Reactions by the miners and resources industry to the government’s proposed carbon tax has dominated the headlines over the past week. Also making news, BHP Billiton agreed to buy Petrohawk Energy for $US12.1 billion, Lynas’ Malaysian subsidiary will inject up to $US210 million to ramp up construction at its controversial refinery and Peabody Energy increased its $4.7 billion bid for Macarthur Coal.
And we take a closer look at uranium exploration and development company Energia Minerals, speaking exclusively with Managing Director Keren Paterson. We also hear from Westpac Senior Economist Justin Smirk about the week’s movement in commodities, with a focus on gold.
A strong response to carbon taxMany of the mining and resource companies took the opportunity to voice their opinions regarding the government’s planned carbon tax. Whilst most were against the proposal, a few reported they were less concerned than investors had anticipated.
Rio Tinto
(ASX:RIO) slammed the proposal. AGL Energy Ltd
(ASX:AGK) chief executive Michael Fraser said the carbon pricing scheme provided investment certainty for the energy industry. Santos Ltd
(ASX:STO) expressed uncertainty over how the carbon tax will have an impact on its finances. Origin Energy Ltd
(ASX:ORG) backed the carbon price of $23 per tonne. Caltex Australia Ltd
(ASX:CTX) declared it will fight for 100 per cent compensation to remain competitive internationally. Envestra Ltd
(ASX:ENV) plans to recover the additional costs through its network charges. Bandanna Energy Ltd
(ASX:BND) believes the tax makes Australia’s coal industry as a whole less competitive in international terms.
Energia Minerals uranium market outlookFour months on from the Fukushima nuclear accident it appears that the price of uranium has recovered, but uranium stocks are yet to catch up. The Finance News Network spoke exclusively with Managing Director Keren Paterson of Energia Minerals Ltd
(ASX:EMX) about the discrepancy.
“It reflects market sentiment and a concern about the potential for the end of nuclear power. There’s been a lot of information about Germany pulling out. Italy has had a referendum that determined that they were not going to reinvigorate their nuclear power program after having closed it down after Chernobyl. And Switzerland has declared that they want to phase out nuclear power. But the rest of the world … has nuclear power in its mix [and] has reinforced they want to continue with nuclear power,” added Ms Paterson.
Japan, France, the United States, the United Kingdom, China, South Korea, India and even Saudi Arabia were all interested in having nuclear power as part of their energy plans, says Ms Paterson.
Ms Paterson says whilst it’s always a good time to buy Energia, currently, “the value per pound … is well below exploration cost for uranium resources around the world”.
BHP buys Petrohawk for $US12BBHP Billiton Ltd
(ASX:BHP) has agreed to buy Petrohawk Energy for $US12.1 billion. It’s an all cash offer, and the miner’s second acquisition of US shale gas assets this year. The total enterprise value of the deal is $US15.1 billion. BHP is set to buy Petrohawk for $US38.75 a share, funded from existing cash resources and a new credit facility. BHP said it would retain Petrohawk’s workforce.
Lynas ramps up plant constructionLynas Corporation Ltd’s
(ASX:LYC) Malaysian subsidiary will inject up to $US210 million to ramp up construction at the rare earth producer’s planned Malaysian refinery. Lynas Malaysia has signed a letter of award with Thai engineering company Toyo-Thai Corporation for engineering, procurement construction and commissioning assistance of the Phase 2 expansion of the Lynas Advanced Materials Plant. Lynas’ planned Malaysian refinery has been the subject of scrutiny and protests from community and environmental groups.
Peabody bid for Macarthur CoalPeabody Energy increased its $4.7 billion bid for Macarthur Coal Ltd
(ASX:MCC), winning approval to commence due diligence. Macarthur reached the agreement with Peabody and its joint-venture bidder ArcelorMittal, lifting the $15.50-a-share offer by agreeing to a final dividend of up to 16 cents a share. Prime Minister Julia Gillard has used the bid to sell her carbon pricing scheme, claiming it cements the future of coal mining in Australia.
Resources NewsTreasurer Wayne Swan said on Friday that pricing carbon pollution would unleash a new wave of investment in clean energy technology. While visiting Carnegie Wave Energy Ltd
(ASX:CWE) test facility in Fremantle the treasurer went as far as to say that Australia couldn’t be a first rate economy unless powered by clean energy. He said that putting a price on carbon would send the signal to the investment community to invest in clean energy.
CommoditiesWestpac’s Senior Economist Justin Smirk says it’s been a fairly mixed week for commodities.
“We’ve seen signs of strength in the gold market in particular coming through with the risk around the globe. But then also when you think about the other type of commodities we’ve also been seeing some strength come back into the oil market as well. So overall, despite what we think is an unfolding correction in commodities the most recent week has been … more positive.”
Mr Smirk also says gold will outperform other commodities in the future.
“Even though commodity prices are falling and gold will fall, gold will fall less … if the risks in the world are great enough and the risk aversions are strong enough you could see gold rise a bit. So in this environment I would actually argue that the signs are there … Gold can clearly outperform other commodities in this environment. So while I’m reasonably bearish on commodities I’m nowhere near as bearish for gold,” said Mr Smirk.
