BHP might move first, but Rio Tinto’s buyback likely bigger

Financial Post | Business

Both BHP Billiton and Rio Tinto Group should begin returning excess capital to shareholders during the next year, but BHP will likely move first, says Fraser Jamieson, an analyst at J.P. Morgan Cazenove in London

He thinks BHP could make an announcement during its fiscal 2014 results in August, but he thinks Rio Tinto offers a more compelling capital returns story even though it might wait to make a similar announcement until it reports in February 2015.

Mr. Jamieson estimates the miner could support a US$4.75-billion share buyback program in fiscal 2015, while keeping net debt near its US$15-billion target. That would produce EPS accretion somewhere between 3.8% and 4.1%.

The analyst further noted BHP could support share repurchases of around US$3-billion, implying 1.3% to 1.4% in earnings accretion.

“Both management teams have emphasized they are in listening mode around the preferred mechanism for any returns,” Mr. Jamieson told clients, noting…

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Mesaieed Petrochemical Surges 400% on First Trading Day in Qatar

A staggering trading day for Qatar’s Mesaieed Petrochemicals points toward serious expectations for the company.  The trading price rose 400% in a single day, immediately after it had completed Qatar’s largest IPO in five years.

Mesaieed Petrochemical Holding rose more than five fold on its first day of trading after completing the country’s biggest initial public offering in five years.

The shares closed at 55 riyals after opening at 10 riyals on the Qatar Exchange. The stock rose as high as 73.9 riyals during the day.

State-run energy company Qatar Petroleum raised 3.2 billion riyals ($880 million) by selling a 26 percent stake in Mesaieed to Qatari nationals last month. The share sale is the nation’s biggest since Vodafone Qatar raised $1 billion in 2009, and the largest first-day gain for an IPO in the Middle East and Africa since 2009 when Saudi Arabia’s Ace Arabia Cooperative Insurance Co. (ACE) sold shares, according to data compiled by Bloomberg.

“The IPO was at 10 riyals which is a significant discount to what this company is worth,” Bobby Sarkar, head of research at Qatar National Bank Financial Services, said in a phone interview. “This is a solid petrochemical, QP-backed company.”

Mesaieed was formed in September and owns Qatar Chemical Co., Qatar Chemical Co. II and Qatar Vinyl. The government valued the company at 12 billion riyals for the IPO, below an initial valuation of 16.7 billion riyals, Finance Minister Ali Al Emadi said last month. Foreigners are allowed to trade in the company’s shares once they have been listed.

Mesaieed is the first company to be listed on the country’s bourse since MSCI Inc. (MSCI) agreed to upgrade Qatar to emerging-market status in June. It raises to 43 the number of companies traded on the Qatar Exchange, Chief Executive Officer Rashid al Mansoori said in an interview in Doha today.

By Robert Tuttle of Bloomberg

The full article is visible via the link below – Pankaj Oswal

Impasse deepens over B.C. LNG tax as Shell warns 7% levy not globally competitive

Financial Post | Business

Royal Dutch Shell Plc is leading an industry pushback against the scope of British Columbia’s proposed tax on liquefied natural gas exports, extending a standoff over fiscal terms for the upstart sector.

The B.C government this week announced a two-tier tax structure for the industry as part of the provincial budget. Under the scheme, profits from LNG plants will be taxed at an initial rate of 1.2%, with rates climbing as high as 7% once companies recover capital costs associated with building the multibillion-dollar export terminals.

The B.C. government said the rates are competitive with rival export jurisdictions in Australia and five U.S. states, including Alaska, Texas and Louisiana.

We’ve been clear that the rate needs to be globally competitive if B.C. is to build an LNG industry

But Shell on Wednesday questioned that assessment, deepening an impasse that has delayed final investment decisions and threatened to snuff out a…

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Saudi looking to boost re-exports through Dubai

The Kingdom of Saudi Arabia is reported to be working toward further expanding trade links with the UAE, which has proven a fruitful re-export destination.  We shouldn’t be surprised to see an even more robust relationship in coming years, even though 45% of Saudi exports already either go to or through the Emirates.

Dubai: The Kingdom of Saudi Arabia is looking to explore new markets through the gateway of Dubai, Ahmad Hakbani, Secretary General of Saudi Export Development Authority, told Gulf News on Sunday.

