After six years presiding over monumental expansions at BHP Billiton, the company's iron ore chief, Ian Ashby, has called it quits. Taxing as his role must have been, Ashby's resignation does come at a strange time, with his giant Outer Harbour project in Western Australia just months away from board approval, prompting one jotter to examine the likely fate of the $20 billion proposal. Elsewhere, one commentator bets Gina Rinehart has inadvertantly killed her chances at a seat on Fairfax's board, as another is heartened by new moves to get intellectual property rights recognised in China. And finally, the commentariat seizes on the Australian Stock Exchange's 25th birthday to explore what's next for the company, and Australian traders.
But first, The Australian Financial Review's Matthew Stevens waves goodbye to BHP's outgoing iron ore boss, Ian Ashby, and has some ideas about what might happen to his huge Outer Harbour project under the division's new head, Jimmy Wilson.
"The presumption that the board will almost certainly give Wilson the go-ahead on the Outer Harbour is mine. But it seems a very good bet. Of the three mega-projects that BlackRock and others don’t like owing to investment return hurdles so much longer than their preferred three-year horizons, Outer Harbour seems easiest to sustain. The other two are the Olympic Dam expansion (estimated cost circa $US15 billion) and the Jansen potash push (circa $US12 billion). …The consensus is that Olympic Dam will get something with FID but on a longer-dated build-up than previously expected while a final decision on Jansen may be delayed until next year. My view is there is too much obsession over approval timetables and that the important date for Jansen watchers should be first production not FID. And currently BHP is sticking to its forecast of first production by 2016."
In The Australian, Mark Day says Gina Rinehart's latest legal action will surely result in the rejection of her request for a seat in Fairfax's boardroom.
"It is intolerable to suggest a person who seeks a position of influence on a newspaper publisher's board should try to use the courts to undermine a central, almost sacred, element of journalism: the protection of confidential sources. Yet that is what Australia's richest citizen, the Perth-based mining billionaire, is doing. She has launched an action in the West Australian Supreme Court designed to force The West Australian newspaper and its reporter Steve Pennells to divulge the source of documents used to inform its reports on the bitter family feud tearing the Rinehart family apart."
Tony Boyd, The Australian Financial Review's Chanticleer columnist, says it's understandable that the government was wary of Huwei helping China steal intellectual property through involvement in the national broadband network. But he points to moves by China's biggest law firm, King & Wood Mallesons, as evidence that the nation is slowly beginning to recognise these rights.
"The King & Wood Mallesons response to the challenge of having no public [intellectual property] precedents was to hire 18 former judges who are from the High Court of Justice and the Supreme Court of Justice. When the former judges turn up in court it is intimidating for the presiding judge and of course the King & Wood Mallesons staff turn up with first-hand knowledge of the precedents. The firm is now litigating 3500 intellectual property cases. This aggressive litigation agenda is a hallmark of the firm, and in a bizarre way it can be seen as a public good. It is actually forcing the communist system to recognise commercial rights and to rule on them."
In the same newspaper, and just one day after the Australian Stock Exchange turned 25, Glen Mumford puts forward an explanation for why, even with the best economy in the developed world, the Australian equity market has underperformed its global peers.
"Politics obviously plays a part. The clumsy policy shifts of the Rudd and Gillard Labor governments have clearly harmed sentiment towards Australia. The mining and carbon taxes have delivered unnecessary cost imposts and created a perception of unexpected sovereign risk. Both factors have clearly damaged investor perceptions. But to me it’s been the Reserve Bank that’s been the primary cause of these sub-par equity performance. By steering a monetary policy course that’s been so seriously at odds with global trends, it’s managed to wring the life out of large chunks of the Australian corporate sector."
Also on the ASX anniversary, The Australian Financial Review's Michael Smith examines the exchange's remaining growth options – including small acquisitions, offering global stocks, and selling itself as a destination for primary listings by companies from other regions – while The Sydney Morning Herald's Scott Rochfort says the event comes as a rather sad reminder of the demise of his own publisher, Fairfax.
In The Age, Malcolm Maiden says the NBN's changed methodology, which now includes premises that will be connected within a year in its rollout reports, as well as homes actually passed by fibre cables – offers a fascinating insight into the politics of the project. And The Sydney Morning Herald's Ross Gittins attempts to calculate the rate of mining growth that is most consistent with Australia's national interest, calling on the researchers from the Australia Institute for help.
Finally, The Australian's David Uren discovers new risks for Australia in the International Monetary Fund's latest world growth upgrade, which highlights structural changes in China that could cause its export engine to lose power.