Tony Abbott’s passionate declaration of Australia being once again ‘open for business’ with a mining boom rebooted has raised resources sector hopes of existing in an environment of reasonable taxation and regulatory policies. Mr Abbott moves into Kiribilli enjoying strong support from a mining industry desperate for a stable political environment, a desire perhaps best surmised by Rio Tinto Limited’s
(ASX:RIO) Australian MD David Peever:
"For Australia to maximise its potential and to achieve desired growth, we need leadership from our politicians focused on the long-term national interest, buttressed by proper governance, strong institutions and consultative decision-making processes."
BHP Billiton Limited
(ASX:BHP) seems committed to working with Mr Abbott and his soon to be named cabinet, prioritising areas that will help restore Australia's productivity and competitiveness. According to a spokesperson for the global miner:
"It is encouraging that the need to lift productivity to maintain living standards featured so prominently in the campaign. While the bulk of the productivity challenge rests with industry, government has a critical role to play in the provision of predictable and stable policy frameworks."
The Coalition has declared that Australia’s economy is in for a jolt, not only one in which the mining boom is rebooted but also where the apetite for risk and investment is restored. Minerals Council of Australia chief Mitch Hooke is of the opinion that abolishing the carbon tax and minerals resource rent tax, as Mr Abbott has declared his intention, would represent a positive first step in an industry where its international competitors faced no such comparable imposts. According to Mr Hooke:
"The MRRT was founded on the falsehood that the mining industry was not paying a fair share of tax and that a further new tax was necessary for Australians to share in the benefits of the millennium mining boom.”
Commentary FNN asked Fairview Equity Partners, Portfolio Manager and Executive Director, Chris Adams, why the fund manager is committed to retaining sufficient exposure to the resources sector:
Commodity prices have fallen but we don’t suggest they’re still falling, in fact many have bounced back. Take iron ore for example, that’s gone from $US100 a tonne back to $US130. Gold staged a 15 per cent recovery during the last couple of months. Even copper’s bounced back about 10 per cent. So we don’t necessarily see commodity prices still falling. They’re inherently volatile – very hard to predict, it’s not something that we ever try to predict. And given resource companies are driven primarily by commodity prices, we always seek to maintain a healthy exposure to what we consider to be the better ones. Now when I say the better ones, we make sure that we own the lower cost producing companies. We certainly are very reluctant to own any speculative or junior companies, which are yet to start producing. And we found those companies have continued to deliver good returns, even during difficult periods for resource companies.
Profit results Beadell Resources Limited
(ASX:BDR) has posted a first half net profit of $37.1 million in its maiden six months of production at its Duckhead gold mine in Brazil. Managing Director Peter Bowler says Duckhead is one of the most profitable gold pits globally. Mr Bowler says he expects the next half to be far stronger, with full year gold production to hit 185 to 195,000 ounces.
Altona Mining Limited
(ASX:AOH) has delivered its first full year net profit. In fiscal 2013, net profit after tax was $12.6 million, a significant turnaround on the $25 million loss in 2012. Altona says the result is a reflection of its transformation from building an commissioning its Outokumpu operations to entering successful commercial production. The miner booked a $5.5 million write down in the value of nickel resources at the Kumho Nickel Project as a result of lower nickel prices. Managing director Dr Alistair Cowden says Altona has matured in to a full-fledged producer in a climate where other start-ups have stumbled or failed.
Corporate musings Boart Longyear Limited
(ASX:BLY)has had its corporate debt rating downgraded. Moody’s Investors Services has advised the company’s ratings have been revised and will remain under review. The company says the review comes as a result of the financing structures the company is evaluating to provide greater liquidity and flexibility, as previously announced.
An independent review of Newcrest Mining’s Limited
(ASX:NCM) disclosure and investor relations practices has not found a systemic failure in the miner's communication with the market. Newcrest says Dr Maurice Newman has finalised his report, concluding the group takes its continuous disclosure obligations very seriously and has processes in place to reinforce this. Dr Newman says the usual protocol for completing such a review is to look for systemic failure or tell-tale signs which indicate a repeated lapse in laid-down procedures and protocols, but he says this was not the conclusion he reached in relation to Newcrest.
Worleyparsons Limited
(ASX:WOR)has won a contract from Brazilian resources giant Vale to work on a rail infrastructure project in Africa. The mining services provider will build a rail link between Vale’s coal mine and the Port of Nacala which is located in the north-east of Mozambique.
