Australia-Japan News | June 2022

Australia-Japan News | June 2022

This page collates links to interesting articles that provide a picture of what is happening in Japan and in the Australia-Japan relationship, with brief summaries of their content.

While we don’t claim this list to be comprehensive, and some of the articles may be behind paywalls, we hope it will evolve into a valuable resource that assists members and subscribers in keeping up to date and provides a record of key developments… make sure to check back regularly to see the latest.

* indicates the article is behind a paywall.

June 2022
G-7 renews push to sanction Russia, to tackle China’s market abuse

Leaders of the Group of Seven nations said on 28 June they would explore a price cap on Russian oil, while pledging $US4.5 billion to combat a growing food crisis. Leaders also agreed on a ban on imports of Russian gold and pledged to raise $US600 billion over five years to finance infrastructure projects in middle and low-income countries to counter China’s “Belt and Road” infrastructure scheme. Read more >

Less than 3% of Japan firms exiting Russia, lowest among G-7: survey

Only 4, or 2.4%, of the 168 Japanese companies operating in Russia had decided to cease business in the country, the lowest proportion among the G-7 nations, according to analysis by Teikoku Databank based on the survey conducted by the Yale School of Management covering 1,300 major companies worldwide. Read more >

U.S., Japan and Australia launch Pacific island initiative

On 24 June, the United States, Japan, Australia, Britain and New Zealand launched a mechanism “the Partners in the Blue Pacific (PBP)” to support Pacific priorities more effectively and efficiently. The five countries also said in a statement that they will forge closer connections with Pacific governments and with the Pacific Islands Forum as well as help expand opportunities for cooperation between the Pacific and the world. Read more >

Japan consumer inflation tops BOJ target for 2nd month in row

Japan’s Ministry of Internal Affairs and Communication’s data showed its nationwide core consumer price index (CPI), which excludes volatile fresh food but includes fuel costs, rose 2.1% in May from a year earlier. It stayed above the BOJ’s 2% target for the second straight month. The BOJ has maintained its ultra-low rate policy on the view that cost-push inflation will only be temporary. Read more >

Japan PM Kishida backs BOJ ultra-easy policy while yen worries mount

Prime Minister Kishida said in a debate* on 21 June that the Bank of Japan should maintain its ultra-loose monetary policy. Kishida said the recent sharp falls in the yen were worrying but monetary policy and exchange rates must be dealt with separately, while fiscal policy should play the principal role to lower energy and food prices. Read more >

Upper House election campaigns underway

The official campaigning for the House of Councillors election in Japan began on 22 June. Voting day is set for 10 July. There are 125 seats to fill this election. Prime Minister Kishida says his ruling coalition aims to maintain its majority in the Upper House, and that would require winning at least 56 seats. Read more >

Airlines chart cautious path for Japan inbound travel recovery*

A total of 61,298 inbound flights to Japan are scheduled for the rest of the year (July to December), 58% fewer than during the same period in 2019. JAL and ANA said they have yet to consider adding flights in response to Japan’s tourism resumption on 10 June. Singapore Airlines recently said it plans to add more Tokyo-Singapore flights starting in July. *Read more >

Japan logs 2.38 trillion yen goods trade deficit in May, 2nd largest ever

Japan’s Ministry of Finance data showed Japan logged its second largest ever monthly goods trade deficit of 2.38 trillion yen ($17.7 billion) in May, remaining in the red for the 10th consecutive month due to high commodity prices and a declining yen. The data showed overall imports were pushed up strongly by larger shipments of coal and LNG from Australia and oil from the United Arab Emirates. Read more >

Japan Inc.’s capital spending poised to roar back 25%*

According to a recent Nikkei survey, Japanese companies are looking to increase their capital spending 25% this fiscal year. Planned capital investment by 876 major companies has increased for the first time in three years, to 28.66 trillion yen (US$212 billion), the second highest tally on record. The year-on-year increase marks the sharpest growth since fiscal 1973. Manufacturers project a 27.7% increase in capital spending to 17.5 trillion yen, while nonmanufacturers estimate a 20.8% rise to 11.16 trillion yen. *Read more >

Osaka Gas Australia to join study with AGL and its partners on green energy hub in Australia to produce, supply and export green hydrogen and synthetic methane

Osaka Gas announced on 17 June that Osaka Gas Australia has signed a non-binding MoU with AGL Energy to join AGL and its partners in feasibility studies for green hydrogen facilities in Torrens Island, SA and Hunter Valley, NSW. The study will examine possibilities to supply green hydrogen as well as synthetic methane and green ammonia to SA and NSW customers, as well as export markets. Japan’s INPEX is one of the partners in the Torrens study. Read more >

Komatsu announces agreement to acquire Mine Site Technologies, Australia-based connectivity solution provider for underground mining

