News Wrap

IN THIS morning’s wrap: income to fall as mining slump bites; Xstrata set to recommend Glencore deal; and Newcrest accused of Cadia East licence breach.

Kristie Batten

The Australian Financial Review reports that Australia’s economy faces a double-barrelled hit over the next 12-18 months as real income falls for the first time since the global financial crisis and weaker mining investment detracts from growth.

The deteriorating outlook means the Reserve Bank of Australia will be forced to cut official interest rates at least once by the end of the year.

“China isn’t going back to the halcyon days of 10 per cent growth,” said BT Financial Group chief economist Chris Caton.

“Furthermore, the composition of the growth will shift from construction and infrastructure spending towards less commodity-intensive consumer spending ... we won’t be getting the lazy 1-2 per cent increases to real national income every year.”

Xstrata has agreed to give shareholders a separate vote on a huge bonus scheme that threatened to derail the takeover by Glencore International, as well as winning assurances that the miner will have a majority of the board, in order to save the deal, reports The Australian.

The mining giant infuriated investors with multimillion dollar retention packages for about 70 top managers.

Over the weekend, the Xstrata board worked on a complex structure it hopes will appease both camps with details to be agreed overnight ahead of an announcement to the London Stock Exchange today.

Finally, a private exploration company backed by high-profile shareholders, including Leigh Clifford, Mark Carnegie and Jeremy Barlow, has lodged an extraordinary legal claim aimed at preventing Newcrest Mining from going ahead with a key part of its $2 billion Cadia East project, according to the AFR.

Private company Gold and Copper Resources lodged the claim in the New South Wales Land and Environment Court on Thursday, arguing that construction of the Cadia East mine such as the extension of a dam had occurred on land over which Newcrest doesn’t have a mining lease.

Newcrest plans to complete Cadia East, near Orange, by the end of December with the new underground mine to contribute an additional 800,000 ounces of gold and 90,000 tonnes of copper to Cadia’s total annual production.

topics

loader