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Australian dollar dives as March interest rate cut predicted

Most bank-based economists still believe the RBA’s next move will be up, but not everyone agrees. Photo: Jesse Marlow Most bank-based economists still believe the RBA’s next move will be up, but not everyone agrees. Photo: Jesse Marlow
Nanjing Night Net

Most bank-based economists still believe the RBA’s next move will be up, but not everyone agrees. Photo: Jesse Marlow

Most bank-based economists still believe the RBA’s next move will be up, but not everyone agrees. Photo: Jesse Marlow

The Australian dollar dived to fresh four and half year lows on Wednesday as surprise weakness in the national accounts refuelled bets of an interest rate cut next year, with Goldman Sachs becoming the latest bank to change its monetary policy predictions for 2015.

In late trade, the Aussie was fetching US84.03¢, after bouncing off US83.90¢, its lowest point since the first week of July 2010. It was the first time this year the local currency has dipped below US84¢.

The trigger was Wednesday’s national accounts data, which showed a shock slowing in September quarter gross domestic product growth, to just 0.3 per cent from 0.5 per cent in the June quarter. The latest figures takes year-on-year growth to 2.7 per cent, compared with average GDP growth of 2.9 per cent over the past decade and a 15-year average of 3.1 per cent.

Another weak quarter could push calendar year GDP growth below 2.5 per cent, under the Reserve Bank of Australia’s minimum forecast.

Most economists had predicted September quarter growth of around 0.7 per cent, equating to 3.1 per cent over the last 12 months

Although many forecasters were relatively sanguine about the weak data, highlighting a pick-up in non-mining related investment, credit market traders immediately took new positions on forward swap rates, pricing in an almost certain RBA cash rate cut next year.

At one point a closely-watched Credit Suisse swap rate index had priced in a 96 per cent chance of a rate cut in 2015, although this later came back to 88 per cent.

The Australian government’s three-year bond also rallied, pushing the yield down from 2.45 per cent to 2.38 per cent.

Most bank-based economists still believe the RBA’s next move will be up, although many don’t expect monetary tightening to begin until late 2015 or early 2016. A growing band, however, has been shifting its position.

Deutsche Bank this week ventured that a 50 basis point reduction, to 2 per cent, could be on the cards if unemployment continued to rise and housing market price growth continued to cool.

Goldman Sachs re-joined the bear pack on Wednesday, forecasting a 25 basis point cut in March and another in August.

“Although third-quarter GDP growth was consistent with our forecast . . . we are shifting our view on interest rates back to interest rate reduction in 2015,” the investment bank said.

“Nevertheless, revisions to the back data and the composition of the GDP data were sufficiently poor to tilt the balance of probabilities towards a rate cut in the first half of 2015 as our base case,” it said

National Australia Bank’s senior economist David de Garis said on Wednesday that if leading indicators for the current quarter prove erratic, the central bank might consider more easing.

“The RBA can take some comfort from recent indicators on the economy suggesting that the pace of growth has picked up to some extent,” he said.

“Should such indicators show signs of faltering, then the RBA would need to address whether the current stance of monetary policy is sufficient to aid the economy’s transitioning to higher domestic non-mining growth,” he said.

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Lock it or lose it: Dubbo, Wellington top NSW crime figuresPOLL

Detective Sergeant Mark Meredith inspects the latest crime figures for the Orana region. Photo: GREG KEEN.BREAK-INS to non-dwellings in Dubbo have soared, with latest crime figures showing they have nearly doubled in the two years to September.
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The 96.2 per cent spike was the second-biggest increase recorded in that category across all of NSW, second only to the neighbouring Wellington local government area, which recorded a whopping 141.7 per cent increase in the same period.

The figures were contained in the NSW Bureau of Crime Statistics and Research (BOCSAR) quarterly report released yesterday.

With 153 of the incidents reported in Dubbo and 58 reported in Wellington in the year to September, break and enters to non-dwellings were happening at a rate more than twice the state average in Dubbo and nearly four times the state average in Wellington.

