News Wrap

IN THIS morning’s wrap: Brierley may use Murchison as a vehicle; Consumer spend, construction key to 2013; and China’s Hanlong ready to close Sundance bid.

Staff Reporter

Ron Brierley may use Murchison Metals as listed vehicle for other interests

Corporate raider Ron Brierley could use Murchison Metals as a listed vehicle for other interests after his investment company said it was unlikely to participate in a proposed share buyback, one month after taking control of the shell company, The Australian reported.

Brierley’s Mercantile Investment Company moved late last month to oust the directors of the failed mining company after raising concerns about the $A7.6 million cost to wind up Murchison.

Speculation at the time had suggested that Brierley was looking to control the junior resources shell, but he said his company supported the return of capital to shareholders as soon as possible.

Murchison is being wound up after it sold its interest in failed infrastructure and mine projects to joint venture partner Mitsubishi for about $325 million.

Liquidators were expected to be appointed to Murchison in February or March.

Consumer spend, construction key to 2013 economy

According to the Australian Financial Review, the Australian economy will enter 2013 still juggling a mining investment boom on the one hand and weakness in the non-mining parts of the economy on the other. How these two competing forces resolve themselves will dictate the economy’s health this year.

Business surveys suggest that mining investment is likely to remain at a high level over the coming year, but the sector’s contribution to economic growth is close to a peak. Indeed, the slowdown in the Chinese economy and sharp drop in iron ore prices mid-way through 2012 saw an earlier than expected mothballing of some mining investment projects, and one downside risk for the economy this year is a larger cutback in investment plans if commodity prices drop further and the Chinese economy continues to slow.

On that score, there have been some recent encouraging signs – with iron ore prices reversing half the earlier falls in the past two months amid signs of stabilisation in Chinese economic growth. At best, however, improvements in the global economy would mean export commodity prices and mining investment level out or fall more modestly – continued strong gains in both are unlikely as they are already at a very high historic levels.

As commodity prices and mining investment fall, the challenge remains for the non-mining sectors of the economy – like consumer spending, manufacturing, home building and tourism – to take up some of the slack.

China's Hanlong Group ready to close Sundance takeover bid

China’s Hanlong Group will finalise its long-running $1.3 billion bid for Sundance Resources in the next two months, a step that China hopes will allow it to become a major player in swaying prices in the global iron ore market, The Australian reported, citing Xinhua.

The privately held Chinese company revealed on the weekend that it would soon lodge documents with the Australian Securities and Investments Commission to press ahead with the bid, which began in November last year.

China's official news agency Xinhua reported on the weekend that Hanlong had flagged the bid would be finalised by early March.

In a statement, Hanlong also said it would seek joint venture partners, most likely Chinese firms, to help develop the mine and the infrastructure needed to transport the iron ore.

"Hanlong is investing $US5 billion to develop its first mining project in Mbalam, as well as build a 550km railway and shipping port," the report said.

"It is slated to start operating in 2014. Hanlong executives have disclosed that the company is in talks with leading state firms to jointly develop the mine."