Chinese miner wins – conditional – approval for Oz expansion

The Federal Treasurer, Wayne Swan, has approved a proposed merger between the Australian coal miner,  Gloucester Coal with China’s state owned miner Yancoal.

However that approval is conditional on several legally enforceable conditions.

“ The merged business, Yancoal, will be required to continue its production and supply arrangements on a commercial basis, and remain headquartered in Australia,” Mr Swan said.

He said the merger would  also allow Yancoal’s parent company, Yanzhou Coal Mining Company Limited, to achieve a listing of its Australian operations by the end of 2012

This had also been condition of Yanzhou’s acquisition of Felix Resources Limited in 2009.

However Yanzhou is being given extra time to comply.

Mr Swan said he  recognised Yanzhou’s progress in meeting his earlier requirements, in that case.

Because of that – and in light of sustained volatility in global financial markets  -   Yanzhou would be given an extra 12 months  to reduce its economic ownership of Yancoal to less than 70 per cent.

That would now be required by the end of next year, Mr Swan said.

“However after 31 December 2012, Yanzhou will be required to quarantine the voting rights of any shares that it holds above 70 per cent in the listed Yancoal,” he added.

Mr Swan said the owners must:-

•               List Yancoal on the Australian Securities Exchange by the end of 2012 and reduce Yanzhou’s ownership to less than a 70 percent holding by the end of 2013;

•               Reduce the economic ownership of Yanzhou in the Syntech Resources and Premier Coal mines to 70 per cent by the end of 2014 and manage these mines through the listed Yancoal in the interim;

•               Market coal produced at their Australian mines on arms-length terms with reference to international benchmarks and in line with market practices;

•               Operate Yancoal as an Australian incorporated and headquartered company that is managed in Australia using a predominately Australian management and sales team;

•               Ensure Yancoal, and any of its operating subsidiaries, have at least two directors whose principal place of residence is in Australia, one of whom will be independent of Yanzhou and its related entities; and

•               Ensure that the Chief Executive Officer and Chief Financial Officer of Yancoal have their principal place of residence in Australia and that the majority of Yancoal’s board meetings in any calendar year are held in Australia.

Mr Swan said “The Government welcomes foreign investment in Australia.”

But he said it would  also make sure that such  investments are consistent with Australia’s national interest.

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Cut rates and forget surplus:Business

Business leaders called for lower interest rates – and urged the Federal government to defer planned spending cuts –  after new figures confirmed that Australia’s economic growth has slowed.

The Treasurer, Wayne Swan, noted that the Reserve Bank said, earlier this week, that there is room for rate cuts, if things get worse.

But Mr Swan said, too, that the Reserve Bank, alone, would decide what rates should be.

And he declared both that the government would proceed with its plans to produce a surplus in its next budget and that this would require further spending cuts.

The calls, for easier policies, came from the Housing Industry Association and the Australian Chamber of Commerce and Industry.

They were based on National Accounts, showing that the Australian economy grew by just 0.4 per cent in the December quarter and 2.3 per cent last year.

HIA economist, Andrew Harvey, said a weak performance by the housing industry had restricted economic growth during the quarter.

“The disappointing December growth result is evidence that it is impossible to have a strong economy without a strong housing industry,” Mr Harvey said.

“ It is not only a weak update for those in the residential building industry but should be of concern to those managing the broader economy,” he added.

“Today’s result confirms that interest rates remain too high and should place serious doubt over the Federal Government’s strategy to rush back to budget surplus,” Mr Harvey declared.

ACCI’s Economic and Industry Policy Director, Greg Evans, agreed.

“If we see a deterioration in labour market conditions the Reserve Bank should consider resuming the monetary policy easing they commenced late last year,” he said.

“Today’s read on the economy also strongly suggests the government’s objective of returning the budget to surplus in 2012-13 looks even more difficult and its appropriateness should be re-assessed if economic growth continues to slow,” Mr Evans added.

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It will hit the budget:Swan concedes

Wayne Swan admits that the slower growth, reflected in the latest national accounts, will hit the Federal government’s budget.

“There is no doubt that these numbers will have a detrimental effect on our budget bottom line,” the Treasurer told reporters in Canberra.

Mr Swan also said the accounts – which showed growth of 0.4 per cent in the December quarter – reflected “pretty rugged international conditions at the end of last year.”

“I think the number is somewhat softer than many people expected,” Mr Swan said.

The Bureau’s figures also showed growth of 2.3 per cent last year.

However  Swan did not retreat from the government’s promise to put the new financial year’s budget back into surplus.

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Charity no substitute for paying taxes:Swan

Wayne Swan has renewed his attack on three mining billionaires, accusing them of using their wealth to push their vested interests.

Addressing the National Press Club, the Treasurer insisted that he was speaking in defence of the Australian concept of “a fair go.”

“If we don’t grow together,” he said, “we will grow apart.”

Mr Swan said he was disturbed by Gina Rinehart’s purchase of media shares, to increase her influence.

Ms Rinehart, the daughter of mining magnate Lang Hancock, recently sought a big stake in Fairfax, which publishes The Sydney Morning Herald and the Melbourne Age.

When a reporter reminded Mr Swan him that the family of another mining billionaire – Andrew (Twiggy) Forrest – had decided to devote $50 million a year to “deserving causes,” Mr Swan responded with a biting line.

“Charity is not a substitute for paying taxes,” he said.

Mr Swan also criticised Clive Palmer, who reportedly said his responsibilities were to his shareholders and his workers, and that he did not have a public responsibility.

Mr Swan said no one grows wealthy alone.

“That is a clear example of what I am talking about,” Mr Swan said.

Then he repeated his central warning.

“I think we are on the cusp of losing a fair go, if we are not careful,” he declared.

