The price of iron ore has fallen below $US100 a tonne for the first time since 2009. Analysts have warned a further fall of 16 per cent could occur, with a price of $US83 a tonne. Big producers are forecasting a rebound later this year when Chinese spending on infrastructure is expected to kick in.
The government says it will scrap a floor price for carbon permits from 2015, linking the scheme directly to Europe which could see the price of carbon plunge to about $12 a tonne. Concerns have been raised the Australian carbon price is open to a volatile market determined by the European Union’s carbon scheme. Minerals Council of Australia chief executive Mitch Hooke said the next three years present a high cost burden.
Resources news
Oil producing nations have been urged by seven global finance ministers (G7) to increase their output as many western countries are well placed to call on oil reserves to avoid price hikes.
“The current rise in oil prices reflects geopolitical concerns and certain supply disruptions. We encourage oil-producing countries to increase their output to meet demand,” the G7 said in a statement.
Copper prices have retreated slightly after data from the Federal Reserve Bank of Dallas showed business activity contracted at a slower pace in August than in July. On Wednesday it was $0.01 down at $3.48 a pound.
GrainCorp Limited
(ASX:GNC) has agreed to buy two commercial food oils businesses for $472 million. The grains producer will acquire Goodman Fielder Limited’s
(ASX:GFF) Integro Foods and Australia's second largest oilseed crusher , the Gardner Smith Group. Graincorp will attempt to raise $159 million via an entitlement offer to assist the funding of the acquisition.
Iron ore explorer Sundance Resources Limited
(ASX:SDL) has accepted China’s Hanlong Mining’s takeover offer which was recently reduced to $0.45 per share. The reduced offer from $0.57 came after Chinese regulators ordered a reduction in price due to soft iron ore prices. The revised offer values Sundance at $1.37 billion. Chairman George Jones says the board has concluded the deal is in the best interests of shareholders.
Chinese manufacturing contracts
A preliminary read on manufacturing activity in China has dropped to a nine month low. The HSBC flash Purchasing Managers Index fell to 47.8 in August, down from 49.3 the month before with a read below 50 indicating contracting activity. HSBC’s chief China economist says falling orders dragged down the August Flash PMI, suggesting Chinese producers are still struggling with strong global headwinds.
Commodities outlook
Australia’s largest rail freight company QR National
(ASX:QRN) has cautioned to expect softer demand for coal haulage services near term but affirmed the medium to long term outlook for Australian resources remains robust. CEO Lance Hockridge says the company doesn’t believe the fundamental drivers of Asian demand have changed and there is a strong pipeline of new expansion projects committed in the resource sector, especially for coal and iron ore.
Abandoned deals
Whitehaven Coal
(ASX:WHC) has announced that its major shareholder Nathan Tinkler has walked away from his $5.2 billion takeover offer for the company. The coal producer received an indicative and non-binding proposal from Mr Tinkler’s company to privatise Whitehaven in June.
Full year results
Beach Energy Limited
(ASX:BPT) has rebounded to profitability as it reported its annual results. The oil and gas producer swung to a net profit of $164 million after it booked a net loss of $97.5 million the year before. The positive result was boosted by its sales revenue which rose 24 per cent over the year. Beach says it will invest $200 million to advance its Cooper Basin assets.
Ausdrill Limited
(ASX:ASL) has boosted its full year net profit by 53 per cent to $112.2 million. The diversified mining services company says the result was increased due to its expanded services to the resources sectors in Australia and Africa. The company achieved revenue in excess of $1 billion for the first time in its history.
BHP Billiton Limited
(ASX:BHP) has revealed a bigger than expected full year profit drop and confirmed it will not meet the deadline for deciding on its Olympic Dam copper and uranium mine expansion. The global miner’s full year net profit has fallen 35 per cent to $US15.4 billion from a record Australian corporate profit of $US22.5 billion achieved in 2011.
Woodside Petroleum Limited
(ASX:WPL) dragged the energy sector lower after the oil and gas producer revealed its first half profit has fallen 1.9 per cent to $US812 million. Woodside’s CEO Peter Coleman revealed the company’s drilling campaign for its $15 billion Pluto LNG project has produced disappointing exploration results, putting a question mark over future expansion.
Fortescue Metals Group Limited
(ASX:FMG) has increased its full year net profit by 53 per cent to $1.52 billion. The iron ore miner says it expects to meet its 155 tonne annual production target and that 2013 growth will be driven by its advanced infrastructure.
Mount Gibson Iron Limited’s
(ASX:MGX) net profit has sagged 28 per cent to $172.5 million in the 2012 financial year. The miner says that lower iron ore prices, ore stockpile write downs and infrastructure disruptions are among the reasons for the profit fall. CEO Geoff Hill highlighted the fact that Mount Gibson has cash reserves of $293 million and no debt in emphasising that the company is set to experience growth moving forward.