“The main role of our authority is to ease Saudis’ businesses by supporting their industries and enhance their presence in the international markets,” he said. “And Dubai is an ideal gateway to achieve this target since it is a very popular re-export destination in the region.”

Saudi Arabia’s exports stood at Dh190 billion last year. Forty-five per cent of it goes either to or through the UAE.

The government of Saudi Arabia is also putting more efforts to boost trade between the two countries and take advantage of the strong trade environment in Dubai, Hakbani added without disclosing additional details.

“Authorities expanded the industrial area in Saudi by 300 per cent last year expecting Saudi’s industries to grow further in the region and internationally,” he said.

Saudi’s non-oil exports make up the petrochemical industry, which include downstream plastic production, building materials and food, he said.

While Saudi’s petrochemical industry achieved a steady growth of 20 per cent in the last five years, authorities are very optimistic of further growth in the coming years.

Satish Khanna, General Manager of Al Fajer Information and Services, said that currently Saudi’s share of petrochemical exports is estimated at 17 per cent worldwide, while it represents 70 per cent of the GCC’s overall petrochemical exports.

Saudi’s petrochemical exports are expected to reach 100 million tones by 2016, a 250 per cent increase comparing to 2006, Khanna said.

By Zaher Bitar

The full article is visible via the link below – Pankaj Oswal

Australia: 2,100-applicants for Blair Athol’s 120 coal mine positions

Peak Jobs News

Via Australian Mining. Something of interest that I missed from last week. 120 jobs snapped up at Blair Athol mine. Excerpt:

Of the 2100 applications received for work at Blair Athol mine, a lucky 120 people have been offered positions at the operation. Emails with offers of employment have been distributed, but a date for when workers will hit the ground is uncertain as the completion of sale is still being finalised.

A subsidiary of Linc Energy, New Emerald Coal, acquired Blair Athol mine from Rio Tinto in October. NEC will reopen the mine with a view to produce up to 3 million tonnes of thermal coal per year via what it calls “low-cost, targeted mining operations”. Executive general manager of operations Jason O’Rourke said he hoped to have crews start in April, CQ news reported.

He said the number of applications received was “impressive”, with many coming…

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China’s Sinopec cuts domestic polyethylene prices amid high inventories

Sinopec has cut its polyethylene offers this week in a move that could lead market trends.

Major Chinese petrochemical producer Sinopec Corp cut its polyethylene offers by Yuan 100-500/mt ($16-83/mt) this week, amid pressure from mounting stocks, a company source said Wednesday.

In eastern China, Sinopec trimmed its high density polyethylene offers by Yuan 100/mt to Yuan 12,100/mt ex-works basis, slashed its linear low density PE offers by Yuan 350/mt to Yuan 10,850/mt and cut its low density PE offers by Yuan 500/mt to Yuan 11,800/mt, ex-works basis.

Downstream demand had improved marginally after the Lunar New Year holidays but combined stocks held by local producers including Sinopec and PetroChina were hovering at exceptionally high levels of 1.1 million-1.2 million mt, compared with 800,000 mt in the same period last year.

The local producer was considering a cut in run rates at its production sites across China, but had not yet reached a decision on the matter, the source added.

–Michelle Ho,
–Edited by E Shailaja Nair,

The full article is visible via the link below – Pankaj Oswal

CSG industry ‘working well’ in Queensland

Informa Insights

CSG_Water_Salt_Management Fundamentals_image CSG training in Queensland seems to be paying off, with a new state government report stating regional projects are performing to expectation.

The annual update assessed how well the CSG industry is managing the effects on groundwater resources from developments in the Surat Basin.

Water is a primary by-product from CSG projects, although it is often rich in constituents that make it unsuitable for a number of uses.

Minister for natural resources and mines Andrew Cripps said the government has committed to rigorously monitor the CSG industry and how it impacts the wider environment, including managing groundwater production.

Surveying operating conditions and ensuring they stay within stringent guidelines is also important, he added.

According to the report, CSG development has been a little slower than first anticipated, which means it is too early to detect any clear water pressure impacts. There is also likely to be less of an impact…

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