Senior Coalition figures have attacked Mr Swan over his campaign, on this issue, accusing him of promoting class warfare.

However the Treasurer dismissed their attacks, noting that Mr Palmer is a big contributor to the Liberal party.

He then accused the Opposition Leader, Tony Abbott of “singing for his supper.”

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“Fair go” under threat:Swan

Wayne Swan says the “cherished” idea of “a fair go” is now “at grave risk.”

The Treasurer also declared that “a few wealthy individuals” have been using their “vast resources” to “distort public policy.”

If you think these are fighting words, you are right.

Especially as Mr Swan went on to name some of those “individuals,” including mining magnates, Andrew (Twiggy) Forrest, Gina Rinehart and Clive Palmer.

Mr Swan launched his broadsides in an essay published in a magazine called The Monthly.

His barrage continued today.

“…vested interests are on the march,” an unrepentant Mr Swan said, on ABC radio.

This had been all too clear in debate on resource taxation, carbon pricing and cigarette packaging.

A senior opposition figure, Christopher Pyne, struck back quickly, dismissing Mr Swan’s essay as “class warfare” and “the pure politics of envy.”

Mr Forrest was equally blunt, replying through the Deputy Chair of Fortescue Minerals, the one time champion miler, Herb Elliott.

He said Mr Forrest who “had started with nothing” has now built one of the most important mining operations in the world.

“Andrew epitomizes the spirit of what an Australian can do if given a fair go,” Mr Elliott said.

Mr Swan’s strongest backing  came from Cassandra Goldie, the CEO,  at the Australian Council of Social Service.

She declared that a debate on “fair shares” in Australia is “long overdue.”

“This is a critical time in Australia’s history and we need a national conversation so all voices are heard,” Dr Goldie said

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Our farmers and Woolies do a deal

Australia’s farmers and the nation’s biggest supermarket are getting together – and both say they want to hear from you.

The National Farmers’ Federation (NFF) has says it has reached agreement with Woolworths on a Blueprint for Australian Agriculture.

The Farmers’ President, Jock Laurie said that this will ensure that farm planning accurately captures the issues, challenges, opportunities and risks facing the entire agricultural supply chain in the long term.

That is “from farm to fork,” Mr Laurie said.

So what is it all about?

In short, setting directions.

“The Blueprint aims to gain the input of all with an interest in, or involvement with, Australian agriculture and the supply chain: farmers, transporters, processors, retailers and the communities and services that rely on them,” Mr Laurie said.

“Today’s announcement will enable us to gain the input of the customers who buy and consume Australian produce – a very important group in the agricultural supply chain.

“… as the saying goes: if you eat, you’re a partner in farming, “Mr Laurie said.

“Having Woolworths on board will ensure that what consumers believe are the key issues for Australia’s food producers are captured in the Blueprint,” he added.

So what does Woolworths think about all this?

“Woolworths and, most importantly, our customers, rely on a strong and prosperous agricultural sector,  “Tjeerd Jegen, Director of Woolworths said.

This year marks 25 years as the Fresh Food People – with that milestone comes extensive work with farmers and this relationship remains critical to our future.

“Woolworths’ top priorities in this area are productivity, promoting a new generation of farmers and meeting our customers’ needs.

“We are looking forward to working with the NFF on the Blueprint to achieve this,” Mr Jegen said.

So who else is in on this deal?

Woolworths joins Westpac as a major partner in the Blueprint for Australian Agriculture, the NFF said.

Like to know more? Go to www.nff.org.au/blueprint.

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Import bill falls, but…

Australia’s imports fell by 2 per cent, on seasonally adjusted figures, just released by the Australian Bureau of Statistics.

The bureau reported that the fall was driven by reduced imports of fuels and lubricants in January, but it noted, also, that imports of consumer goods still rose in that month.

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We’ll know tomorrow

So how bad is the Australian economy, really?

A paper, to be published at 11.30 tomorrow morning, should help to answer that pressing question.

The Reserve Bank surprised almost everyone, almost two weeks ago, when it decided to keep  Australia’s interest rates on hold,

Most economists had believed things  were so bad that a third, almost consecutive, rate cut was almost inevitable.

They are supposed to be the experts.

But the authorities didn’t agree.

The Treasury Secretary, Martin Parkinson, thinks we are all too glum.

“It’s almost as if most Australians seem to think we live in Greece,”  he told a parliamentary committee in Canberra last Friday.

“We don’t.

“I mean, we actually have an incredibly bright future ahead of us.,” Mr Martin said, as cheerfully as he could.

Reserve Bank chiefs had been hinting at much the same thing, earlier in the week.

The bank’s Deputy Governor, Philip Lowe, for example had been talking about Australia’s “investment boom.”

And his colleague, Guy Debelle, who watches financial markets very closely, said Europe’s plight is at least  “a more positive story” now than it was last year.

The  Reserve Bank regularly publishes “the minutes” of its board meetings, two weeks after the event. It will do so again, at 11.30 am Tuesday.

These papers are always watched closely, in the financial world, usually for hints about what course the bank might take in future, in setting interest rates,

Not this time, though.

That’s partly because Australia’s big four commercial banks have now revolted, declaring they will set their own interest rates in future, thank you very much.

More basically, though, it is also because a deeper question is now dominant.

Put simply, it is this.

“What, really, is going on, in the economy, right now?”

That won’t be easy to answer.

After all, we learnt last week that Australia’s unemployment rate actually fell last month, even though our newspapers have been full of reports of fresh lay-offs and redundancies.

Share prices, too, were generally better at the end of last week, even though Mr Lowe had also warned of a “material risk” of a downward spiral in the global economy, as more “fiscal consolidation” in Europe and the United States takes hold, in the months ahead.

Expectations, of a clear explanation, tomorrow morning, are high.

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