MARCH 2012
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MAy 2012 – Volume 6 no. 2
Featured in this issue of Australian Resources & Investment
Fewer but bigger resource IPOs expected
After a dreadful first quarter, the initial public offerings (IPO) market has been boosted by larger mining IPOs. Queensland explorer Cuesta Coal raised up to $34 million, and the year’s largest float so far, gas explorer Armour Energy, launched a $75 million IPO late in the first quarter. At this rate, 2012 looks like having fewer, but larger resource IPOs than in recent years.
Roy Hill advances local industry
I am very conscious of the fact that our Roy Hill project is just a small issue in the context of where Australia is, and where it is currently heading. As this edition of Australian Resources and Investment goes to print, Australia is due, for the first time ever, to hit its debt ceiling and breach its loans if the Australian debt then continues to increase, despite five or six years of the commodities boom resulting in increased revenues. Things like additional FIFO conditions, approvals, permits, and attached conditions will simply add to Australia’s already high costs of doing business.
Indonesia a coking coal hotspot
Cokal is part of a wave of activity in Indonesia. The country is one of Asia’s fastest-growing economies, as sliding coking coal prices and tougher regulation, plus escalating operating costs in Australia, threaten to erode profit margins. Indonesia’s projects may not be able to unseat Queensland’s dominance, but could supply coal to Asia at half the cost charged by the likes of BHP Billiton.
Implications of the carbon price on miners
Only 100 or so mining companies will be directly liable under the new carbon price scheme, set to be introduced on 1 July 2012, but all mining companies will be affected through costs in their supply chain – particularly energy and fuel costs, and other costs such as capital costs. Companies will need to assess their supply contracts to identify how and when costs can be passed through by their suppliers.