Orana Local Area Command Detective Sergeant Mark Meredith said non-dwellings could include buildings such as shops, farms, industrial sheds, storage warehouses and workplaces.

For Dubbo, the other crime category in Dubbo that experienced a significant jump was thefts from motor vehicles, which rose by 36.1 per cent.

Rates were calculated per 100,000 population, Detective Sergeant Meredith said, so there were not necessarily more offenders in Dubbo and Wellington than elsewhere. But there were a lot of repeat offenders, he said.

“We’re not looking at the wild, wild west, 90 per cent of the crime is done by a small minority,” he said.

“We are aware of that and that’s why we concentrate much of our effort on people who have recently been released from custody, and we liaise with other government agencies such as Corrective Services and Probation and Parole to monitor them.”

Information provided by members of the community had also been extremely helpful in the past and Detective Sergeant Meredith said he hoped people would continue to come forward if they had information that could help police smash crime locally.

“And through that we are getting results,” he said.

“We’re happy with our clear-up rates for significant crimes. And across the board, what’s reported in one day may well be solved on the same day or within a week.”

Detective Sergeant Meredith said local residents could feel somewhat optimistic in that police were using an increasingly impressive amount of technology to solve crimes.

“The sheer quantity of things we can obtain from crime scenes these days, DNA and the like, should give people hope,” he said.

“The technology is far greater than it used to be and as a result there have been some serious crimes solved that are 20 to 30 years old.”

There were measures local property owners could take to help prevent their premises falling victim to break-ins, Detective Sergeant Meredith said.

“Discuss security with our crime prevention officer or your insurance company,” he said.

“We can assist people with security, have a chat with us.”

Meanwhile Detective Sergeant Meredith said the growing use of security cameras in business premises was helping police catch crooks.

“CCTV is a wonderful tool and we rely on it heavily,” he said.

And while he had said it before, Detective Sergeant Meredith said he would keep reminding members of the community to secure their vehicles when they left them.

“Make sure you take anything of value with you, don’t leave your valuables in plain sight,” he said.

This story Administrator ready to work first appeared on Nanjing Night Net.

Grunwald moves and grooves

Ash Grunwald will play at The Basin Concert on New Year’s Day.ASH Grunwald is openly opinionated, naturally relaxed and forever seeking a groove.
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This year has been a busy one for the Australian blues and roots musician.

Grunwald toured his most recent album, Gargantua, protested against the growing coal seam gas mining movement, worked with many of the country’s most influential musicians and still found time for a surf.

Ahead of his performance at Launceston’s 2015 Basin Concert, the passionate singer said he would always work towards making music with feeling.

“I just loved that bluesy kind of sound and I like a groove,” Grunwald said.

“Most of my songs have been always asking that question, what do you do with your life and how do we spend these few years that we have on this earth.

“The answer is usually some version of, live for the now, we don’t know what’s going to happen tomorrow but we do know what’s going to happen now.”

Through his music, the outspoken environmentalist said he felt it was his duty to publicise his protest against what he believed to be “Australia’s biggest issue” – coal seam gas mining.

“I just wouldn’t forgive myself if I didn’t speak up.

“Australian people who are actually environmental refugees now have to leave their own properties that they’ve paid for.

“You see people lighting their tap water and kids with these slow, ghoulish nose bleeds.”

Grunwald began to record his 11th album last week – an album he said was heavy on the drum, guitar and synth but sure to stick close to his environmental roots.

“I still don’t know how it’s going to turn out but I have a really strong feeling that it’s going to be one of the better things that I’ve ever done.”

A headliner of the Basin Concert, Grunwald said he was happy to return to Tasmania – one of the first places he ever toured.

“I always love Tassie and it’s always a massive party,” he said.

“I think I’d like to say I prefer the intimate shows but of course big festivals are sick.

“I’ve got great memories in Tassie, of some epic gigs at Falls Festival and there’s nothing like it – I like that energy.”

The Basics, Xavier Rudd, Reuben Koops, Emma Anglesy and Tash Parker and Younger Dryas are among the other acts at the New Year’s Day concert.

Limited tickets are still available for the concert.

