BRIEFS

MINING

By InvestSMART · 2 Jun 2012

By InvestSMART ·
2 Jun 2012

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MINING

Newcrest cost fears

Australia's biggest listed gold producer has joined the list of mining companies warning that Australia has become too expensive to consider new domestic projects. Speaking in Melbourne yesterday, Newcrest Mining's managing director, Greg Robinson, said Australia was among the most expensive 25 per cent of destinations around the world in which to develop gold projects. "We love working in Australia ... [but] labour costs are very high, the currency is high and energy costs and taxation issues are making Australia's gold industry about a third or fourth quartile industry," he said.

Peter Ker

AWB INQUIRY

Breach admitted

Six years after the Cole Inquiry unveiled details of how AWB paid hundreds of millions of dollars of kickbacks to Saddam Hussein's regime, the former boss of the wheat exporter has conceded he failed in his duties. Andrew Lindberg, who quit as chief executive in early 2006, just as the Cole inquiry began, agreed to pay a $100,000 penalty and, subject to court approval, will be barred from managing companies until September 15, 2014. His admissions mark the first time anyone involved in the AWB kickbacks has been formally penalised. Mr Lindberg has admitted to four breaches of section 180(1) of the Corporations Act, the provisions that require a director or officer of a company to exercise reasonable care and diligence in carrying out their duties. Implicit in the admissions is that Mr Lindberg should have been more alert when it came to watching over the corporation.

Leonie Wood

PROPERTY

Becton stake

Melbourne's Becton Property Group, which is saddled with $200 million in debt, is fighting to boost its financial position while facing a possible raid by Mariner Corporation. Becton, formed in 1976 and with $4 billion worth of projects completed over this period, issued two statements yesterday on a report that Mariner may take a position in the company. Becton's assets are retirement villages and residential projects. Mariner could build a stake though Becton's main shareholder, Australian Capital Reserve, which is in liquidation. The liquidator, PWC, is selling that stock through Macquarie Bank. It is believed Mariner wants to buy up to 20 per cent of Becton's stapled securities.

Philip Hopkins

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Frequently Asked Questions about this Article…

What did Newcrest Mining say about the cost of developing gold projects in Australia?

Newcrest Mining's managing director Greg Robinson said Australia is among the most expensive 25% of destinations worldwide to develop gold projects. He cited very high labour costs, a strong currency, rising energy costs and taxation issues as factors making Australia a third- or fourth-quartile jurisdiction for gold development.

How could high Australian costs affect Newcrest Mining and gold investors?

According to Newcrest, high labour, energy and taxation costs and a strong currency could make new domestic projects less attractive. For investors, that can mean slower domestic growth, pressure on project margins and a greater chance the company prioritises lower‑cost overseas opportunities.

What happened in the AWB inquiry and who was penalised?

The Cole Inquiry revealed that AWB paid hundreds of millions of dollars in kickbacks to Saddam Hussein’s regime. Six years after the inquiry, former AWB chief executive Andrew Lindberg admitted he failed in his duties and became the first person involved in the AWB kickbacks to be formally penalised.

What penalties did Andrew Lindberg face from the AWB case?

Andrew Lindberg admitted four breaches of section 180(1) of the Corporations Act (the duty to exercise reasonable care and diligence). He agreed to pay a $100,000 penalty and, subject to court approval, will be barred from managing companies until September 15, 2014.

What is Becton Property Group's financial position as described in the article?

Becton Property Group is described as being saddled with about $200 million in debt. The Melbourne-based developer, formed in 1976, has completed around $4 billion worth of projects and its assets include retirement villages and residential developments.

How could Mariner Corporation build a stake in Becton and how big could that stake be?

Mariner could build a stake by buying stock currently held by Becton’s main shareholder, Australian Capital Reserve, which is in liquidation. The liquidator (PWC) is selling that stock through Macquarie Bank. It’s reported Mariner may seek to buy up to 20% of Becton’s stapled securities.

Who is handling the sale of the Australian Capital Reserve shares in Becton?

The liquidator PwC is handling the sale of Australian Capital Reserve’s holdings in Becton, and the shares are being sold through Macquarie Bank, according to the article.

What should everyday investors watch for after these developments at Newcrest, AWB and Becton?

Investors should monitor cost pressures and project decisions at Newcrest (domestic vs overseas development), governance and legal fallout from the AWB penalties, and Becton’s balance‑sheet and any Mariner stakebuilding (which could affect control and share price). Keep an eye on company announcements, liquidator updates and any court approvals mentioned in the reports.