News Wrap

IN THIS morning’s News Wrap: resources companies take the axe to bosses' pay; Hancock confident of $7bn funding for Roy Hill mine; and iron shortage looms with Rio tipped to delay plans.

Staff Reporter

Resources companies take the axe to bosses' pay

As cutbacks across the mining sector intensify, companies with operations in Australia, Brazil and other resource-rich countries are taking aim at a new target – the pay packets of their top brass, according to The Australian.

Falling commodity prices and soaring costs of producing raw materials such as coal and gold are shackling resources firms that had, until recently, been riding high on a what Australian policymakers described as a once-in-a-century mining boom.

Over the past year, companies have been forced to make deep cuts, slashing jobs and spending on exploration for new mineral deposits, right through to dumping coffee machines and barbecues for staff.

Hancock confident of $7bn funding for Roy Hill mine

Gina Rinehart’s Hancock Prospecting says it is confident of securing a $7 billion funding package for the Roy Hill iron ore project in Western Australia’s Pilbara after meeting with banks and says it is on track to meet an end-of-year deadline, according to the Australian Financial Review.

Hancock and its partners in the $10 billion mine, port and rail project are seeking to arrange $4 billion in funding from export credit agencies (ECAs) and at least a further $3 billion from commercial banks in what would be the biggest capital raising of its kind in mining history.

The process has already been delayed once and there is much speculation that Rinehart may strike further trouble, with conditions in debt markets not favourable for private entities such as Hancock.

Iron shortage looms with Rio tipped to delay plans

Rio Tinto appears increasingly likely to delay a $5.4 billion iron ore mine expansion in Western Australia, possibly leaving global iron ore markets under-supplied and backing up claims by new Arrium chief Andrew Roberts that pundits predicting price slumps are factoring in too much new supply, according to The Australian.

After a detailed review of Rio's plans to ramp up the final 70 million tonnes of annual iron ore production in its expansion plans, JPMorgan has predicted the miner will delay its iron ore ramp-up by three years from its current 2016 target.

Rio has started building the port and rail capacity, but not yet committed to mine expansion.