BREAKFAST DEALS: Xstrata splurge

Send your tips to deals@businessspectator.com.au and don't forget to watch Deals TV for new rumours and reports later on this morning. Plus, you can follow us at www.twitter.com/WheelsDeals

Xstrata is planning a huge thermal coal operation in Queensland as the Swiss mining group turns its focus to organic growth.

Xstrata

BHP Billiton is not the only resources giant with massive capital expenditure plans: Xstrata is reportedly planning a 100 million tonnes per year thermal coal operation in Queensland as the acquisitive Swiss-headquartered mining group calls a time-out on transformative deal-making to focus instead on organic growth and, to a lesser extent, bolt-on acquisitions. Xstrata Coal's chief development officer Jeff Gerard has told The Australian that the company wants to maintain its position as the leading exporter of thermal coal, with strong demand expected in the years to come. The expansion, which could cost $15 billion, will almost quintuple the current planned annual output of the Wandoan operation over the next decade or two. Xstrata, which is partnered in this instance by Japan's Itochu and Sumitomo, attempted to merge with AngloAmerican last year.

Telstra

The Australian is flagging speculation that legislation designed to split Telstra might be delayed until the telco releases its first-half results in a couple of weeks. Talks continue with the government over what compensation is on offer for shifting its traffic from copper to the proposed fibre-to-the-home network. It will be interesting to see what the Future Fund will do with its $4.4 billion or near-11 per cent stake in Telstra, when the escrow period expires on February 23. A selldown is likely, although Telstra put in a solid performance in the December quarter, returning 4.8 per cent or 5.6 per cent for the financial year to date.

DP World

Australia's revenue-rich stevedore and port operations are set for a shake-up this year, with major player DP World tipped to float its P&O business as the Dubai-controlled entity tries to reduce its significant debt burden. The $1 billion-plus float of DP World's Australian asset has been flagged by The Australian Financial Review, with DP World tipped to keep a substantial stake in the listed business, which is expected to be named DP Australia. The report follows the November request for a six-month debt moratorium by the flagship conglomerate Dubai World and moves by key state governments to expand ports and bring in third operators to compete against existing players, DP World's P&O and Asciano's Patrick.

Crown

Analysts have been upbeat on Crown this year with Citi lifting its recommendation to 'hold' from 'sell', citing a balance sheet strong enough to support opportunistic international acquisitions and Deutsche retaining a 'buy' recommendation, albeit with a lower price target of $10.10 (still well above current prices). And now there's talk that private equity-backed casino giant Harrah's Entertainment – in which Crown has a small stake – might snap up Crown's 32 per cent stake in Melco Crown Entertainment. According to The Age, analyst David Vain of US broking firm Sterne Agee says Harrah's is "acutely interested” in the joint venture, which Crown has written down to zero.

Financials

Over to banking, and Westpac chief Gail Kelly has again warned against the imposition of unnecessary global regulations on well-performing Australian banks amid international political "anger and outrage” against bailed-out US and European banks and a greater reliance on expensive offshore money markets because of the dearth in local savings, says The Aus. Elsewhere, Aussie Home Loans executive chairman John Symond has detailed his ambition to become one of the biggest retailers of financial services outside of the big four, filling the void left by St George and BankWest. Meanwhile, the silver donut may not be finished with Sal. Oppenheim Jr. & Cie yet, with sources telling Dow Jones that Macquarie Group could cut a deal for the European bank's capital markets operations shortly. This would follow last month's purchase of Sal. Oppenheim's derivatives business, and the announcement of talks on the sale of its property portfolio to John Gandel-backed fund manager Charter Hall. And this might be of interest to Macquarie, one of three short-listed bidders for the sale of commodity trader RBS Sempra: according to reports out of the UK, JPMorgan is having second thoughts over its RBS Sempra offer because of worries about how an expected crackdown on proprietary trading will affect the American division. The US investment bank is believed to be still interested in the international operations, but the North American business could be orphaned. Finally, solid demand has been reported for the branch sales of the government-backed Royal Bank of Scotland.

Extract Resources

To uranium, and Extract Resources is whittling down potential partners for its Namibian project, which although is not for sale, has attracted interest from Asian utilities. Chairman Steve Galloway has told Bloomberg the Rio Tinto-backed company might need partners in a few years' time, but not right now.

Wrapping up

The recently intensified hardware war between Wesfarmers, Woolworths and Mitre 10 might prompt Western Australian conglomerate Wesfarmers to finally make a play for Crane Group, says the AFR. The thinking is that failing to get its hands on the closely guarded bathroom and plumbing products company Reece, Wesfarmers could acquire Crane for plumbing supplies business Tradelink, and then offload the plastic pipes divison Iplex to either Fletcher Building or CSR's demerged building products business. Elsewhere, the paper flags consolidation in the utilities sector, possibly in the form of an internalisation of AMP and Macquarie Group-owned DUET Group, or a restructure of the Singapore Power-owned SP Ausnet. And coming up on Deals TV, we'll be looking at Warrnambool Cheese and Butter, media stocks and much more.