Click here for more information

This story Administrator ready to work first appeared on Nanjing Night Net.

Perth drivers urged to fill up while fuel prices down

Perth motorists keen to save money at the bowser are advised to fill up their cars with petrol this afternoon while the cost of unleaded is at its lowest in almost 30 months.
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According to FuelWatch, the government’s fuel monitoring service, the average price of unleaded fuel in the metropolitan area is 128.7 cents per litre, the lowest daily average since July 11, 2012 when the average price was 126.2 cents per litre.

The cheapest places to fill up with unleaded petrol on Wednesday are Caltex Woolworths at Warnbro Fair, Canning Vale and Winton Road Joondalup, where unleaded petrol will be selling for 124.8 cents a litre.

The cheapest fuel outlet in the eastern suburbs is currently United in Roleystone.

FuelWatch manager Lynne Gould said the reduced fuel price was in line with global trends driven by increased supply.

“Our benchmark for local petrol prices is the fuel price in Singapore, which has been decreasing and flowing on to Perth,” she said.

Ms Gould said that while some of the cheapest Perth fuel outlets would probably be busy on Wednesday, prices across Perth were generally similar, with 86 per cent of outlets selling fuel at or below the metropolitan average.

She said Perth prices were expected to continue to decrease in the near future but the price of fuel will go up on Thursday as it usually does as part of the weekly fuel price cycle.

The average cost of unleaded petrol is set to increase by about nine cents per litre on Thursday.

According to FuelWatch many sites will increase their prices with most of the Puma Energy sites hiking the cost of unleaded petrol by 14 cents per litre up to 142.9 cents per litre and just 35 metropolitan fuel stations will be selling petrol below 128 cents per litre.

Motorists can visit fuelwatch.wa.gov.au for more information on the cheap prices. Follow WAtoday on Twitter

This story Administrator ready to work first appeared on Nanjing Night Net.

One in 10 surgery deaths due to flawed care or injury caused by treatment

Dangerous: Surgery risks can outweigh benefits. Photo: Nic Walker Dangerous: Surgery risks can outweigh benefits. Photo: Nic Walker
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Dangerous: Surgery risks can outweigh benefits. Photo: Nic Walker

Dangerous: Surgery risks can outweigh benefits. Photo: Nic Walker

More than one in 10 deaths during or after surgery involved flawed care or serious injury caused by the treatment, a national audit has found.

The Australian and New Zealand Audits of Surgical Mortality shows delays in treatment or decisions by surgeons to perform futile surgeries are still the most common problems linked to surgical deaths.

But surgery also appears to be getting a little safer, with the audit, which covers almost every surgery death in Australia, finding fewer faults with the medical care provided to patients than it has in the past.

Audit chair Guy Maddern said of the deaths where there were concerns, about 5 per cent involved serious adverse events that were likely to have contributed to the person’s death.

In about 8 per cent of cases, the audit found some area of care could have been delivered better.

“These are the sorts of deaths where it was a difficult surgery, and instead of going straight to an operation, maybe additional X-rays and imaging should have been pursued, or maybe the skill set of the team that was operating could have been more appropriate,” he said.

“Sometimes, of course, the result would have been exactly the same.”


Professor Maddern said some surgeons, particularly in general surgery, orthopaedics, and, to a lesser extent, neurosurgery, still needed to work on deciding not to proceed with surgeries where the risks outweighed the benefits.

“People are thinking a little bit longer and harder about whether an operation is really going to alter the outcome,” he said. “These are the types of cases where you know before you begin that it is not going to end well.”

However, in some areas with many patients with complex conditions, things were just more likely to go wrong.

The report, which includes data from nearly 18,600 deaths over five years, found in 2013 the decision to operate was the most common reason a death was reviewed.

Overall, delays in treatment, linked to issues such as patients needing to be transferred or surgeons delaying the decision to operate, were still the most common problem, and in about 26 per cent of the deaths no surgery was performed.

