News Wrap

IN THIS morning’s wrap: Cycle will take care of itself, says Bechtel; CBA slashes iron, coal, zircon forecasts; and court orders miner to pay $8M damages.

Donna Schmidt

Cycle will take care of itself, says Bechtel

Contracting giant Bechtel admits the pipeline of new work in Australia’s resources sector is slowing down but says no company should have expected the mining boom to last, given the nature of the commodity price cycle, according to the Australian Financial Review.

Its Australian chief Andy Greig echoed concerns raised by services provider Clough that some sections of the contracting community may have been overexposed to unrealistic growth expectations.

CBA slashes iron, coal, zircon forecasts

Commodity prices are likely to remain under pressure as the Chinese government delays new construction and renewed economic stimulus becomes increasingly doubtful, according to the Australian Financial Review.

Commonwealth Bank analyst Lachlan Shaw has slashed forecasts for iron ore, coking coal and zircon prices as Chinese steel output flattens and zircon demand dwindles.

CBA’s commodities team expects Chinese steel output will finish flat in 2012 and grow by 4% in 2013, about 2% less than previously expected.

Court orders miner to pay $8M damages

A long-running dispute between a mining company and its litigation funder ended in the High Court with a damages award of more than $8̢ۉۡmillion going to Singapore-based funder International Litigation Partners, according to the Australian Financial Review.

The dispute arose after Chameleon Mining (now Kupang Resources) refused to pay ILP an early termination fee the funder claimed was triggered when there was a change of control at Chameleon. ILP had been funding Chameleon’s court battle against Murchison Metals.

Chameleon argued ILP was not entitled to the fee as it did not hold an Australian financial services licence, but the High Court said the funding agreement was a credit facility under corporations law, meaning a licence was unnecessary.

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