PRESS DIGEST-Australian Business News - Jan 8
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)
Oil and gas group Santos (STO.AX) and partner Apache Corp (APA.N) have signed a deal to supply gas to a Chinese company which will be the foundation customer of their stalled Reindeer gas development off Western Australia. Under the agreement, Citic Pacific's A$5.2 billion Sino Iron magnetite project in WA's Pilbara region will buy 75 petajoules from Reindeer over seven years at about A$9 to A$10 per gigajoule. The deal comes less than a month after the Reindeer project was put on ice because no supply contract could be signed. Page 12.
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Construction group Leighton Holdings (LEI.AX) has flagged the possibility of further write-downs after announcing A$170 million in write-downs earlier this week. 'No one is predicting further deterioration but there is some probability that might occur,' chief executive Wal King said yesterday. On Tuesday, Leighton unexpectedly downgraded its full-year net profit forecast by 21 percent to A$480 million, but analysts said the forecast did not take into account a downturn in the domestic non-residential construction market. Page 12.
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BHP Billiton (BHP.AX)(BLT.L) shipped 10.6 million tonnes of iron ore from Western Australia in December, up significantly from the nine-month low of 10.1 million tonnes in the previous month. Observers said yesterday that the 5 percent increase in iron ore exports by the world's third-largest producer of the commodity indicated that the Chinese government's economic stimulus package was helping boost demand at that country's steel mills. BHP Billiton shares finished the day up 90 cents at A$32.60. Page 12.
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Copper miner Aditya Birla Minerals (ABY.AX) will mothball operations at its Mount Gordon mine in Queensland and Nifty project in Western Australia. The move by the company, which is controlled by India's Hindalco Industries (HALC.BO), comes after the falling copper price forced troubled producers such as Matrix Metals (MRX.AX) and CopperCo CUO.AX to go into voluntary administration. Aditya Birla had previously suspended the development of its Esperanza South project at Mount Gordon because of the slump in the copper price. Page 13.
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THE AUSTRALIAN (www.theaustralian.news.com.au)
Aluminium group Alcoa (AA.N) has announced it will make 15,000 job cuts and reduce production yet again as the global economic slowdown continues. he announcement came close on the heels of the move by Rio Tinto to cut 14,000 jobs across its operations globally. Alcoa plans to lay off 13,500 of its own workforce and 1700 contractors, mostly in North America and Europe serving the aerospace and automotive markets. An Alcoa Australia spokesman said that, at this stage, there were no plans to make job cuts at its local operations. Page 19.
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UBS has been appointed adviser to Brockman Resources (BRM.AX) to assist the iron ore company in developing a long-term strategy to cope with the global market downturn. Brockman managing director Wayne Richards said that, considering the current subdued market situation, 'prudent management of our strong uncommitted cash position remains a priority for the Brockman board.' UBS will advise on Brockman's undeveloped Marillan iron ore project in Western Australia as well as the company's broader corporate direction. Page 20.
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Fonterra Co-operative Group said the average auction price of whole-milk powder fell to its lowest level in over two years in a sale yesterday to US$2017 a tonne. The price of milk powder has fallen 54 percent since Fonterra, the world's largest dairy exporter, started monthly auctions in July. After reaching record highs 13 months ago, global prices of butter, milk and cheese have declined as the United States and Europe increased dairy exports and the global economic slowdown lowered demand for commodities. Page 21.
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Tishman Speyer Office Fund (TSO.AX) said yesterday that its portfolio of prime commercial real estate in the United States had fallen by 10 percent in value to US$2 billion. The fund's loan covenants require its debt ratio to stay under 65 percent as well as have a minimum tangible net worth of US$747 million. After the fall in the value of its assets the fund is close to breaching these covenants, but Tishman Speyer said that cash flows created by the portfolio, along with the cash on hand, would be adequate to meet its obligations to November 30. Page 21.
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THE SYDNEY MORNING HERALD (www.smh.com.au)
Former Coles Myer chief executive John Fletcher and clients of investment bank Lazard Carnegie Wylie may have suffered A$10 million of losses from their attempt to turn around national car care chain Midas Australia. The car care group was placed into administration with restructuring firm Ferrier Hodgson at the end of last year. Midas owes unsecured creditors around A$4 million and Ferrier Hodgson is searching for buyers for the company's 82 centres across Australia. Page 25.
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An online survey commissioned by the Mortgage and Finance Association of Australia and BankWest has found that most relatively wealthy Australians expect the value of their homes and investment properties to decline in the March quarter. Of those who took part in the poll, 60 percent of households with and annual income of A$100,000 to A$200,000 predicted property values would fall. Page 26.
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West Australian iron ore miner Fortescue Metals Group (FMG.AX) narrowly missed meeting its iron ore shipment targets in 2008, according to Port Hedland Port Authority shipping figures. Fortescue shipped 14.88 million tonnes of iron ore last year, compared with the target of 15 million tonnes to 16 million tonnes released in late November. Fortescue had previously expected to achieve shipments of 22 million tonnes, but later twice lowered its target. Page 26.
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CBH Resources (CBH.AX) said yesterday its scrip bid for rival miner Perilya (PEM.AX) was a better option than Perilya's planned A$45.5 million placement to Chinese smelter Zhongjin Lingnan. This week Perilya said it would be forced to raise more funds or sell-off assets if the Zhongjin placement, which would give the Chinese company 50.1 percent control of Perilya, failed to gain approval at a February 5 shareholder meeting. At close of trade yesterday, CBH's 4.2-for-one offer was 25 cents in value compared to Zhongjin's 23 cents per share valuation. Page 26.
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THE AGE (www.theage.com.au)
National Australia Bank (NAB.AX) is the latest Australian bank to take advantage of the Federal Government's funding guarantee, raising capital through a bond issue to United States investors. NAB raised US$2.5 billion (A$3.51 billion) through its bond issue. The NAB offer was led by HSBC, Merrill Lynch, RBC Capital Markets and Barclays Capital. Other banks are expected to tap global markets after the success of NAB's fund raising. Page 22.
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Investment company Guinness Peat Group (GPG.NZ) has been forced to write down a series of investments due to the squeeze on credit caused by the financial crisis, although owner Sir Ron Brierley described 2008 as a 'very unsatisfactory year' for GPG. The group said investments in Green's General Foods, Tafmo, Gosford Quarry and Australian Country Spinners, which initially had a combined book value of A$64.4 million, had an adjusted market value of zero after losses in 2008. Page 22.
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Shares in Atlas Iron (AGO.AX) rose to their highest level in three months after the iron ore miner announced the discovery of high-grade ore reserves at its Pardoo Mine. Managing director David Flanagan said investigations at the mine, near Port Hedland in Western Australia, 'have clearly demonstrated that Pardoo can produce high grade intercepts.' A Chinese steel mill has agreed to take 30 percent of production from Pardoo until 2012. Page 22.
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