Mining sector sending mixed messages

Resources Corner

Australia’s trade deficit widened more than expected in October, hit by lower resource export revenues. The Australian Bureau of Statistics showed the balance on goods and services came in at a deficit of $2.1 billion in October, from $1.4 billion the month before. Exports fell 5 per cent while imports increased 2 per cent.
 
The drop in resource exports can be attributed to the fall in coal and iron ore prices earlier this year. Capital expenditure in mining may have peaked with many invested projects still yet to deliver. Productivity in resources is at an all time low, contributing the most to Australian’s overall drop in productivity.
 
In contrast, the Australian Bureau of Statistics released data showing the Australian economy has grown 0.5 per cent in the September quarter. The industries that drove growth in the September quarter were mining, manufacturing and health. Mining contributed 0.4 per cent to the increase in GDP.
 
But the Manpower Employment Outlook Survey released this week shows employers in the resource sector are set to reduce employment by 8 per cent in the first quarter next year.
 
Manpower also says they expect a ‘multi-speed’ labour market in the new year.
 
“While jobs in resources are down overall the oil and gas industry remains strong, with an expanding pipeline of projects that will drive demand for workers throughout 2013. Recent figures from the Queensland Minerals Council bear this out: While 5,000 coal jobs were lost in the state, 7,000 coal seam gas jobs were created in the first half of 2012,” Managing Director of Manpower Group, Lincoln Crawley, said.
 
Project updates
 
In the face of more controversy Lynas Corporation Limited (ASX:LYC) has affirmed the validity of its temporary operating license and ability to continue operations at its $800 million Malaysian plant. The confirmation comes after four Malaysian government ministers threatened to suspend or revoke the rare earths producer’s license if it fails to exports the waste generated from its facility.
 
Straits Resources Limited (ASX:SRQ) says heavy rain and flash flooding has impacted its Mt Muro gold mine operations in Indonesia. 72 hours of rain has affected mining in the short term, with Straits suspending milling operations until the situation is stabilised.
 
Takeovers and joint ventures
 
Fortescue Metals Group Limited (ASX:FMG) is in discussions with BC Iron Limited (ASX:BCI) relating to the partial sale of its interests in the Nullagine joint venture in Western Australia.
 
Woodside Petroleum Limited (ASX:WPL) will further expand its exploration interests in Myanmar after reaching a joint venture agreement with local company MPRL E & P to acquire a 50 per cent interest in a block within the Rakhine Basin.
 
Divestments
 
Rio Tinto Limited (ASX:RIO) has sold its 57.7 per cent stake in South African copper producer Palabora Mining Company Limited for $US373 million. The global miner says the business is no longer a natural fit within its portfolio and the sale reflects the company’s policy of reviewing its portfolio to generate value.
 
BHP Billiton Limited (ASX:BHP) will sell its interests in the East Browse and West Browse joint ventures in Western Australia for $1.63 billion. The global miner has signed an agreement with PetroChina International Investment to offload its 8.33 per cent stake in the East Browse site, and its 20 per cent holding in the West Browse site.
 
Capital raisings
 
Uranium producer Peninsula Energy Limited (ASX:PEN) has raised $36 million from Blackrock Financial Management and Pala, to be used for development of its Lance project in north east Wyoming in the US.
 
Atlas Iron Limited (ASX:AGO) has completed a $US325 million financing package and remains on track to meet its Pilbara iron ore production targets by December 2013.
 
Interview
 
FNN spoke to Dahlman Rose Managing Director and Co-Head of the firm’s OTCQX Markets Group, Stephen Nash.
 
Mr Nash discusses why he does not think the Australian mining boom has peaked.
 
To watch more of the interview click here.