PRESS DIGEST-Australian Business News - July 1

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)

Discount retailer Target, part of the Wesfarmers (WES.AX) conglomerate, says it plans to keep stock levels and costs at a minimum until a recovery in the retail sector becomes more apparent. Managing director Launa Inman yesterday said, "you can always run and get additional stock and spend more on advertising; its easier to loosen the purse strings than to fall back.' Ms Inman also said the retailer has been working on improving its supply chain by reducing the number of suppliers while working more closely with them. Page 45.

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Premium department store David Jones (DJS.AX) has lifted its full-year profit guidance following an increase in sales, driven by the Federal Government's stimulus spending and a recovery in sharemarket stability. Less than six months after downgrading profit growth expectations to between zero and 5 percent for the full year, David Jones is now forecasting profit growth of between 8 percent and 12 percent. However, chief executive Mark McInnes warned that high growth is not expected next year, saying "ww'd be delighted if it was flat." Page 45.

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Independent grocery chain FoodWorks, which this week agreed to purchase 45 stores from rival Coles for A$35 million, says it will use its increased volume to seek better trading terms from suppliers. The purchase will increase the chain's aggregate annual sales from A$1.75 billion to A$2.2 billion. Chief executive Peter Noble said that although the company was large enough to create its own supply chain, "if you can get an effective supply-chain contract outcome that's transparent, why would you want to create your own?" Page 45.

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West Australian Premier Colin Barnett said he expects the proposed iron ore joint venture between mining companies BHP Billiton (BHP.AX) and Rio Tinto (RIO.AX) will lead to both groups moving their global headquarters to Perth within the next five to 10 years. "Both companies have about 30 percent of their global operations in Western Australia. It's all about Western Australia and it's all about iron ore," Mr Barnett said yesterday. The Premier has met with senior executives from both companies in recent weeks regarding the proposed joint venture. Page 46.

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

Tasmanian forest products company Gunns (GUN.AX) has admitted that it has not yet applied for Forestry Security Council (FSC) certification for the feedstock to its proposed A$2.2 billion pulp mill at Tamar. The company says it has instead secured Australian Forestry Standard certification, which Gunns says is recognised as equivalent. However, analysts say that Gunns' "preferred" candidate as a joint venture partner for the pulp mill, Sweden's Sodra, lists FSC certification as a prerequisite for any investment. Page 20.

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Mining company Iron Ore Holdings (IOH) (IOH.AX), which is 51 percent-owned by West Australian businessman Kerry Stokes, yesterday announced a new iron ore resource estimate for its Iron Valley deposit in Western Australia's Pilbara region. The new estimate has increased total resource expectations by 50 percent to 132.3 million tonnes, which IOH says could support a mine producing 10 million tonnes a year. Analysts say the company is likely to seek a joint venture with a major iron ore miner in order to gain access to infrastructure for the project. Page 20.

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Mining company Rio Tinto is believed to have warned the China Iron and Steel Association (CISA) that it is prepared to use clauses in contracts that allow Rio to cancel contracted volumes and instead sell the ore on the spot market. The "drop-dead" clauses come into effect if benchmark prices have not been agreed to by June 30. CISA, which is negotiating on behalf of Chinese steel mills, has been pressing for a larger price cut than the 33 percent agreed to by Japan, Korea and Taiwan. Page 20.