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203 Mr J. A. Lyons, Prime Minister, to Mr Torao Wakamatsu, Japanese Consul-General in Sydney

Letter 18 May 1938,

With further reference to your letter of 11th April, 1938 [1], and
to previous correspondence on the subject of iron ore, I have the
honour to inform you that this matter has now received full and
careful consideration by the Government. The closest attention was
given to the particular points raised in your letter of 5th April
[2] and in that now under reply.

The best expert advice available has been obtained, and in the
light of this advice the Government is satisfied that the
accessible iron ore deposits of Australia which are capable of
economical development are so limited as to compel their
conservation for Australian industrial requirements. You will
recall that I gave expression to our concern in this regard in my
letter to you of 29th March. [3]

Copy of a report by the Commonwealth Geological Adviser on the
subject of iron ore is attached.

Careful consideration has been given to the proposal that licences
should be granted to export limited quantities of iron ore, but
the Commonwealth Government has come to the conclusion that such
action would be inconsistent with the necessity to conserve
Australia's limited iron ore resources.

For these reasons I am very reluctantly obliged to inform you that
the Commonwealth Government feels that it has no alternative but
to prohibit the export of all iron ore from Australia, and a
proclamation to this effect will be issued to take effect as from
1st July, 1938.

During the early stages of Messrs Brasserts' [4] activities at
Koolan Island no doubt existed as to the adequacy of our iron ore
resources, and, in consequence, the Government made no demur to
the proposed enterprise. It has been only as a result of
investigations which have recently taken place, and which I may
say were initiated owing to apprehension expressed by experts,
that the necessity for our intended action has become apparent.

I note from your letter of 5th April, that the expenditure in
connection with Koolan Island is already substantial. The
Government will be prepared to examine and consider equitable
claims for reimbursement of expenditure which has up to this date
actually taken place in connection with development operations
directed towards the exploitation of our iron ore resources for

We sincerely trust that the interests concerned will appreciate
that the Commonwealth Government is acting only with the gravest
sense of responsibility and we assure you that we regret
exceedingly that the decision may indirectly affect Japanese
interests. We hope, however, that the action which our duty
compels us to take will not impair the cordial and friendly
relations which have so long and so happily existed between our
respective countries.


1 Document 184.

2 Document 178.

3 Document 171.

4 Messrs H. A. Brassert & Co. Ltd, a British firm of consultative


Report by Dr W. G. Woolnough

14 April 1938 [1]


Any estimate of the availability of iron ores in Australia must be
based upon the fundamental economics of the question, and
cognisance must be taken of physical conditions peculiar to

The following considerations must be given due weight:-

1. Iron ore, even of high grade, is intrinsically low in value,
therefore mining and transportation must be as cheap as possible.

2. A high degree of purity is desirable so that metallurgical
costs may be reduced to the lowest limit, and a minimum of barren
material dealt with.

3. Relatively large supplies of uniform quality must be assured so
that rapid variations in metallurgical practice may be avoided.

4. The capital cost of the essential metallurgical installation is
so high that continuity and uniformity of supplies must be ensured
for a period sufficiently long to cover the amortisation of the
capital expended.

These fundamental demands can be met, especially in the case of
infant iron industries like that of Australia, only by a fortunate
concurrence of favourable factors. It is economically impossible
to consider deposits of less than about 20 million tons of ore,
containing a high percentage of iron, and free from notable
amounts of such objectionable constituents as silica, titanium,
sulphur, phosphorus and copper. Some manganese may be present with
advantages, but an excess is objectionable.

Workable deposits must be so situated as to be within economical
transportation radius of adequate supplies of coal of just the
right quality. In existing conditions, only deposits favourably
situated for water transportation are economically possible of

Mining must be exceedingly cheap and, until the industry has
become maturely developed, must be confined to open-cut methods.

In Australia there are only two groups of iron ore deposits which
satisfactorily comply with all these conditions, namely, the Iron
Knob Group in South Australia and the Yampi Sound Group in Western

Many other important iron deposits are known to exist, but all of
these exhibit one or more characteristics excluding them from
economic consideration at present, or in the immediate future.