Between 2009 and 2013, the report shows a decrease in the proportion of patients who died with serious infection causing sepsis from 12 per cent to 9 per cent, while significant post-operative bleeding decreased from 12 per cent to 11 per cent. Serious adverse events halved from 6 per cent of deaths in 2009 to 3 per cent in 2013.

Every public hospital now participates in the audit, along with all private hospitals in every state except NSW. However, Professor Maddern said he was pleased NSW private hospitals had agreed to participate in future.

Doctors are now provided with regular case studies from the audit, in which de-identified information about the death is provided, so they can learn from any mistakes.

“What we are seeing is an overall decrease in deaths associated with surgical care, which may be due to many things, and we think the audit is helping,” he said. “It’s making people think twice.”

Professor Guy Maddern’s tips on protecting yourself in surgery

1. If you are away from a major hospital, get yourself to one. A particular problem, Professor Maddern says, exists when rural patients resist transfers to major hospitals because they don’t want to leave their families.

2. Lose weight and don’t smoke.The proportion of deaths where obesity was a factor increased slightly this year. “An operation done on a thin person relative to a fat person can have a completely different outcome,” Professor Maddern says. This is particularly important for older people, who have the most operations.

3. Go to a hospital that performs a lot of the type of surgery you are going to have, particularly if it is complex. Remember, practice makes perfect.

This story Administrator ready to work first appeared on Nanjing Night Net.

Mariners boss supports owner’s right to move games

Central Coast Mariners coach Phil Moss says his club’s owner should have the freedom to decide whether to host a specified number of games away from Gosford each season as part of his investment into the club.
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The Mariners will play their second A-League game in Sydney’s northern suburbs on Friday night when they host Melbourne Victory at North Sydney Oval in what is part of their strategic push down the Pacific Highway.

Club owner Mike Charlesworth has long been eager to move the club into new markets in the northern beaches and north shore by hosting more home game each season at North Sydney Oval and Brookvale Oval while maintaining a footprint on Central Coast.

Friday night’s game at the historic ground is the first of two Mariners games in Sydney this season with the club scheduled to play Adelaide United at Brookvale Oval on February 7.

The club claims 20 per cent of their membership in Sydney’s northern suburbs and the games coincide with the establishment of a Mariners academy aligned with Northbridge Football Club.

Moss preferred to focus on football rather than weighing into the debate but supports the broader concept of A-League owners having more control over their football investments.

“If the owner sees fit to tap into the north shore of Sydney to play some games here than that’s totally his prerogative, he’s put a lot of money into this football club out of his own pocket.

“Whatever decision he makes is the decision we live with and our job is to win football games whether that’s on the Central Coast, North Sydney or in Brookvale,” Moss said.

The club reassured fans of their commitment to the Central Coast, which is also the preferred regular home ground of the players.

“Our home is Central Coast,” captain John Hutchinson said.

“We are Central Coast, our stadium is in Gosford and the more games we can play there, the better. But we understand that we need to play a game or so every season away from Central Coast Stadium but we love playing there.”

North Sydney Oval came under criticism from Melbourne Victory coach Kevin Muscat over its hard surface and Mariners sources suggested Muscat asked his close friend, Mark Bosnich, to inspect the field on his behalf on Wednesday.

The condition of the playing surface appeared much softer than expected with the impact of the cricket pitch lessened, giving Hutchinson no concerns of the field.

“The field looks amazing, obviously the cricket pitch doesn’t look too bad and the grass looks fantastic but, as we’ve alluded to, our home is Central Coast and our home is Central Coast stadium but to come here is a fantastic opportunity,” Hutchinson said.

South Korean Kim Seung-yong has been out of the Mariners’ squad in recent weeks and linked with a return to his native country for personal reasons but Moss quashed those suggestions and said he is likely to play against the Victory on Friday night, either starting or from the bench.

This story Administrator ready to work first appeared on Nanjing Night Net.

Australian shares gain despite GDP slowdown

S&P/ASX 200: full tableTop gainers and losers
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Australian shares pushed higher for a second day in a row as energy stocks continued to rally after slumping on last week’s global oil price shock.

The market posted broad gains in spite of the most disappointing quarterly economic growth reading in nearly six years.

