RIU Sydney Resources Round-up – Day One
The 2011 RIU Sydney Resources Round-up kicked off this morning to news that Wayne Swan had left the mining industry out of the Federal Budget.
That came as a bit of an anti-climax, especially for us journalistic types who enjoy a good government versus mining industry stoush.
It would appear the Gillard government has done its utmost to avoid any confrontation with the miners leaving that particular battle to be picked up by the Greens.
Greens leader Bob Brown was fairly succinct in his description of the budget saying it was “lacklustre”, giving a clear indication his party will be expecting a few changes to be made to the budget make-up.
“It’s got some high notes and low notes, but the music’s not there,” he told ABC TV.
“This is a wealthy country, we have the best resources base in the world, there is a mining boom and all we’re hearing from the big parties is cuts.”
Brown however, didn’t go into any great detail about any of the changes the greens may want to make, saying he wanted to take the time to see how the budget was configured and set in legislation.
“We have always said we’re going to ensure supply,” he said.
“On the other hand it is our job to improve and if we can improve this budget for a better outcome for Australians we’ll certainly be looking at that.”
Meanwhile at the Resources Round-up delegates were treated to a key note address on what the immediate future may hold for the base metals market by BNP Paribus senior metals strategist, commodity markets strategy Stephen Briggs.
“Increasingly metal prices, base metal prices in particular, will have to flourish on their own fundamentals more than on wider economic conditions,” Briggs said.
Briggs said base metals have become almost a mainstream asset class in the last couple of years.
Not only as an avenue to buy into futures markets, but there has been any number of other paths for investors that have been supportive of this trend.
“These metal markets also become ever more forward looking,” Briggs said.
“But I would warn you that this forward looking aspect of the market is not symmetric.
“All financial markets, but particularly base metal markets, are very good at pricing in future bullish developments.
“They are truly lousy at anticipating bearish developments.”
On the company front junior Pilbara iron ore producer BC Iron announced that it had terminated its proposed Scheme of Arrangement with Regent Pacific Group.
The company said in an announcement to the market that it “wishes to advise that its independent expert, KPMG, has concluded that Regent Pacific Group Limited’s (Regent Pacific) proposed Scheme of Arrangement (Scheme) is not fair and not reasonable and therefore, is not in the best interests of shareholders.”
The termination brings to an end the protracted take-over bid from Regent.
“After careful consideration and taking into account the conclusions of the Independent Expert and Senior Counsel, the BC Iron Board has determined that the withdrawal of its recommendation for, and termination of, the Scheme of Arrangement is in the best interests of our shareholders,” BC Iron chairman Tony Kiernan said.
“This decision largely reflects the positive changes in your company’s value since announcing the Scheme.
“Looking forward, the Board and management are excited at the opportunities to grow BC Iron for the benefit of all shareholders.
“Our status as Australia’s latest iron ore producer at a time of very strong iron ore prices makes the Company extremely well placed to consider future strategic opportunities.”