The Mt Philp deposit of the Cloncurry district, estimated at 20
million tons, is some 400 miles inland-beyond the economic
transportation limit.

Iron Range, near Portland Roads in North Queensland, is large in
size, but so far as is known at present inferior in quality.

The Cadia deposits in New South Wales are the extreme limit of
economic transportation, and, in existing conditions, cannot
compete with seaborne supplies from greater distances.

Victoria possesses no major deposits.

In Tasmania, the Blythe River deposits are of considerable
dimensions, but recent investigations have thrown grave doubts
upon both quantity and quality of the ores.

Other deposits of economic importance may exist in Tasmania, but
extended surveys and explorations are necessary to determine their
quality, quantity and availability.

In South Australia, the only major accessible deposits are those
of the Iron Knob Group. Official estimates of tonnages available
lie between 150 million and 200 million tons. These deposits do
and must unquestionably constitute the backbone of the Australian
iron industry for a long time to come. Unfortunately, the largest
deposits of the group show an increasing percentage of manganese,
to more than the admissible limit, with increasing depth of
exploitation. This must be counteracted by dilution of the ore
with other iron ore low in manganese, since the manganese cannot
effectively be removed in smelting.

It is largely for the reason mentioned in the preceding paragraph
that the Yampi Sound deposits, until recently regarded with
comparative indifference by Australian iron-masters, have quite
suddenly taken on greatly enhanced importance. No other completely
adequate source of supply of low-manganese ore is actually
available or immediately probable within the Australian region.

The Yampi Sound deposits have been variously estimated to contain
from 63 million to about go million tons of ore. These estimates,
however, assume a depth of profitable mining which is almost
certainly excessive in existing economic conditions in Australia.

Very large tonnages of iron ore are known to exist in the interior
of Western Australia, but none of these is comparable in respect
of transportation even with the Cadia deposits of New South Wales.

In the circumstances, then, and until the whole question has been
clarified and stabilised. by a critical survey of all reasonably
probable sources of supply of ore, it is absolutely essential,
from the purely technical aspect, that steps be taken to conserve
the iron ore reserves upon which must rest to a very large extent,
the future industrial development and prosperity of Australia.

The world trend at the present time is towards rapid increase in
the development of iron industries in those countries possessing
the two absolute essentials of adequate ores, and, above all,
suitable fuel supplies. Australia possesses the latter. As pointed
out above, however, the ore supplies appear to be definitely

Nevertheless, the fuel factor alone makes it certain that our
juvenile iron industry must expand rapidly.

At present we are using over two million tons of iron ore a year.

In view of the expansion of the iron and steel industries of
Australia which has taken place in the last few years, and the
practical certainty of further large expansion within the next few
years, it is certain that if the known supplies of high grade ore
are not conserved Australia will in little more than a generation
become an importer rather than a producer of iron ore.

From their very nature iron ore deposits of dimensions worthy of
consideration in the present survey form topographic and
geological features so exceedingly conspicuous that it is beyond
the bounds of possibility that there exist anywhere within the
accessible portions of Australia undiscovered accumulations of
such ore of noteworthy dimensions.

That other countries are looking towards Australia for supplies of
ore emphasizes the fact that the known circum-Pacific iron ore
reserves are very inadequate, and suggests that we must in the
interests of our own industries, conserve all supplies of iron ore
which are favourably situated.


[AA : A1608, C47/1/4, iii]

1 Although dated 14 April 1938 the copy of the Woolnough report
sent to Wakamatsu contained a number of minor textual alterations
made probably on 18 May. These alterations are listed in a
cablegram from Lyons to Page on 18 May 1938 (section not printed;

see AA : A1608, C47/1/4, iii]. For the original version of the
report see AA : AA1972/341, box 6.

[AA : A981, AUSTRALIA 90]
Last Updated: 11 September 2013
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