Today's first article is credit Sydney Morning Herald, #2 FT and the next The West Australian.
The point, however, is that regardless of how much of an economic slowdown we are going into [the redhead thinks I'm less of a bonehead since the mutual fund salesman brother in law is now in extremis] that production of Ni and Co is falling precipitously.
Not to pick overly on our friends at Scotia, but this week in their metal bulletin they state:
Preston Resources of Australia announced that it would not be considering any expansion plans for its Bulong pressure acid leach (PAL) nickel project until the project achieves a sustainable production level of 9 KMT of nickel and 600 tonnes of cobalt. This announcement was made shortly after its rival producer Centaur Mining went into receivership after operating costs at its Cawse PAL project increased beyond initial estimates. Anaconda Nickel™s Murrin Murrin unit has also delayed ramping up to capacity because of operational problems. Anaconda expects the A$1.3 billion Murrin Murrin project to remain cash flow positive and will cover operating costs, principal repayment, and interest during the third quarter of this
year. We continue to forecast that the three Australian PAL producers will eventually increase production to a total annualized rate of 53 KMT/year despite recent indications suggesting otherwise. We continue to forecast a nickel supply deficit in 2002, including 41 KMT/year
from the Australian PAL producers, but any production shortfall should only exacerbate the supply deficit.
Someone explain this to me. Centaur is bankrupt. Preston is essentially bankrupt. Anaconda is not working, and going through the corporate equivalent of a nasty divorce (see below). And Australian laterite production is going to be 53 kmt this year? In a pig's ear, Scotia!
Zambia falling apart. Konkola deep and Roan have flooding problems which may never straighten out.
So my next question is who is better off:
1) Me, proud, psychotic, and soon to be neutered (by the redhead) owner of CMR
2) Glencore, Sherrit, Anglo and other Anaconda owners
3) Centaur and Preston owners
4) Whoever Inco stuck with that VBN stock
5) Nortel owners, down $3 today
Now, if Ted can find one banker who is not a wimp, maybe we can get the refinery financed. The problem is, I think, that the banks don't see that the 1.3 billion people in China, the 1.2 bil in India and the various developing economies in Pakistan, Iran etc need metals. I'm convinced that bankers don't care if they lose money; they only care if their bosses think they will lose money.
Anglo gets heavy with Anaconda
By Michael Weir
ANGLO American has finally started throwing its weight around the Anaconda Nickel boardroom, calling yesterday for the sacking of founding chief executive Andrew Forrest.
Anaconda's biggest shareholder, with a 26 per cent stake, said yesterday performance promises had never been met and it had lost confidence in Mr Forrest and the Anaconda board.
The South African miner said the fight to axe Mr Forrest had gone public only after it became frustrated by attempts to negotiate corporate changes.
But Mr Forrest, the master promoter who single-handedly raised the $1 billion to develop the massive Murrin Murrin laterite nickel project between Leonora and Laverton, is not expected to go down without a fight.
He called the move a takeover by stealth and accused Anglo of using underhand tactics to thwart Anaconda's attempts to raise additional working capital.
"The takeover of Anaconda has officially started today, but my personal view is Anglo has been working on this for some time," Mr Forrest said.
"This is a major attempt to seek control without a takeover being launched and without due consideration for shareholders.
"Anglo is doing what Anglo does, buying assets cheaply."
Anglo chief executive Tony Trahar said it was Anglo's idea to call an extraordinary meeting for the board shake-up, which he believed was in the interests of all Anaconda shareholders.
"Anglo has been concerned for some time by the poor operating and financial performance of Anaconda," he said.
"Projections and financial forecasts made at the time of Anglo's investment in 1999 and, subsequently, have not been achieved.
"Anglo has lost confidence in the Anaconda board as well as the CEO and CFO (chief financial officer Michael Masterman), to achieve timely ramp-up of the Murrin Murrin plant and the transition of the company to a competitive and reliable supplier of quality nickel.
"In Anglo's view, Anaconda's financial position, despite significant cash injection by Anglo and others, prevents it from undertaking key capital expenditures or pursuing other value-adding opportunities."
Anglo has called for the sacking of chairman Allan Coogan, Mr Forrest, Mr Masterman, and non-executives Rodney Adler and Norman Coldham-Fussell.
Anglo said it would recommend the new board undertake a $100 million rights issue to raise additional capital.
But before it would support the rights issue it wanted a full strategic review of the company, its prospects and financial structure.
Anglo said that if its proposals were not met it would not provide any further financial support to Anaconda.
"Anglo's proposals are obviously far reaching but are essential," Mr Trahar said.
"They provide Anaconda with the highest probability of being able to crystallise shareholder value and regain the support of the investing community."
Mr Forrest said he had appointed a committee of directors to review the company's strategic and financial alternatives "including the possible sale of all or part of the company".
He said the Murrin Murrin plant was running at 65 per cent capacity and was meeting its operating costs.
Mr Forrest said he had forced an admission and apology from Anglo adviser Credit Suisse First Boston that it had contacted prospective financial institutions during Anaconda's recent attempts to raise more money.
"You draw your own conclusions," he said.
The lobbying efforts of both camps are now set to be tested, with Swiss-based trading house Glencore the prize vote with its 21 per cent Anaconda stake.
Others carrying substantial weight in the meeting will be Canadian-based nickel producer Sherritt International (9.4 per cent) and Mr Forrest (8.5 per cent). |