The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each lifted 0.8 per cent, on Wednesday to 5321.8 points and 5301.2 points respectively, after taking a positive lead from the United States and Europe.

Local shares continued to move higher in the afternoon despite Australian Bureau of Statistics data that showed much weaker than expected economic growth in the September quarter. Gross domestic product grew by just 0.3 per cent over the three-month period, missing consensus forecasts for a rate of 3.1 per cent.

“The third quarter GDP result was a big miss for the market … the biggest downside surprise since the fourth quarter 2008,” Citi chief economist Paul Brennan said.

Coming a day after the Reserve Bank of Australia held rates at a record-low 2.5 per cent for the 15th month in a row, some strategists noted the weaker than forecast GDP added weight to the argument for another rate cut this cycle.

“The RBA is likely to be disappointed by the small increase in GDP, and we have lowered our forecast for 2015 growth,” Barclays’ economist Kieran Davies said.

The big four banks were all stronger. Commonwealth Bank of Australia rose 0.8 per cent to $81.40, while Westpac Banking Corporation added 0.3 per cent to $32.84. ANZ Banking Group gained 0.2 per cent to $31.77, and National Australia Bank added 0.1 per cent to $32.43.

The battered energy sector was broadly higher despite Brent crude oil slipping 2.2 per cent to $US71 a barrel on Tuesday night. After Monday’s sharp sell-off across the energy sector, investors are re-evaluating the value of oil and gas producers on a case-by-case basis.

“The swift sell-off in energy stocks, in response to the recent slump in oil prices, created an attractive entry point for long term investors into any high quality producer with a cost of production below the current commodity price,” Wingate Asset Management portfolio manager Chad Padowitz said.

Australia’s biggest oil producer Woodside Petroleum lifted 2.2 per cent to $35.64, and Oil Search added 0.3 per cent to $7.72, while Santos dropped 1.2 per cent to $9.08.

Liquified Natural Gas was the best-performing stock in the ASX 200, climbing 13.9 per cent to $2.86.

Mr Padowitz expects there will be about a six-month lag time before global oil supply contracts.

“In the meantime things will be volatile but I will be surprised if the oil price is not back north of $US80 per barrel in 12 months time”.

BHP Billiton edged up 0.1 per cent to $30.44. A number of US analysts have noted the resources giant’s US shale business is better placed to weather the oil price shock than most rivals.

Rio Tinto inched ahead 0.1 per cent to $57.98, while iron ore miner Fortescue Metals Group added 5.5 per cent to $2.71 as several senior executive positions were cut amid ongoing cost reductions.

The spot price for iron ore, landed in China, fell 0.6 per cent to $US70.67a tonne on Wednesday – down 47.5 per cent year-to-date.

Food and liquor giant Woolworths added 2.2 per cent to $30.90 as it announced the acquisition of Chinese alcoholic drinks distributor Summergate. Main rival Wesfarmers, owner of Coles, rose 1.6 per cent to $41.64. Among other major stocks Telstra Corporation rose 0.2 per cent to $5.68, while Medibank lifted 0.5 per cent to $2.15.

A renounceable rights issue from Harvey Norman was the worst-performing security on the ASX 200, dropping 9.8 per cent. The household goods retailer’s regular stock was up 0.3 per cent at $3.66.

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HSBC commodities boss backs Australia’s competitive edge on LNG

Jean-Francois Lambert, the London-based head of commodities and structured trade financing at HSBC. Photo: Dominic Lorrimer/Fairfax MediaThe global head of commodities at the world’s biggest trade bank has rejected the growing pessimism  over the future competitiveness of Australia’s liquefied natural gas, insisting the country has a “tremendous” advantage to compete against the United States and others.
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Jean-Francois Lambert, the London-based head of commodities and structured trade financing at HSBC, said the costs involved in investing in LNG supply facilities in the US, and the expense of shipping and logistics were being underestimated.

Exports from the US were also taking longer to start up and reach the market than initially anticipated.

