Iron ore prices have risen to a five-month high as China’s leadership change gives confidence to a rebound in demand for the commodity. On Friday, benchmark iron ore prices at Chinese ports jumped to $US129.30, their highest price since July. Prices are still below the $US150-a-tonne averages that were seen last year. The rise is only expected to be medium-term as new supply from Australia continues to come onto the market and seasonal factors kick in next year.
A separate article in The Australian addresses how the increase in iron ore prices is expected to lift the economy in the new year. However, it will take until the June quarter next year before the improved prices begin to generate tax revenue to the treasury. Treasury secretary Martin Parkinson said yesterday that the nation’s increasing reliance on the mining sector was adding to economic volatility.
The election victory by Japan’s Liberal Democratic Party has sparked investor interest in uranium stocks as a re-start in Japan’s nuclear capacity is on the cards. Executive chairman of Peninsula Energy Gus Simpson said he believed uranium price would start to rise as Japan switched its nuclear capacity back on and supply constraints became more apparent. “The market is going to see a major increase in demand. Where that supply is going to come from is still up in the air,” Mr Simpson said.
Treasury officials will review the mining tax next year, acting on advice that the existing regime was “neither desirable nor sustainable”. The mining tax concerns will be referred to a forum of state and federal officials. It is hoped the outcome will end Wayne Swan’s dispute with the states over iron ore and coal royalties cutting into federal revenue.
The Australian Financial Review
Western Australia Treasurer Troy Buswell has refused to agree to a compromise with the federal government that would stop federal revenue being cut into by state government royalty increases. “There’s absolutely no way that WA will give up one cent of its mining royalties nor its right to continue to apply royalties,” Mr Buswell said.
The carbon tax, paired with rising retail power prices and an historic fall in demand for electricity, has led to Australia’s three “dirtiest” coal power stations making big cuts to their output. Hugh Saddler from energy consultancy firm Pitt & Sherry said demand was clearly driven down by rapidly rising prices and the publicity around them. “This is the first time in the 120 years of the electricity industry that we have had a prolonged period of steadily falling demand and it is the first time we have had a period of steadily rising prices,” Dr Saddler said.
A discussion paper released by Queensland Energy Minister Mark McArdle yesterday did not present privatisation as an option for the state’s 30-year electricity strategy. Despite an independent review panel recommending the sale of network businesses Energex and Ergon Energy, the failure of the paper to put forward the sale of government-owned energy companies shows there are still “political sensitivities” on the topic. The Newman government has consistently said there will be no privatisation unless approve by voters.
The Foreign Investment Review Board has recently approved Cameco’s acquisition of BHP Billiton’s Yeelirrie uranium deposit in Western Australia. WA premier Colin Barnett is now the only person in a position to prevent it from going ahead.
The Age also reports on the anticipated rebound of global uranium demand following the Japanese election results. Managing director of Toro Energy Greg Hall said Japan had been spending an additional $US100 million a day on extra coal, oil and gas, which represented a “very, very high cost” compared to uranium. A new independent safety authority would be in place by April and Japan’s nuclear power capacity would be restored through 2013-15.
The West Australian
Nearly 300 cattle will be culled in the Kimberley to protect Western Australia’s bovine Johne’s disease status after an outbreak in Queensland. The move, endorsed by the pastoral industry, will retain WA’s nationally unique BJD-free status and protect international export trade. While BJD poses no threat to humans, it causes illness and eventual death for cattle.
Three abattoirs are planned for construction in the Middle East to process live sheep and cattle exports from Western Australia in a boost for the local pastoral industry. Jordanian company, the Hijazi and Ghosheh group, plan to invest up to $110 million in new abattoirs, feedlots and logistics services. All of the facilities would be built to comply with animal welfare standards required under the exporter supply chain assurance scheme introduced last year by the federal government.
The Courier Mail
Queensland Investment Corporation chief executive Damien Frawley has called for a greater focus on sectors such as agriculture and construction in the state at The Courier-Mail’s leadership forum, warning that Queensland should not rely on being a “one-trick pony”. Frawley also recognised the resources boom will leave a lasting legacy for Queensland’s economy regardless of when it ends. “Over time there’s been this build-up of support services for resources, which I think has changed the economy of Queensland,” Mr Frawley said.