Bleak warning on resources ventures as downturn bites
More resources projects that would cost billions of dollars could be dumped because of deteriorating market conditions, the mining industry has warned on the eve of new government forecasts on the viability of planned resources investment, according to the Australian Financial Review.
The latest six-monthly review of Australia’s resources and energy projects will be published as early as today and is expected to forecast that more major projects will be shelved or delayed over the next three years.
The Bureau of Resources and Energy Economics is the federal government’s key mining industry research unit and its September forecast will help inform Treasurer Joe Hockey’s deliberations before he releases the mid-year economic and fiscal outlook in December.
Palmer mulls get out clause with Citic
Mining magnate Clive Palmer is considering forgoing more than $500 million in royalties to break his contract with Chinese-owned company Citic Pacific over the $7 billion Sino Iron project in the Pilbara, according to the Australian Financial Review.
With both parties heading back to court next month after mediation failed, Palmer revealed he was considering using a clause in the contract to end the long-running legal dispute.
The move would be a major risk for Palmer because it would deny him hundreds of millions of dollars of revenue stream he was hoping to use for other business interests.
But the new MP said he was confident another iron ore player would be willing to step up to take on the project.
Rio’s ‘big bang’ may be muffled
Rio Tinto is expected to update investors on its multi-billion dollar iron ore expansion plans next week amid predictions the global resources company will take a conservative approach to its development strategy, the AFR reports.
Rio’s investor seminar on December 3 in Sydney was expected to be the day Rio would outline its strategy to jump from an expected capacity of 290 million tonnes a year to a run rate of 360 million tonnes a year at its Pilbara-based operations in Western Australia’s North West.
Phase two of the expansion of the port, rail and power infrastructure to cope with 360 million tonnes a year is already underway.
While the Rio board, led by chairman Jan du Plessis, is yet to make a final decision on how and when to expand its iron ore division, Australian-based shareholders and equity analysts are not predicting the board to outline large scale plans to hit 360 million tonnes a year next week.