Australian Miners Bid for Queensland Rail

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
26 May, 2010
New York City

The benchmark stock index rose 1% in Australia driven by commodity stocks as gold prices edged up 0.7% to $1,206 per ounce and crude oil prices advanced 0.8% to $69.3 per barrel on signs the global economy is recovering.

[R]6:00 PM Sydney, Australia – Australian stocks rebounded tracking higher commodities. BHP Billiton Ltd and eleven other miners bid $4 billion for Queensland rail network. Rio Tinto backs a progressive dividend policy and said demand for commodities in China is expected to remain high for the next fifteen years. Foster''s Group Ltd plans to separate wine and beer business.[/R]

The benchmark stock index rose 1% in Australia driven by commodity stocks as gold prices edged up 0.7% to $1,206 per ounce and crude oil prices advanced 0.8% to $69.3 per barrel on signs the global economy is recovering.

A private report also indicated that the country’s economic activity is likely to increase in the next three to nine months.

Australian dollar fell on concern tightened financial regulations stemming from the Spanish crisis could stifle economic growth and demand for higher-yielding assets.

The ASX 200 index in Australia increased 0.98% or 41.90 to 4,307.20 and of the stocks in S&P ASX 200 index, 114 increased, 75 declined and 11 were unchanged.

The Australian dollar fell 0.4% to 82.40 U.S. cents.

Westpac leading economic index of Australia rose 0.9% from February to 260.9 in March, as per details issued by the Melbourne Institute, Westpac Banking Corp in Sydney today.

‘The growth rate is signaling better economic times for Australia’, said Bill Evans, Chief Economist at Westpac Banking Corp.

QCIG Bids A$4.85 Billion for Coal Rail Network

The Queensland Coal Industry Rail Group (QCIG), which consists of 12 coal miners in Australia, said it will pay A$4.85 billion for Queensland Rail''s coal track network which stretches across Central Queensland.

Queensland had earlier indicated that it intends to sell the track through a public float. However, Premier Anna Bligh says the offer will be considered.

BHP, Rio, Xstrata, Peabody, Anglo American Plc, Macarthur Coal Ltd. Vale SA, Wesfarmers Ltd., Ensham Resources Pty, Felix Resources Ltd. and Jellinbah Resources have bid A$4.85 billion for Queensland Rail’s coal railroad to head of the Queensland government’s planned IPO of some assets of the company

New Hope Corp. and Aquila Resources Ltd. support the bid and have the opportunity to contribute equity at a later stage, Greiner Chairman of the Queensland Coal Industry Rail Group said.

The 12 miners may have more incentive to add tracks than a single owner would with a potential for higher fees in the future. Premier Anna Bligh said she will examine the details of the bid according to Australian Broadcasting Corp.

Foster’s Group Spin-off Plan

Foster’s Group Ltd, Australia’s biggest liquor maker feels that separate companies for beer and wine may be more appealing to investors. It is planning to spin off its wine unit and write down the unit by as much as A$1.34 billion before taxes, the Melbourne-based company said in a statement today.

Chief executive Ian Johnson said the beer and wine business operate in separate market segments with different strategic and operating characteristics.

The wine business is viewed as a deterrent for potential buyers to the business.

Full year earnings before interest and tax are estimated to be between A$1.05 billion and A$1.08 billion.

Gresham Advisory Partners is acting as a financial advisor.

Dynasty Fine Wines Look For Targets

‘As there are only a few locations for vineyards in China, we are looking for acquisitions in Australia, New Zealand, Chile or France’, said Chairman Bai Zhisheng of Dynasty Fine Wines Group Ltd, in an interview yesterday in Hong Kong.

The Tianjin-based company wants to raise production to 100,000 tons per year within three years from the current 70,000 tons to meet rising demand in China.

ASX Movers

Gunns Limited led gainers in the S&P ASX 200 index with a rise of 13.2% followed by Fortescue Metals Group Ltd 8.4%, OM Holdings Limited 8.2% and Carsales.com Ltd 7.3%.

PaperlinX Limited led decliners in the S&P ASX 200 index with a loss of 7.4% followed by Spotless Group Limited 4.8%, Austar United Communications Limited 4.7%, Australian Agricultural Company Limited 4.7% and Flight Centre Limited 4.6%.

Other Movers

Atlas Iron Limited gained 5.9% to A$1.88 after the mining company was upgraded to “outperform” from “neutral” at Credit Suisse Group AG.

BHP Billiton plc added 3.1% to A$37.43 after the mining company said coal miners made a joint A$4.85 billion ($4 billion) bid for a rail-track network in the country''s coal state on Wednesday.

Foster’s Group Limited increased 7.1% to A$5.52 after the brewer announced that it intends to spin off its wine business subject to a detailed evaluation of the issues, costs and benefits to Foster’s shareholders.

Rio Tinto Limited advanced 4.0% to A$64.18 after the Global miner remains committed to a progressive dividend policy, the company told its annual meeting in Australia on Wednesday.
Jan Du Plessis, the Chairman of the company said at the annual meeting the demand for iron ore, copper, coal and aluminum is expected to grow in China for the next 15 years and then the demand from India will support the growth.

Sigma Pharmaceuticals Limited rose 4.3% to A$0.48 after the company announced that Lazard Asset Management Pacific Co. is interested in 95,499,125 shares of the company, representing 8.10% of the total voting power.

Wattyl Limited surged 38.5% to A$1.15 after the paint maker was upgraded to “outperform” from “neutral” at Credit Suisse Group AG.

Woodside Petroleum Ltd, the oil and gas producer rose 2.4% to A$42.38.