Global miners Rio Tinto Limited
(ASX:RIO) and BHP Billiton Limited
(ASX:BHP) have been encouraged by a leading global mining investor to divest billions of dollars worth of assets regardless of whether they can realise full value on them. BlackRock investments believe the top tier resource companies will still be able to deliver improved investor returns even if assets are sold under market value prices, and applauded moves by Rio and BHP to sell non-core and under-performing assets.
Meanwhile, the 12-year boom in engineering construction activity in Australia is about to end according to economic forecasting agency BIS Shrapnel. BIS says engineering work in fiscal 2013 will total approximately $128 billion, then pull back by 5.4 per cent the following financial year owing to the slowdown in mining investment and its related infrastructure. After that, according to BIS Shrapnel, engineering construction will fall 20 per cent below its current peak by 2016-2017 and is unlikely to peak again for at least another decade.
Economic news
Australia’s manufacturing sector declined at its fastest rate in four years, according to the Australian Industry Group’s performance of manufacturing index (PMI). The index dropped 7.7 points in April to read 36.7, with the decline attributed to the strong Australian dollar and high labour and energy costs.
Chinese Manufacturing slowed above expectations in April, according to the official purchasing manger’s index. The reading fell to 50.6, coming down from the previous months read of 50.9.
Commentary
Woodside Petroleum Limited
(ASX:WPL) Chairman Michael Chaney believes other Resource companies to follow Woodside’s example and boost shareholder returns, after investors responded enthusiastically to Woodside’s decision to offer a special dividend as well as increase its dividend payout ratio.
"In general, in the resources industry, shareholders are really wanting to ensure that the management teams are investing quite wisely for the future...So in the absence of a compelling business case, I think it's fair to say that shareholders are asking management to return dividends to them as fast as possible...It is fair to say Woodside finds itself in a very fortunate position at the present time- with, on the one hand, a number of promising growth prospects ahead of it and, on the other, very strong cash flows."
Mr Chaney believes the payout ratio is set to be maintained for several years based on current forecasts and will be reviewed only in the event of significant new capital investments or a change in external circumstances.
The Woodside of life
Woodside Petroleum Limited
(ASX:WPL) is unlikely to use floating liquefied natural gas technology in its development of the Sunrise gas project in the Timor Sea and is reportedly instead considering an onshore plant. The East Timor government says both it and the company see the offshore option as carrying risk related to the use of commercially unproven technology.
Woodside Petroleum Limited
(ASX:WPL) boss Peter Coleman says the oil and gas giant’s decision to shelve its $45 billion Browse gas plant in Western Australia is by no means the end of its plans to develop the Browse resource. Speaking at Woodside’s AGM in Perth, Mr Coleman says he is confident the company can begin basis design work on new concepts in the near future.
Sign here, initial there
Worleyparsons Limited
(ASX:WOR) has been awarded two framework agreements by BP for the provision of consulting services across its business line outside of North America.
Aquila Resources Limited
(ASX:AQA) says a joint venture with global trading company Sumitomo Corporation’s subsidiary Sumisho Coal Australia will not be proceeding. Sumitomo has elected not to pursue an interest following two independent valuations.
Sundance Resources Limited
(ASX:SDL) is pursuing suitors after the collapse of Chinese suitor Hanlong's takeover bid for the group. The iron ore explorer is pursuing renewed talks both with Chinese parties and with interested groups outside China on a number of options for the development of the Mbalam Project.
BHP Billiton Limited
(ASX:BHP) is set to sell its Pinto Valley mining operation and the associated San Manuel Arizona Railroad Company to Capstone Mining Corp for an aggregate cash consideration of $US650 million. The deal is subject to regulatory approval and is expected to be completed in the second half of 2013.
Mining IPOs
IPB Petroleum Limited
(ASX:IPB) started trading on Tuesday 31st April. The Australian oil and gas explorer floated with an issue price of $0.50, opened at $0.43 and a closed at $0.35.
