PRESS DIGEST-Australian Business News - Jan 16

Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy.

THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)

China's largest steelmaker, Baosteel (600019.SS), has called off iron ore negotiations with BHP Billiton, Rio Tinto and Brazil's Vale. Before talks began, Chinese mills were understood to have been amenable to a 30 percent rise in prices, but mill officials said yesterday they were "not even close to reaching a consensus." A Shanghai Metals trader said the problem was that the miners had demanded a 50 percent price increase. Meanwhile, Rio Tinto Iron Ore chief executive, Sam Walsh, said both sides understood that a price rise was inevitable. Page 39.

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Rio Tinto (RIO.AX)(RIO.L) is due to report its annual and fourth-quarter production figures today, and company sources have flagged a more open and detailed style of reporting. Rio Tinto yesterday provided more details on iron-ore production figures from Western Australia's Pilbara region, and said its target was to reach 300 million tonnes a year by 2013 at a cost of US$100 a tonne. Alan Davies, the company's vice president, finance strategy, said earnings before interest, tax, depreciation and amortisation would be about US$4 billion in 2007. Page 39.

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Fortescue Metals Group (FMG.AX) said yesterday that its A$2.7 billion iron ore project in Western Australia remained on track to meet its May 15 production target. The company's executive director, Graeme Rowley, assured investors there had only been a short delay because of the death of a 23-year-old worker at a screen plant, which was being investigated. Fortescue is checking all equipment of the type installed at the accident site for mechanical defects. Analysts said progress on a key cyclone-damaged railway was of greater concern. Page 40.

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The Queensland Government is evaluating bids for Brisbane's proposed Airport Link underground toll road. The three bidders are BrisConnections, comprising Macquarie Group (MQG.AX) and Leighton Holdings (LEI.AX), Thiess and John Holland subsidiaries; the Northern Motorway consortium of Leighton Contractors and ABN Amro Australia; and the NorthConnect Motorway joint venture of Baulderstone Hornibrook, Abigroup, Bilfinger Berger Civil and Babcock & Brown BNB.AX. A 2012 opening is forecast, with construction valuations estimated at A$4 billion. Page 40.

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THE AUSTRALIAN (www.theaustralian.news.com.au)

The chief executive of Rio Tinto (RIO.AX) Iron Ore, Sam Walsh, said yesterday that the company was looking at exporting iron ore out of India. Rio Tinto has a 51 percent stake in an iron ore joint venture with Orissa state in the South Asian nation, which has a history of giving local steel producers priority access to iron ore production. "We think we are well placed in India," Mr Walsh said. Page 29.

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Aspiring methanol exporter, MEO Australia (MEO.AX), announced yesterday that it was ceasing re-drilling operations at the Plover formation in the Timor Sea's Bonaparte Basin because of technical issues with its Heron-2 well. MEO has a joint venture with Petrofac (PFC.L) for exploration in the basin. MEO Australia managing director, Chris Hart, said the company would now shift its focus to the Epenarra Darwin formation in the basin, but a separate well at Plover was also planned. MEO shares dropped A37 cents to A$1.14. Page 30.

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Qantas Airways (QAN.AX) chief financial officer, Peter Gregg, said yesterday that its Singapore-based subsidiary, Jetstar Asia, was improving but the low-cost offshoot faced challenges in the near-term. "It's a business that is competing in a pretty aggressive part of the world," Mr Gregg said. He revealed that Jetstar Asia had been granted rights to fly on the important route between Singapore and Malaysia's capital, Kuala Lumpur. Qantas has a 45 percent stake in Orangestar Investment, which owns Jetstar Asia and sister airline, Valuair. Page 31.

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Brambles (BXB.AX) pallets business, Chep, has dropped legal proceedings against West Australian firm, Jason's Pallets, after reaching an out-of-court settlement over unauthorised use of its shipping pallets. This is the third dispute related to Chep pallets that Brambles has settled in the past year. "We are resolved to pursue organisations which engage in conduct that affects our customers and our supply of equipment," Chep Asia-Pacific president, Howard Wigham, said yesterday. Page 31.

THE SYDNEY MORNING HERALD (www.smh.com.au)

Merrill Lynch MER.N yesterday placed a sell recommendation on Qantas Airways and cut the carrier's 2008-09 profit forecast by 20 percent. The broker cited "rising competition, rising wage pressures, higher capital costs and a weakening economic backdrop" for Qantas in a note to clients. The move by Merrill Lynch came shortly after a court in the United States imposed a US$61 million (A$68 million) fine on the airline for fixing freight rates. Qantas shares slipped A23 cents to A$4.90. Page 21.

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Energy Resources of Australia (ERA.AX) (ERA) has increased yearly output at its Ranger uranium mine in the Northern Territory by 14 percent. The Rio Tinto subsidiary said yesterday that uranium oxide production was 5412 tonnes last year, its second-highest annual production figure for the mine. ERA said the good result came despite rain-related problems at Ranger in March last year. The company spent A$14.1 million on exploration and evaluation at the mine in 2007. ERA shares were up A$1.62 at A$19.73. Page 22.

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A trademark registration application by leading retailer, Coles Group CGJ.AX, includes a bid to stop other parties from using the name "Coles" in relation to "retailing of pharmaceuticals." The move points to a renewed attempt by the Wesfarmers-owned group to enter the A$9 billion pharmacy market. Two years ago, both Coles and rival, Woolworths (WOW.AX), lobbied to break the Pharmacy Guild's monopoly on the pharmacy sector. The trademark application was "all about having options available to us," Coles spokesman, Jim Cooper, said yesterday. Page 23.

THE AGE (www.theage.com.au)

Federal Trade Minister, Simon Crean, has received assurances from Indian business groups that the cricket dispute between the two countries following the Sydney Test match will not affect bilateral trade. "That is just a game," Confederation of Indian Industries spokeswoman, Charu Mathur, told Mr Crean yesterday when he arrived in Mumbai on an official visit. India is Australia's fastest-growing export market, with exports of goods and services to the South Asian nation rising 30 percent annually. Page 21.

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Some large investors have been adversely affected by the fallout of the funding crisis that has gripped Centro Properties Group (CNP.AX). Barclays Group (BARC.L) has seen the value of its 77.9 million Centro shares plummet by more than A$340 million since November, while the 43 million shares held by UBS Nominees, worth A$257 million before the property group's shareprice crash, are now valued at just A$27.7 million. Macquarie Group has also suffered a massive slump in the value of its 48 million-plus shares, from A$332 million to A$31.2 million. Page 22.

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Australian stocks fell for the seventh consecutive session yesterday, with property trusts seeing significant declines. Real estate investment trust, DB RREEF, dropped A7.5 cents, or 4.5 percent, to close at A$1.60, while Macquarie DDR Trust fell A4 cents to A70 cents. MFS was down A76c, or 19 percent, to A$3.18. The property trusts were dragged down by the crisis-ridden Centro Properties Group, which slid A26 cents, or 30 percent, to A60 cents. Strong gold stocks cushioned the benchmark S&P/ASX200 Index, which closed 20 points lower at 5960. Page 20. --