Australian Dollar Parity; BHP, Apache in Deal

Chandrasekhar Atreya
24 Sep, 2010
New York City

Sydney index declined 0.7% on Friday and fell 0.8% for the week. BHP and Apache approve $1.5 billion Macedon gas field development. Rio Tinto plans to develop Dampier port for increased iron ore exports. Long running investigation of CabCharge led to A$15 million penalty.

[R]6:00 PM Sydney, Australia – Sydney index declined 0.7% on Friday and fell 0.8% for the week. BHP and Apache approve $1.5 billion Macedon gas field development. Rio Tinto plans to develop Dampier port for increased iron ore exports. Long running investigation of CabCharge led to A$15 million penalty.[/R]

Australian stocks declined on Friday tracking the weakness in international markets and the strength in the Aussie dollar. The Aussie dollar is likely to reach parity with the U.S. dollar as early this year.

The ASX 200 Index dropped 0.68% or 31.70 to close at 4,601.90 and fell 0.8% in the week. The Australian dollar edged higher in the week and reached closer to parity with the U.S. dollar. In the month the Aussie dollar gained 7 U.S. cents and traded 26-month high this week.

If the Australian dollar reaches parity with the U.S. dollar, that will be for the first time since 1983.

BHP Billiton and partner Apache Energy approved the development of the $1.5 billion Macedon gas field off the coast of Exmouth in Western Australia. BHP which holds a 71.43% stake in the venture will pay project costs of $1.05 billion, while Apache, which has a 28.57% stake, will pay the balance $450 million.

The Macedon project involves four offshore production wells supplying a wet gas pipeline to an onshore gas treatment plant to be built at Ashburton, 17 kilometers southwest of Onslow.

CFS Retail Property Trust said it will buy four of the Direct Factory Outlet centers for $498 million, to be funded through a new equity sale.

Sydney-based CFS said the deal involves one mall in Sydney and three in Melbourne. The trust will fund the purchase through a A$450 million institutional equity raising, CSF said in a statement to the Australian stock exchange.

Australian iron ore producers are cashing in on the index-based iron ore contract pricing system beating major competitors from India and Brazil, as Chinese consumption continues to increase.

The budget deficit in the year to June 30 was less than forecast earlier, due to lower spending, Treasurer Wayne Swan said Friday.

The shortfall was A$54.8 billion in 2009-10, compared with the A$57.1 billion forecasted in May. The lower deficit reflected lower interest costs and spending below budget on government programs, Swan said.

Rio Tinto Group said it will spend $230 million to expand iron ore export capacity at Dampier Port in Australia to meet surging demand in Asia. The work will boost capacity from its mines in the Pilbara region of Western Australia by 5 million tons to 230 million tons a year and the expansion is subject to approvals from the government and others, Rio said in a statement today.

The current project schedule is for completion in the first quarter of 2012, the company said.

The Australian government plans to stick to its schedule of October 11 as the deadline date to make a decision on gas projects proposed by BG Group and Santos Ltd, the Australian Financial Review said, citing Environment Minister Tony Burke.

The Australian dollar was poised for the longest weekly gain since September 2009 as the spread between two-year yields in Australia and the U.S. was near the widest in two years. The Aussie closed up 0.5% to 95.43 U.S. cents.

This will be the sixth weekly gain for the Australian dollar versus the greenback.

The Australian Competition and Consumer Commission took legal action against taxi fare payment company Cabcharge Australia Ltd for beaching the Trade Practices Act through its anti-competitive behavior and charged it with A$15 million for penalties and costs related to the legal action.

CabCharge surged as much as 15% after the long running investigation came to an end.

“Cabcharge admitted to certain facts only for the purpose of the ACCC proceeding and consented to the three declarations of contravention of the Trade Practices Act, civil penalties, and compliance orders made in the ACCC proceeding by Justice Finkelstein in the Federal Court in Melbourne Friday,” Cabcharge said in a statement today.

Resource News

Gryphon Minerals took advantage of a spike in interest for West African gold to raise $45.2 million for its exploration projects in Burkina Faso and Mauritania.

Woodside Petroleum is set to re-engage in talks with the East Timorese authorities as it steps up efforts to get government approval for its floating LNG plant.

Newmont Mining CEO Richard O’Brien said it was too early to press the panic button over issues at the company’s massive Boddington gold mine in Western Australia, including less than expected production due to lower grades.

BHP Billiton said it received antitrust clearance from U.S. regulators to go ahead with its $39 billion bid for Potash Corp.

Gainers & Losers

Cabcharge Australia Ltd led gainers in the ASX with a rally of 10.59% to A$5.95 followed by Lynas Corp Ltd 3.24% to A$1.275, Energy World Corp Ltd 2.5% to A$0.41, Cochlear Ltd 2.26% A$71.15 and ASX Ltd 2.25% to A$32.71.

Ausenco Ltd led decliners in the index with a fall of 7.17% to A$2.72 followed by Spark Infrastructure Group 6.11% to A$1.075, Platinum Australia Ltd 5.41% to A$0.700, Roc Oil Ltd 4.76% to A$0.400 and Oz Minerals Ltd 4.08% to A$1.41.