Komatsu Ltd. announced on 15 June that, through its wholly owned subsidiary in Australia, it has agreed to acquire Mine Site Technologies Pty Ltd (MST Global), a Sydney-based provider of operational optimization platforms for underground mining that leverage communication devices and position tracking systems. Komatsu and MST Global will work together to increase availability of high-speed, low latency digital communication, which is necessary to provide mission critical communication, integrate IoT sensors, increase the volume of information communicated and enable real-time tracking, monitoring and automation of mine operations. Komatsu plans to work with MST Global to offer customers real-time insights and alerts, voice and communication technologies, software solutions, robust network infrastructure and wireless and geospatial technologies. Komatsu is planning to close the acquisition on July 1, 2022, providing all necessary procedures for closing are completed. Read more >

Japan-Australia Defense Ministers’ Meeting in Tokyo – Joint Statement on Advancing Defence Cooperation

Japanese Minister of Defense Kishi Nobuo and Australian Deputy Prime Minister and Minister for Defence Richard Marles met in Tokyo on 15 June 2022. The Ministers reaffirmed the view that the Shangri-La Dialogue, which was held on 10-12 June in Singapore, provided an excellent opportunity for bilateral defense talks, during which they pledged to increase cooperation in the Indo-Pacific region. Kishi and Marles also held trilateral talks with U.S. Defense Secretary Lloyd Austin in Singapore. The Ministers reaffirmed the importance of the bilateral defense relationship between Japan and Australia as Special Strategic Partners who share security challenges and interests in the Indo-Pacific region. They agreed to continue deepening their defense cooperation, which will be facilitated by the Japan-Australia Reciprocal Access Agreement and increase the interoperability of their forces. The Ministers also agreed to advance cooperation on science and technology, and strategic capabilities as well as enhance cooperation on areas including space and cyber and supply chains. Moreover, the Ministers agreed to work more closely with Southeast Asia and the Pacific Island nations. Read more >

Osaka Gas – Acquisition of interest in Australian Integrated Carbon Pty Ltd

Osaka Gas announced that through its subsidiary, Osaka Gas Energy Oceania, it has acquired a 16.7% stake in Australian Integrated Carbon Pty Ltd (AI Carbon), which is engaged in the sale of carbon credits. AI Carbon has been engaged in obtaining and selling carbon credits officially certified by the Australian Government from projects regenerating native woodland that has been deforested by overgrazing and clearing in the past. AI Carbon aims to reduce a total of approximately 100 million tons of CO2 through its growing portfolio. Since 2015, the Australian Government contributed over 4.5 billion AUD to establish the country’s carbon-credit auction market. Australia is one of the leading carbon credit sources with an annual supply of 17 million tons in 2021 and growing. In addition to the government’s purchases, an increasing number of businesses are purchasing credits to offset their own CO2 emissions. Osaka Gas will leverage this partnership with AI Carbon to develop expertise on carbon credit business. Read more >

BHP and NYK Strengthen Strategic Partnership to Progress Shipping Decarbonisation

BHP and Japan’s NYK announced on 9 June that they have signed a Memorandum of Understanding (MoU) to expand their strategic partnerships and to support the decarbonisation of ocean transportation across their shared supply chain. Under this MoU, BHP and NYK will jointly study the next-generation of zero-GHG emission ships fuelled by green or blue ammonia, which could potentially help both organisations to achieve their respective long-term GHG emission reduction targets for shipping and present a further option for the shipping industry. The companies also aim to promote the use of GHG emission reduction measures, including energy-saving innovations and technologies, and alternative lower- and zero-GHG emission marine fuels. Read more >

NYK was founded in 1885 and is one of the world’s leading transportation companies. The NYK Group is based in Tokyo.

JERA, Tokyo Gas, INPEX to join carbon capture project in Australia*

Nikkei reported on 9 June Japan’s three energy companies – JERA, Tokyo Gas and INPEX – plan to join a large-scale carbon dioxide capture and storage (CCS) project in Darwin Australia. Their total investment is expected to reach as much as 100 billion yen (US$748 million). Australian oil and gas company, Santos is leading the project and it is expected to be one of the largest CCS bases in the world, aiming to commence operation around 2025. The planned CCS plant could store up to 10 million tons of CO2 a year. Offshore gas fields near Darwin are expected to run dry within a few years and the new project aims to store CO2 there, with CO2 being transported from another nearby gas field while the capture of CO2 emitted from Japanese factories and power plants is also being considered. However, the transportation of CO2 remains an issue since it needs to be liquified under high pressure to reduce its volume. JERA is looking to develop dedicated ships for CCS and Japanese shipping companies are also moving to build such vessels. Mitsubishi Shipbuilding and Nippon Yusen announced last November that they have agreed to jointly develop a large-scale ship to carry liquified CO2. *Read more >

