News Wrap

IN THIS morning’s News Wrap: Mining M&A sinks to 10-year low; Australian mining contractors bear brunt of resources rout; Boart Longyear says tough mining services conditions will persist in 2015; and Norway's sovereign fund may yet divest fossil fuels.

Lou Caruana

Mining M&A sinks to 10-year low

Merger and acquisition activity in Australia's mining sector has sunk to a 10-year low, amid a global drop off in mining deals, according to the Sydney Morning Herald.

There were hopes that 2014 would see a flood of deals, with corporate predators like Glencore and a new breed of specialist private equity firms hunting bargains in a heavily distressed sector flooded with unwanted assets.

But a report publishing by accounting firm EY on Monday morning revealed global deals fell by both volume and value for the fourth year in a row. In Australia it was even worse, with deals sinking to a 10-year low.

Australian mining contractors bear brunt of resources rout

Shares in Australian mining services firms fell sharply on Monday after they warned they will struggle to grow revenue as big miners slash spending in the face of collapsing commodity prices, according to Reuters.

Macmahon Holdings' shares dived 41% to a record low after the firm lost a key iron ore contract, while larger UGL fell as much as 15% after posting a half-year loss due to writedowns linked to the mining downturn.

Mining services firms have been among the worst hit by a resources downturn in Australia as their clients, the large producers, scramble to cut spending.

Boart Longyear says tough mining services conditions will persist in 2015

The depressed mining services market continued to take its toll on drilling company Boart Longyear which managed to narrow its full year loss to $US333 million but warned its margins would remain under pressure in 2015, according to the Sydney Morning Herald.

Commenting on the Utah-based company's 2014 full year results, chief executive Richard O'Brien said “extremely competitive industry pricing” for drilling services and the strengthening US dollar would continue to put pressure on earnings in 2015.

Norway's sovereign fund may yet divest fossil fuels

The Norwegian parliament may still instruct the nation’s massive $1 trillion sovereign wealth fund to stop investing in fossil fuels, despite an advisory panel saying the move could hurt the fund, according to the Australian Financial Review.

Norwegian Foreign Minister Borge Brende – who is visiting Australia as part of the first-ever state Norwegian visit to Australia led by the Norwegian King Harald and Queen Sonja – says that the fund's investment ambit is controlled by the parliament.

As a result, the possibility of the fund being instructed to divest, or cease investing in coal-linked assets remains, though he says there is no time frame for such a decision being taken.

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