BREAKFAST DEALS: BHP blessing

BHP Billiton's Olympic Dam has been given the green light by the federal and South Australian governments, but Rio Tinto stole some of the attention by setting up a modest shop just down the road. There's cost cutting afoot at ANZ and CBA, with Mike Smith freezing executive pay and CBA looking at costs outside employee wages. Qantas boss Alan Joyce could have his annual general meeting spoiled by an increasingly bitter union battle, along with his Christmas. Elsewhere, there are changes at the top for Asciano and Hastie, and ACCC boss Rod Sims has made executives in four industries in particular pay attention with a single speech.

BHP Billiton

It could be dubbed BHP Billiton's 'Olympic qualifier'. The world's largest miner has won crucial environmental approvals from the federal and state governments for its planned $30 billion expansion of the Olympic Dam mine in South Australia, which could very well become the biggest mine in the world. Federal environment minister Tony Burke signed off on the mega-mine yesterday after BHP committed to over 100 Commonwealth conditions, and the miner also won a tick of approval from the Rann government in South Australia after committing to more than 150 state-imposed conditions to obtain more than 600 licences and permits. It's a welcome boost for BHP chief Marius Kloppers who, after one successful takeover of US shale gas company Petrohawk and three failed bids between Rio Tinto and Canada's PotashCorp, must squeeze out as much as possible from BHP's existing footprint.

Everything about this project is big; it's a mining trivia buff's dream. Olympic Dam is the world's largest uranium deposit, the fourth-largest remaining copper ore source and the fifth largest gold deposit. The existing underground mine will be transformed into an open pit mine four kilometres long, 3.5 kilometres wide and 1 kilometre deep – a seemingly bottomless pit both literally for onlookers and metaphorically for BHP's coffers. The expansion – which requires a new airport, gas-fired power station and desalination plant – will increase the site's annual copper production to 750,000 tonnes and boost uranium output to 19,000 tonnes. That's expected to create up to 6000 jobs during the construction phase, 4000 ongoing jobs at the mine itself and 15,000 indirect jobs. The Greens say the money involved in the project has coaxed the government into approving "a world's worst practice uranium mine,” a criticism both governments have dismissed.

BHP still has to ink an indenture agreement with the South Australian government covering royalties and other issues then it's up to the company's board to sign off on it. Some have questioned whether the sheer scale of production could put downward pressure on prices, particularly uranium. However, evidence of demand for nuclear power appears to be returning in the wake of the Japanese Fukushima nuclear disaster if China Guangdong Nuclear Power's strongly suspected bid for the UK's Kalahari Minerals, and by extension Australia's Extract Resources, is anything to go by. It's expected that Olympic Dam will be in the bag within the first quarter of calendar 2012.

Rio Tinto, Tasman Resources

Call it a curious coincidence that on the same day that BHP Billiton won the environmental approvals for Olympic Dam, Rio Tinto was handing out money to an explorer just down the road. Shares in junior explorer Tasman Resources more than doubled, admittedly to 10.5 cents each, after Rio Tinto signed a deal worth up to $92 million for Tasman to conduct exploration at its Vulcan prospect, just 30 kilometres from BHP's flagship project. Tasman non-executive chairman Greg Solomon, who has been a Tasman director since 1987, has been a long-time believer in Vulcan's potential, with all eight holes drilled at the site returning the same magnetic signature as Olympic Dam – meaning there could very well be something good down there. But Rio will require a lot more evidence and has given $10 million cash (of which $5 million is to be spent on exploration over the next year), a sum the giant would consider to be spare change. Rio has the option of earning up to 80 per cent of the project if something comes of it. While mentions of BHP's project in the same breath are coming way too early, those looking for signs of destiny might point to Tasman chief geologist Rob Smith, who used to hold the same title somewhere else – right back down the road at Olympic Dam.

Commonwealth Bank, ANZ Banking Group

Two of Australia's major banks have caught the scent of tougher market conditions and opted to cut costs. According to The Australian, Commonwealth Bank of Australia has launched a program called Project 35, spearheaded by senior executive Rob de Luca, with the aim of reducing the cost-to-income ratio of the bank's retail arm from 38.7 per cent as of June 30, to 35 per cent by 2013. A spokesperson for the Sydney-based bank said staff costs generally make up about 60 per cent of total expenditure, but went on to claim that CBA is not looking for redundancies. Meanwhile down in Melbourne, ANZ Banking Group chief executive Mike Smith has reportedly written to about 900 senior executives to tell them their pay has been frozen. According to the Australian Financial Review, Smith has decided to reduce the pay increases for the two highest levels of executives in ANZ to 1 per cent, which would mean in the end that many executives won't see a change in their 2012 pay at all. In the email Smith says that the decision "is the right thing for us to do in the current climate”.