“Whatever happens in the States it is not going to happen fast, and even if the States were going to move into a very aggressive export of LNG, which I doubt, I think the competitive edge of Australia is going to remain massive,” Mr Lambert said in an exclusive interview in Sydney.

Mr Lambert also said the sentiment about oil demand, amid the recent sharp drop-off in crude oil prices, was overly pessimistic, pointing to higher crude oil prices down the track.

He said it was not in anyone’s interest, including Saudi Arabia, for crude prices to fall much further south, signalling the likelihood of action to turn around the decline.

Brent crude oil prices fell to a five-year low of $US67.53 a barrel on Monday after last week’s decision by the Organisation of the Petroleum Exporting Countries not to rein in production to tackle a supply glut.

Mr Lambert didn’t rule out a further move down, noting that “when markets go bearish, they find every good reason to get more bearish”.

But based on world oil demand still growing at more than 3 per cent, including at 1 per cent in the large euro zone region, growth “is not that bad”, he said.

“It can well be that there is a good equilibrium around $US80 to $US85 maybe for a while, but long term, more oil needed, more energy needed, more everything needed in the commodity space,” he said.

With Australian LNG revenues directly linked to crude oil prices, the slump in crude has raised doubts around the profitability of the $200 billion wave of supply projects under construction in Queensland, Northern Territory and Western Australia.

Mr Lambert said that while the strategy of tying LNG sales against crude oil under long-term contracts was not so comfortable in a low oil price environment, it was a “sound” one that would stand Australian ventures in good stead for the long term.

“I don’t see that the States has positioned themselves to be a very large exporter of LNG,” Mr Lambert said.

“I think that all in all it will be a new supply of gas, but is this going to be a cheap resource? No, it will [just] be a new supplier.

“Australia is going to retain a huge competitive advantage in the commodity space versus the rest of the world.”

HSBC is the world’s biggest trade intermediary, speaking for about 10 per cent of global trade finance, giving Mr Lambert an insight into the perspectives of commodities buyers and sellers around the globe.

He said the drops in crude oil and iron ore prices – down 47 per cent this year – were “a very natural correction” that didn’t change the long-term outlook.

“Does it mean that people are not going to invest in commodities? Maybe people don’t want to invest financially in commodities, but as a producer, as a trader, I can assure you that commodities will remain very, very strong, very important.”

The low prices in some key commodities were also fuelling savings that would reap long-term benefits.

“It is not bad for the economy at the end of the day, and it is not bad for China, your main customer,” he said.

Mr Lambert envisages a “stabilisation” of oil prices that will enable investments in new supply projects, even if they are deferred for six months or so to “see where the market is going”.

Mr Lambert said the scene had been set for a period of volatility in crude oil markets after relatively stable prices for three or four years, when traders’ margins were being increasingly squeezed.

At the same time, economic uncertainty prevailed alongside rising geopolitical tensions around the world.

“My guess was that volatility would be back,” he said. “And volatility is back. Had I expected the [oil] price would drop as they have, no, but that in itself you can see the strategic play of Saudi Arabia in this respect.”

Mr Lambert said the latest price slump after the OPEC decision to maintain quotas had done little to derail the US shale boom.

“You might have some marginal fields that are being hurt now, that are coming under pressure, but, overall, no, it doesn’t put the whole shale strategy off track at this stage,” he said.

Mr Lambert remains bullish about demand for iron ore, despite projections of lower prices next year, pointing to the urbanisation still to come in China, and the need for infrastructure across the world, even in the US.

He said the strategy of majors such as BHP Billiton and Rio Tinto to ramp up output was justified by the demand outlook and their low cost position.

“China is halfway in its urbanisation process. No matter what bubbles and things we are hearing about here and there, the long-term trend is there,” Mr Lambert said.

He said that despite the current weak prices, the majors that had made large investments in new production had the means to sustain them.

“The price is much lower than it was one year ago but the profitability of the big players remains extremely high. What could they do, mothball these investments?”

Mr Lambert said the closure of high-cost capacity such as mines in Sierra Leone and of lower quality production in China were playing into the hands of the big players.

