Liquefied natural gas (LNG) is expected to drive growth in the Australian resources sector over the next decade. Resources Minister Martin Ferguson revealed about $230 billion has been earmarked for investment into the industry when he addressed an industry conference this week. Mr Ferguson says major global companies are currently having to digest a new cost culture and has warned the sector is becoming too costly on a broader basis.
“We must face up to cost and price pressures. No-one owes Australia a living,” Mr Ferguson said. Mr Ferguson believes a second stage of investment from mid-decade was crucial for Australia provided the sector became more competitive.
LNG cost blow outs
Chevron’s Gorgon LNG project, the nation’s biggest resources development, is facing a possible $20 billion cost blow out due to a high Australian dollar, union demands, productivity issues and high costs of local manufacturing. The US oil major launched a cost review in July for its initial three train venture in Barrow Island.
Oil Search
(ASX:OSH), Exxon Mobil Corporation (NYSE:XOM) and Santos Limited
(ASX:STO) have increased the cost forecast for their LNG joint venture in Papua New Guinea by about $US4 billion due to foreign exchange factors, bad weather and logistical problems. Oil Search will be required to contribute about $US300 million in additional equity.
BHP assessing LNG options
Global miner BHP Billiton Limited
(ASX:BHP)is reportedly considering exporting a part of its US shale gas reserves to Asia, a move which could compete with Australia’s liquefied natural gas exports. The CEO of BHP’s petroleum division is understood to be studying potential opportunities after noting an increase in Asian interest for US gas and has also expressed concern about the cost of developing gas fields in Australia.
Buru inks deal with WA Government
Buru Energy Limited
(ASX:BRU)and its joint venture partner Japan’s Mitsubishi Corporation have struck a deal with the West Australian government to provide long-term tenure over Buru’s most prospective acreage and facilitate the development of a gas supply project. Buru hopes the development will deliver gas into the existing domestic gas network in the Pilbara and promote long term energy security for the state.
Mergers, Acquisitions & Divestments Sundance tomerge with Texon
US focused oil and natural gas explorer Sundance Energy Australia Limited
(ASX:SEA) has announced plans to merge with fellow explorer Texon Petroleum Limited
(ASX:TXN). The all-scrip deal will see one Sundance share issued for every two Texon shares and has been backed by both boards. Talon Petroleum will become a new listed vehicle which will enable Texon shareholders to retain non Eagle Ford Shale assets.
Intrepid invests in Canadian explorer
Intrepid Mines Limited
(ASX:IAU) has acquired 10 million shares in Canadian listed New Nadina Explorations for $961,000. The acquisition represents 12.6 per cent of New Nadina’s total share issue and include a further warrant option that if exercised would lift Intrepid’s holding to 17.75 per cent. CEO Brad Gordon says the investment continues Intrepid’s policy of sourcing high potential global growth opportunities.
BHP sells $500M diamond business
BHP Billiton Limited
(ASX:BHP) has announced the sale of its diamonds businessfor $500 million in cash, marking the global miners exit from the diamond industry. BHP has sold its interests in the Canadian Ekati Diamond Mine and Diamonds Marketing operations to Harry Winston. The mining company will take a $US200 million impairment charge post tax on the sale which is expected to be finalised in the first quarter of 2013.
Cost cutting Paladin to cut costs by up to $US80 million
Paladin Energy Limited
(ASX:PDN)has flagged plans to cut costs by between $US60 million and $US80 million over two years as it faces a weakening uranium spot price. The uranium producer says it will continue to focus on improving operational efficiency and is expecting this to result in substantial gains within the next years.
Macmahonsheds staff and cuts pay
Macmahon Holdings Limited
(ASX:MAH) has shed staff and its executives will take a pay cut as it strives to improve the business and cost efficiency. The contract mining and construction company did not reveal how many jobs have gone at its annual general meeting but confirmed roles have been made redundant, a hiring freeze has been introduced and executive management will take a 10 per cent pay cut this financial year.
Guidance Atlas affirms FY13 output guidance
Pilbara focused iron ore producer Atlas Iron Limited
(ASX:AGO) has affirmed its full year production targets and spruiked its longer-term growth options. The miner says its economies of scale will only improve as it prepares to ship at a rate of 10 million tonnes per annum from June next year and grow to 12 million tonnes by the end of 2013. Atlas has also confirmed mining at Mt Dove will start next month and that it has secured environmental approvals for its South East Pilbara mines and connecting rail spurs.
Outlooks Rio Tinto confident in commodities
Rio Tinto Limited
(ASX:RIO)has shrugged off concerns of a slowdown in Chinese growth and affirmed its confidence in demand for Australian commodities. The global mining company says there are signs of green shoots in the Chinese economy and recent data suggests China may have bottomed out. Rio has conceded China is showing short term slower growth but says fundamentals suggest a soft landing and a doubling in the economy by 2020.