Marubeni and J-POWER fund A$20 million in Glencore’s CTSCo Project in Queensland

Marubeni Corporation and Electric Power Development (“J-Power”) will each fund A$10 million in Glencore’s CTSCo Carbon Capture and Storage (CCS) Project in Queensland. Glencore’s wholly owned Carbon Transport and Storage Company (CTSCo) Project aims to demonstrate carbon capture and storage technology. It focuses on capturing CO2 from the Millmerran coal-fired power station in Queensland and permanently storing the CO2 deep underground in a dedicated storage site 100km from the power station with a goal to commence CO2 injection in 2025. It is one of the most advanced onshore CCS projects in Australia with the potential to store significant volumes of CO2 from a number of industries. CTSCo is a Glencore wholly owned company backed by Glencore funding, and other key funding partners include Low Emission Technology Australia and the Australian Government. Marubeni and J-Power are long term joint venture partners in Glencore’s mining operations in Australia and their participation in Glencore’s CTSCo Project is part of their efforts to achieve net-zero emissions not only for the power sector but also various sectors and decarbonize economy worldwide. Read more >

Japan to increase investment in human resources, decarbonization

The Japanese Cabinet approved on 7 June the first annual fiscal and economic policy guidelines under the administration of Prime Minister Kishida who took office in October. The government pledged to accelerate its effort to double the nation’s defense spending to 2% of its gross domestic product, in reference to NATO member countries that are committed to spend 2% of their GDP on defense. The guidelines said Japan will drastically strengthen defense capability within the next five years. The government also pledged to make aggressive investment in areas such as human resources and decarbonization and adopted an action plan of boosting investments in four key areas -science, technology and innovation, human resources, startups, and green and digital technology to promote Kishida’s “new form of capitalism” economic initiatives. The guidelines did not state a target year for achieving a national primary budget surplus (previously pledged to achieve a primary budget surplus by the end of fiscal 2025). Read more >

Yen falls to 132 against dollar, hitting 20-year low*

The yen dropped to 132 yen to the dollar briefly during New York trading Monday 6 June, its weakest level in over 20 years, as traders flocked to sell the Japanese currency for the U.S. dollar on speculation of continued interest rate hikes by the U.S. Federal Reserve. With improving U.S. employment data and soaring prices of oil and food, the Federal Reserve is expected to raise interest rates aggressively to curb inflation. A widening interest rate gap between Japan and the U.S. is driving the yen sell-off. In contrast, the Bank of Japan’s Gov. Kuroda has ruled out the possibility that the central bank will shift toward credit tightening*, adding that monetary tightening is not a “suitable” measure at all for the Bank of Japan as the domestic economy is still in the midst of a recovery from the COVID-19 pandemic. Gov. Kuroda also said that even though core consumer inflation jumped 2.1% in April from a year earlier, it does not mean the BOJ’s 2% inflation target has been achieved, stressing that the raising inflation is largely due to surging energy and raw material prices, not strong domestic demand. Kuroda added “It is highly likely that stable moves toward yen weakness, not rapid moves, are positive for the Japanese economy as a whole.” Gov. Kuroda’s remarks were made at an event on 6 June.  *Read more >

World’s first 100% hydrogen combustion technology for residential water heaters by Rinnai – Demonstration tests to begin in Australia in October 2022

Rinnai Corporation announced on 30 May it has successfully developed the world’s first 100% hydrogen combustion technology for residential water heaters that emits zero CO2. Using Rinnai’s combustion and fluid control technologies, the company has succeeded in the development of a water heater powered by hydrogen while addressing the issues of “explosion risk” and “combustion stability”. As part of Rinnai’s commitment to carbon neutrality, the company aims to develop products that emit zero CO2. Rinnai plans to begin demonstration tests in Australia in October 2022 and continue to further improve the reliability of hydrogen water heaters for mass production. Read more >

NIPPON PAPER INDUSTRIES – Notice of Establishment of a New Company in Australia

Nippon Paper Industries Co., Ltd. announced on 1 June that it has established a new local subsidiary in Australia to expand its liquid packaging carton business in the Oceanian market. In March 2022, Nippon Paper signed a license agreement covering the Oceania region with Elopak ASA, a leading global supplier of liquid packaging cartons. Nippon Paper also signed a general agency agreement with Shikoku Kakoki Co., Ltd., the largest liquid packaging carton filling machine producer in Japan. With the opening of the new subsidiary, Nippon Paper has successfully established a system to sell paper packages with Elopak’s Pure-Pak brand and Nippon Paper’s NP-PAK brand, as well as filling machines produced by Shikoku Kakoki. The transition toward sustainable packaging solutions is expected to accelerate in the Oceanian market as in other regions. Read more >

Japanese air cadets fly high in Adelaide

Japanese aviation cadets of JAL group’s J-AIR have resumed their commercial airline pilot training at Flight Training Adelaide (FTA) based at Parafield Airport training facility as part of an ongoing Japanese Civil Aviation Bureau certification program. The airline pilot training program offers an opportunity to further strengthen South Australia’s ties with Japan as well as bring a multi-million-dollar contribution to the South Australian economy. The South Australian Government has a trade and investment office in Tokyo. FTA and J-AIR have a long-term, successful partnership and the resumption of the courses was highly welcomed by both parties.  Read more >