Australia has vetoed a multi-billion dollar mining project involving a Chinese company because of national security and safety concerns. The plan involved a mining site within a restricted missile testing range at Woomera in the South Australian desert.
The Hawks Nest iron ore mine would have been a joint venture between Australian company Western Plains Resources and a Chinese steel corporation. The plan was to develop a multi-billion dollar iron ore facility inside the Woomera Prohibited Area, a military testing base in South Australia, where other mining projects have been approved in the past.
The application has been blocked by the Australian government, which has cited national security and safety concerns.
The huge Woomera range, which is roughly the size of (the U.S. state of) Florida, is a vital part of Australia's defense capabilities.
Defense Minister John Faulkner says the ministry stepped in to veto the project in what he considers to be an extremely strategic area.
"The difficulty here in relation to this proposal is its location," he said. "It's within the testing range's center line and the location of the Hawks Nest tenement is an inherently dangerous and very sensitive, the most sensitive part of the range."
Western Plains Resources said the government's intervention was surprising and disappointing.
It is the second time this year that the government has blocked Chinese investment in the Woomera area on national security grounds.
Large mining deals of this type have ignited a debate over whether Chinese-controlled companies should be allowed to control Australia's mineral resources.
Despite the concerns, China has become the third largest investor in Australia behind the United States and Britain.
Australia's Foreign Investment Review Board said that it had received almost $30 billion of applications from China in the past 18 months and most have been approved.
This latest decision could aggravate relations between Canberra and Beijing. China has become one of the biggest buyers of Australian exports, particularly commodities such as iron ore. But the failure of a Chinese offer to buy a large stake in Australian mining company Rio Tinto, followed by China's arrest of Rio Tinto executives on industrial espionage charges, caused new tension between the two.
Things worsened in July when Canberra granted a visitor's visa to an activist from China's Uighur minority group. Beijing considers Rebiya Kadeer, who lives in the United States, to be the leader of a terrorist group.