Qantas

The battle between Qantas and its engineers is becoming increasingly symbolic, with union boss Steve Purvinas dropping the half-day strike yesterday for Friday, with plans for a full-day stoppage on October 28, the day of the airline's annual general meeting. If the scenario plays out it will be an awkward day for chief executive Alan Joyce. On the one hand he'll be facing questions from nervous shareholders about when the damaging industrial dispute will be settled, while on the other his chairman Leigh Clifford, with a 'no-nonsense to unions' reputation from his days at Rio Tinto, will be egging him on. Purvinas, federal secretary of the Australian Licensed Aircraft Engineers Association, was even brazen enough to tell reporters, "If I was a person considering travel over the period up until Christmas I'd probably be looking at airlines other than Qantas.” Bitter claims and counter-claims continued yesterday, with Qantas arguing that the union knew full well that the cancellation came too late for the airline to do anything about the scheduling done in anticipation of the strike – the damage was already done. Then the union responded with allegations that the cancellation stemmed from illegal Qantas threats to dock workers' pay for more than the four hours they planned to walk off the job.

Asciano, Hastie

The changes continue at the top of Asciano with the director of its troubled Patrick ports division parting ways with the company just 18 months after taking the job. Paul Garaty, a 13-year veteran of Asciano and its former parent company Toll, stepped down as Patrick managing director yesterday. Though he will officially remain with the company until early next year, Patrick's divisional managers will now report directly to Asciano chief executive John Mullen. Since taking over from Mark Rowsthorn, Mullen has set ambitious targets for Asciano's ports division to meet and there has been speculation among analysts that Garaty was vulnerable to a push by Mullen to shake up the ports division. Garaty isn't the first change at the top of Asciano since Mullen came aboard. Asciano's chief financial officer Peter McGregor quit in April last year and was replaced by former Foster's executive Angus McKay, while a restructure saw the departure of director of auto, bulk and stevedoring divisions, Steven Ford, in January.

Big changes have also hit Hastie Group, with the building and infrastructure services provider installing former Leighton Holdings deputy chief executive Bill Wild as interim chief executive. Wild, who left Leighton earlier this year after 36 years with the construction giant, is set to review the company's operations in the wake of refinancing. As Business Spectator's Robert Gottliebsen explains, Wild was anointed as Wal King's preferred successor at Leighton but was ultimately passed over by the board in favour of David Stewart, who left two months after Wild. Now Wild has an opportunity to forge a new legacy (A Wild remedy for Hastie waste, October 10).

Foster's

Australia's largest brewer Foster's was the subject of takeover speculation for years and it appears that some of the greatest beneficiaries of its sale to SABMiller will be the company's loyal defence advisers. Foster's has agreed to a $12.3 billion takeover bid from the world's second largest brewer and it appears that up to $45 million of that bounty could flow to long-time confidants Goldman Sachs and Gresham Partners. According to an industry insider with an understanding of fee methodology of M&A advisors who spoke to the Australian Financial Review, the two firms should net between $30 million and $45 million between them for their services. Then there's the advisors to SABMiller's side of the deal – JPMorgan, Moelis & Co, Royal Bank of Scotland and Morgan Stanley – that also stand to collect some cash from the transaction.

Wrapping up

Rod Sims could hardly be accused of taking his new position lightly, with the new boss of the Australian Competition and Consumer Commission putting executives in four separate industries on notice of big things to come in a single speech. In an address to the Melbourne Press Club, Sims said he holds concerns for the power that Woolworths and Coles wield over smaller suppliers and the influence Telstra will continue to exert through its copper network even as the NBN's rollout progressively ushers in its demise. He also suggested that Australia's airports could be asked to put land aside to make airport parking more competitive and flagged a decision on the merger between pay TV operators Foxtel and Austar. Turning back to resources, Glencore has extended its offer to mop up the last few shares it doesn't own in Minara Resources. The global commodities trading giant currently holds 95.9 per cent of the target after launching a $1 billion takeover in August. The takeover bid for Mongolian-focussed coal explorer Hunnu Coal from its largest shareholder Banpu Public Company has won the approval of Australia's Foreign Investment Review Board and the Bank of Thailand. Banpu put $477 million on the table for Australian-listed Hunnu, which won the approval of the target's board, after snapping up coal miner Centennial Coal for $2 billion. And finally, Melbourne fund-manager L1 Capital has taken advantage of the price slide in Bathurst Resources by adding to its stake in the coal company. L1 Capital's share has risen to 5.17 per cent with Bathurst shares off 34 per cent from where they were in late July.