“Yes, they are taking market share, and yes, some producers will be hurt,” he said. “This is efficient; they have better logistics, and it’s cleaner.”

Mr Lambert also urged Australian agricultural companies to capitalise on the competitive advantage they enjoyed against rivals overseas as China positioned itself to become a major player in the sourcing of soft commodities.

“If I were Australian companies producing, I would pay attention to that, and I would try to build a relationship and establish the links with these people, because no matter what, these future Chinese trading houses or Chinese buying houses, supply chain managers, are going to be big,” he said.

“In Australia, you have a major customer for everything and this is China. Rather than be scared about that it, I think it’s a fantastic opportunity.

“China is the key engine of the growth in the world, of the trade flows; it is already and going to remain for a long time your key customer, so embrace it.”

This story Administrator ready to work first appeared on Nanjing Night Net.

Brazilian miner Vale considering float of nickel and copper assets

Brazilian mining giant Vale could follow BHP Billiton’s lead by spinning-off a group of its businesses to form a new company next year.
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Vale told investors on Wednesday it was considering a float for its nickel and copper assets, after becoming concerned those businesses were not being valued properly by the market.

In comments that echoed BHP’s drive for a simpler, more focused business model, Vale chief executive Murilo Ferreira said the Brazilian company had to become “thinner” to prevail against plunging commodity prices.

“We need a stronger and thinner company, one that can run a marathon very easily,” he told an investor briefing on Wednesday morning.

“The low ferrous, non-ferrous, oil and gas prices is a marathon and we need to be very lean with regards to cost and productivity.”

While not certain to go ahead, Vale said it was evaluating a model that would base the new company in Toronto, so it could be close to operations like the Voisey’s Bay nickel mine in the Canadian provinces of Newfoundland and Labrador.

The new company could also include the nickel exploration acreage Vale has picked up recently in Western Australia’s Fraser Range, although those assets were not named in the presentation.

Nickel has been one of the few commodities to avoid a price slump over the past week, and prices for copper and nickel are predicted to rise over the next five years because of supply shortages.

Mr Ferreira said Vale had not decided on the value of the proposed spin-out, but the company hinted it expected the assets to be worth $US30 billion to $US35 billion.

“The idea is to unlock the value of our base metal assets. That is what we have in mind,” he said, adding that Vale would ideally like to retain more than 50 per cent of the spun-out entity.

BT Investment Management analyst Brenton Saunders said investors would probably be attracted to such a product, but would probably prefer more than 50 per cent of it to be available in the free float.

‘”The success of it will ultimately depend on the extent to which they unwind it and how independent the new company becomes and the size of the free float, because if it is still notionally managed under the Vale umbrella by Vale executives it may not work,” he said, pointing to the performance of gold major Barrick’s African spin-out, which remains 64 per cent owned by Barrick.

Vale has a market capitalisation of almost $US45 billion, but the company said its enterprise value was closer to $US75 billion.

The proposal continues an era in which big mining, oil and gas companies have been selling assets and considering other innovative ways to simplify their business models.

BHP confirmed its plan to demerge a group of non-core assets in August, while Rio Tinto spent much of 2012 trying to spin-off a group of struggling Australasian aluminium assets.

Mr Saunders said Vale’s spin-out proposal appeared to have different motivations to BHP’s, which was being pursued out of a desire to simplify and concentrate a large, diverse portfolio.

“(BHP’s) is more a portfolio consideration, whereas I suspect strongly the Vale one is a capital consideration. They want to be able to raise money and they might use this as a mechanism to raise money to be able to finish developing their iron ore expansion, so the motivations are very different, I suspect,” he said.

Mr Saunders said there was no danger of the two spin-outs crowding each other out, given the company that BHP plans to demerge will be listed in Australia, South Africa and London, whereas Vale’s proposal appears bound for a Toronto listing.

“Like Australia, Toronto has a bit of a dearth of reasonable quality mid-tier base metal assets. Outside of First Quantum, Lundin Mining and a couple of others they really don’t have a lot, so I suspect there would be quite a lot of natural interest,” he said.

