served in the role for less than a month, his military background and experience in naval operations align with the Yoon administration’s strategic priorities.

In commercial circles, it is worth noting over the past 12-months that the Japan Chamber of Commerce & Industry (JCCI) and Korean Chamber of Commerce Association (KCCA) are regularly meeting.

Korea also has a new Chief Representative for the Korea Development Bank, Mr Jerry Lee.

NSW Government appoints new North Asia Trade & Investment Commissioner

In closing, Investment NSW has appointed David Lawson as Trade & Investment Commissioner. He served in Austrade Tokyo for many years and is fluent in Japanese. His email is david.lawson@investment.nsw.gov.au