Economy
Never say die, until you have to! Shareholders want help for Gunns
Marius Kloppers
Greg LeStrange
For big development in Australia to succeed – be it a pulp pill in northern Tasmania, a uranium mine in the South Australian desert or LNG or coal port infrastructure in WA and Queensland – the bottom line is always [i]money[/i].
When [b]Marius Kloppers[/b], the CEO of [i]BHP-Billiton[/i] pulled out of the $28.7 Billion expansion of its Olympic Dam uranium mine last week he said this to say:
“This decision is almost wholly associated with, in the first instance, capital costs.”
He said the high cost of development in Australia, magnified by the high Australian dollar, was the primary cause of BHP-Billiton’s decision to shelve the expansion.
“What happens if you build something while those conditions are in place is effectivelyyou lock in the economics of the project in an unfavourable way.”
Mr Kloppers also blamed last year’s Fukushima nuclear disaster in Japan for softeninguranium demand and prices.
And BHP-Billiton is a huge multi-national; corporation with market capitalisation in the $US100’s of Billions.
Now indulge me in futuristic plagiarism.
When [b]Greg L’Estrange[/b], the CEO of [i]Gunns[/i] pulled out of the $2.4 Billion development of its Tamar Valley pulp mill this week he said this to say:
“This decision is almost wholly associated with, in the first instance, capital costs.”
He said the high cost of development in Australia, magnified by the high Australian dollar, was the primary cause of Gunns’ decision abandon the project.
“What happens if you build something while those conditions are in place is effectively you lock in the economics of the project in an unfavourable way.”
Mr L’Estrange also blamed the downturn in pulp demand and softening prices from its potential customers in Japan.
And Gunns Ltd is an indebted ASX-listed company that has been in a share-trading halt since March 2012. It’s market capital capitalisation is now in the low $100’s of millions and is unlikely to trade again.
• Alison Andrews, The Examiner: Shareholders urge Gunns help
A NEW national group of hybrid shareholders in forest company Gunns has written to Premier Lara Giddings urging her to help ensure the viability of the company.
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Spokesman for the NSW-based group Gaby Berger said that he had sent the same letter yesterday to media outlets, other politicians and banks in a call for support for Gunns at a critical time for the company.
He had not yet received a reply from Ms Giddings.
Mr Berger said that Forests Investor Group Supporters, or FIGS, had become increasingly alarmed at media speculation that a group of hedge funds was about to put Gunns into liquidation.
“This would lead to devastating job losses and a wipeout for investors,” Mr Berger said.