Vale’s proposal comes after prices for the company’s most important product, iron ore, slumped by almost 50 per cent over the past year.

The spin-out is not the only option being considered for raising some spare cash, with Vale also considering a sale of preference shares, as well as divestments of $US5 billion to $US10 billion.

Vale’s coal and fertiliser divisions could be divested under the process, Mr Ferreira said.

While BHP and Rio have been reducing or deferring their capital spending on iron ore expansions this year, Vale confirmed it would spend $US6.35 billion on iron ore projects next year.

Most of that money will form part of a $US20 billion iron ore expansion in the Carajas region of Brazil, which will boost exports to 400 million tonnes a year by 2017.

Vale will devote more than $US10 billion to capital projects next year, meaning it will spend more than Rio but less than BHP.

When asked about the health of the global economy, Mr Ferreira said he was most concerned about Europe, but the gradual reduction of disparities between living standards in the developed world and the developing world would continue to drive growth for commodities.

This story Administrator ready to work first appeared on Nanjing Night Net.

St Kilda forward Ahmed Saad glad to be a Saint again

Hastings: Born-again St Kilda forward Ahmed Saad is finally back on an AFL list and declared on Wednesday he “can’t wait to get into it.”
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The 25-year-old was delisted at the end of 2013 after being banned for 18 months for using an illegal  energy drink. St Kilda selected him with pick 19 in the rookie draft, giving the small forward the chance to resume his 29-game AFL career.

Carlton had shown interest in Saad, who met Carlton coach Mick Malthouse in recent weeks, but when the Blues used their first choice in the draft on teenager Billy Gowers the Saints were free to swoop, allowing Saad to be reacquainted with his old teammates.

“[I’m] absolutely rapt that the Saints showed faith again and there’s nowhere I’d rather be than here,” Saad said on Wednesday after being greeted by Sam Gilbert, Sam Fisher, Farren Ray and Leigh Montagna during a club visit to an aged persons home at Hastings.

“The media talks, there was interest from clubs and up until this morning I had to wait like every other player in the rookie draft and  see when my name got called out,” Saad said.

Having kicked 45 goals across his two seasons at the Saints, Saad offers a handy attacking option for St Kilda, who were heavily reliant on captain and best and fairest winner Nick Riewoldt to kick a winning score in 2014. Riewoldt kicked 49 goals this year, with the now-departed Rhys Stanley the next best at the club with 18.

Though the terms of his ban mean he will not be able to train again with the club until January 1, Saad believes he can work his way up to the senior list and into the Saints’ line-up for the opening-round clash with GWS.

“I’ve come back in good shape and my results have proven that,” he said, “so I’m definitely doing everything I can. I’ve got a personal trainer and he’s got me in really good shape.

“I’ve put in all the hard work on my own, so as soon as I get back with the team it’ll be easier for me to get back with the team and actually train and do everything like that. I’m just going to put me head down and work hard and hope that I can come back and play round one.

“I’ve missed a year of footy, I don’t want to miss any more, so I want to do my best to get back into the team.”

With his 18-month exile for drinking an energy drink containing a banned stimulant all but over, Saad was beaming as he reflected on the difficult journey he had been through since testing positive midway through 2013. He was thankful for St Kilda’s moral support throughout the ban.

“I tried to stay positive, as much as I can, to control everything I can control. What happened happened, and I got banned for it. I just had to cop it on the chin.

“As soon as I found out it was just going to be one season I made sure I put in all the hard work so I could give myself the best chance to come back. Rules are rules and what I did is wrong, but it is what it is.”

St Kilda recruiting manager Tony Elshaug was glad the club had been able to land their man in the rookie draft’s second round, despite the interest from other clubs.

“When we drafted Ahmed three or four weeks ago we were excited then, and we’re just as excited now,” Elshaug said.

The Saints also claimed small midfielder and forward Jack Sinclair, the grandson of former Saint Bill Gleeson, tall utiliy Brenton Payne, the grandson of dual Essendon premiership player Charlie Payne, and rookie-listed veteran Adam Schneider.

This story Administrator ready to work first appeared on Nanjing Night Net.

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