News Wrap

IN THIS morning’s News Wrap: A challenge for UN climate push; mining mergers fall to decade-low; and the UK wary of power pricing promises.

Lou Caruana

Australian coal mining a challenge for UN climate push

UN calls to curb greenhouse gas emissions by ending most electricity generation using coal will face some tough challenges, with coal mining going through a growth spurt in countries such as Australia, according to the Sydney Morning Herald.

Australian growth is expected to continue as companies including Rio Tinto, BHP Billiton and Glencore earmark capital to acquire and dig new mines.

Those companies are banking on projections that use of coal will rise, not fall, in coming decades, creating new markets for Australian collieries.

Australian production of thermal coal is forecast to rise by 8% over the next two years to 270 million tonnes, according to government figures, confirming the nation as the world’s second’s biggest-exporter after Indonesia.

Mining mergers and acquisitions fall to decade low

The value of mining sector transactions so far this year has fallen to about $5 billion, the lowest level in a decade, prompting mixed views on prospects for the next 12 months from bankers and lawyers, according to the Sydney Morning Herald.

Some bankers are tipping deals are likely to be opportunistic by locally listed players, with the gold sector likely to be the hottest for transactions.

Macquarie Capital resources banker Justin Mannolini says a lack of confidence has been hampering deals, and interest from Asian buyers in the Australian mining sector was at a low ebb.

UK utilities chief wary of power pricing promises

The former head of Britain’s energy markets watchdog has advised governments and regulators need to resist the temptation to market electricity price liberalisation to consumers by promising reductions in prices to avoid a potential consumer backlash later on, according to the Australian Financial Review.

Former CEO of UK gas and power regulator Ofgem, Alistair Buchanan, said the experience of UK consumers after the full liberalisation of electricity and gas prices 15 years ago had led to a very heated debate now about whether energy was even a commodity that really lent itself to competitive retail marketing at all.