Australian Financial Review
BHP Billiton’s new iron ore chief, Jimmy Wilson, has targeted more job cuts and a boost in labour productivity to revitalise its iron ore business now that boom-time ‘scarcity pricing’ has passed. BHP cut about 200 iron ore jobs after the sharp plunge in the price of the steel in August.
Jennifer Hewett reports on decision to put the $6 billion Oakajee port and rail project on indefinite hold following tensions between Japan and China.
The mining-related construction boom will peak in 2014 and business investment is set to become a spent economic force by the following financial year, Deloitte Access Economics says. “What has been the big growth driver of the Australian economy over recent years will now be absent,” Deloitte partner David Rumbens writes. “By 2013-14, business investment will be pretty neutral with respect to economic growth, and thereafter it will actually be acting as a brake on our future growth.”
Investors are worried about policy and regulatory risks to their business’ and future investments, particularly in LNG projects. The vice-president of finance and strategy for Shell Australia, Michael Carey, said “we just need to have confidence that the settings will be stable over several decades.” He said that though much of the $30 billion of spending earmarked for the next five years was already committed on projects such as Gorgon LNG, Wheatstone and the Prelude floating LNG venture, the next wave of investment was still in the balance.
Nuclear power generation is ramping up around the world despite the Fukushima tragedy and Australia could have its first reactor within 10 to 15 years if there is sufficient political will. Nuclear physicist and former Telstra boss Ziggy Switkowski says “Once you’ve got the first reactor approved and built you can build them quickly…as other countries like France have shown, you can move from zero reactors to 50 in a period of 20 years.”
The Greens are increasing the pressure on the Gillard government to shut down the live export trade, releasing a position paper today that proposes a five-point plan for a transition from the $1 billion trade to domestic meat processing. Greens animal welfare spokeswoman Lee Rhiannon said the public was distressed over live export cruelty and the government needed to respond properly rather than just hold “half-baked inquiries.”
West Australian Premier Colin Barnett is threatening to campaign against a push to develop the $40 billion Browse project using radical floating liquefied natural gas technology, arguing the move will cost thousands of construction jobs and set a dangerous precedent. “If you think about it, not a single job in construction for Australia, not a single crew member on it for Australia…the two choices are floating LNG or develop at James Price Point.”
Project cancellations and profit downgrades are mounting as the mining services sector confronts its post-boom future. In announcement made late on Friday, two groups servicing the mining sector said contracts with large mining companies had been cancelled and were not expected to be renewed.
The West Australian
Claims about the death of the mining boom may be premature, with a new report showing a further increase in resource investment in WA and across the nation. The Deloitte Access Economics quarterly investment monitor, released today, shows total planned or existing investment grew $6 billion in the September quarter to a record $926 billion.
More than 100 farmers are expected in Katanning today for a crucial meeting on the future of WA’s sheep meat and live export industries. The sheep industry is reeling after the brutal slaughter in Pakistan of sheep from WA. Sheep Industry Leadership Council chairman Rob Egerton-Warburton said the meeting would give farmers accurate information after a 30-40 per cent drop in prices and protests about live exports.
The West Australian government has backed a Chinese consortium’s move to create its own supply chain to grow and ship grain from WA to China. Agricultural Minister Terry Redman said yesterday the plan would create an alternative path to burgeoning market and attract foreign investment.
The Reserve Bank of Australia says that weaker commodity prices and a high exchange rate have dealt a double blow to Australia’s mining sector, making companies less willing to invest and driving expectations for domestic growth lower. “The forecasts have been revised down slightly since the August Statement, largely reflecting a downward revision to mining investment, which reduces GDP growth over 2013 by around half a percentage point (net of imports),” the RBA said in its Statement on Monetary Policy.
Australian Financial Review