Resources news
RBA monetary policy
As the Reserve Bank of Australia lowered the cash rate by 25 basis points at its October board meeting, Governor Glenn Stevens acknowledged a softening in the world economy over recent months with a dim outlook for the year ahead, according to his statement on the latest monetary policy decision.
“Key commodity prices for Australia remain significantly lower than earlier in the year... Looking ahead the peak in resource investment is likely to occur next year and may be at a lower level than earlier expected. As this peak approaches it will be important that the forecast strengthening in some other components of demand starts to occur,” Mr Stevens said.
Commodity Index
The Reserve Bank of Australia’s commodity index fell 1.3 per cent in September compared to August, in special drawing rights terms. Declines in the prices iron ore, coal and oil were the largest contributors to the fall. Aluminium and gold prices rose. In Australian dollar terms the index rose 0.9 per cent last month but was down 18.5 per cent over the year.
China’s manufacturing maintains contraction
The latest read on manufacturing in the world’s second largest economy has continued to indicate contraction. China’s official manufacturing purchasing managers' index increased to 49.8 in September from 49.2 the month before, remaining under the 50 level which indicates contraction.
Australia’s manufacturing still shrinking
Manufacturing activity in Australia continues to shrink, contracting for the seventh straight month. According to the Australian Industry Group and PricewaterhouseCoopers the Performance of manufacturing index dropped 1.2 points to 44.1 in September, with a read below 50 indicating contracting activity.
Resources sector boosts construction
The mining industry has driven construction work over the year to March according to the HIA-Cordell Construction 100 report. Public and private projects spiked 18.1 per cent. Among the country’s biggest builders Leighton Holdings Limited
(ASX:LEI) owned John Holland Group were placed on the top of the list, acquiring contracts worth $7.09 billion during the year, with the majority focused in civil engineering. Leighton Contractors followed with $6.5 billion worth of contracts. As expected, the resource rich states of Western Australia and Queensland dominated construction.
Company news
Expansion plans
Fortescue Metals Group Limited
(ASX:FMG) is a step closer to reaching its 155 tonne per annum production target by the end of the first quarter 2013. The miner has processed the first ore through its 25 million tonne per annum Christmas Creek 2 plant, the second ore processing facility at the Christmas Creek iron ore mine.
Newcrest Mining Limited
(ASX:NCM) confirmed a private exploration company has lodged a claim aimed at preventing it from expanding its $2 billion Cadia East project in New South Wales. Newcrest plans to vigorously defend Gold and Copper Resources claims that Newcrest is attempting to construct the mine over an area which it does not have a mining lease.
Takeover bids
Arrium Limited
(ASX:ARI) has rejected a takeover bid from a consortium including Singapore’s Noble Group and Korea’s POSCO. The mining group says the unsolicited and conditional offer of 75 cents per Arrium share undervalues the company and is highly conditional.
Takeover target Sundance Resources Limited
(ASX:SDL) has revealed a key condition of its takeover from China’s Hanlong Mining has been delayed. The iron ore explorer says the Financier Commitment Letter from the China Development Bank is now expected in mid October, pushed back from the original deadline at the beginning of the month. The delay is understood to have been caused by the Mid-Autumn Festival holiday period in China, and also, the need for Hanlong and the China Development Bank to finalise the conditions surrounding the facility. Sundance has again requested its shares are suspended from trade as it enters into a five business day good faith consultation period with its suitor.
Oil and gas
Central Petroleum Limited
(ASX:CTP) and Adelaide based Santos Limited
(ASX:STO) have announced a joint venture agreement to further explore and develop several areas in the Amadeus and Pedirka Basins in Central Australia. Under the terms of the farm-in agreement, Santos will spend up to $150 million in return for a 70 per cent stake in the area that has been assessed as having substantial potential for both conventional and unconventional oil and gas resources.
Oil and gas explorer Senex Energy Limited
(ASX:SXY) says it has extended its Snatcher oil field in South Australia’s Cooper Basin. Senex is the operator of Snatcher and holds a 60 per cent stake in the joint venture with the remaining interest held by Beach Energy Limited
(ASX:BPT).
