News Wrap

IN THIS morning’s News Wrap: Manufacturers say gas prices are driving industry to coal; Rio seeks partners for iron ore project; and ACCC set to block AGL Hunter Valley spree.

Lou Caruana

Manufacturers say gas price are driving industry to coal

Manufacturers are considering switching from gas to coal as an energy source to avoid paying some of the world's highest prices for gas, according to The Australian.

After Queensland's largest power generator, Stanwell, announced on Wednesday it would mothball its biggest gas-fired power station and resurrect a coal unit, industry groups said more businesses could follow suit.

Rio seeks partners for iron ore project

Rio Tinto is in talks with potential partners from the Middle East and China to seek finance for an $US18 billion mine project in Guinea, in what could be a model for miners to fund the soaring cost of developments, according to the Australian Financial Review.

The Anglo-Australian miner has been in discussions with groups including Mubadala, oil-rich Abu Dhabi’s active investment vehicle, as well as the sovereign wealth funds of Kuwait and Qatar, over possible investment in a 650km railway and port needed to unlock Rio’s development of Simandou, an iron ore deposit in the west African country.

In China, Rio has been in talks with the China Investment Corporation, as well as other entities including ICBC and the China Development Bank, according to people familiar with the project. Rio wanted a consortium of partners who could fund an estimated $US3 billion of equity for the infrastructure, while debt finance of a similar amount would also be needed, sources said.

“Middle Eastern or Chinese partners are the potential funders.”

ACCC set to block AGL Hunter Valley spree

The competition watchdog has flagged that it will block AGL Energy from buying big Hunter Valley coal-power stations, substantially lessening the competitive tension in the NSW government's proposed $2 billion sell-off, according to The Australian.

The three bidders for the state government's Macquarie Generation assets now consist of: one that looks like being at least hindered by the Australian Competition and Consumer Commission; one (ERM Power) where concerns have been raised about its ability to finance the deal; and an outsider, Japan's Marubeni.

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