Fortescue Metals Group to restart $1 billion Kings project, but job cuts stand
Fortescue Metals Group chief executive Nev Power says the miner will not reinstate the 1000 employees and contractors it sacked four months ago, despite reactivating its $A1.1 billion Kings deposit in Western Australia under a plan to boost production to 155 million tonnes a year, The Australian reports.
Power admitted that the iron ore price collapse in early September had been a wake-up call for Fortescue, but said its swift response – which included slashing staff numbers, refinancing $US5 billion in debt and halting work on Kings – meant it could cope with future volatility.
He told the newspaper yesterday that most of the staff cuts announced in September would be "permanent", even under the new expansion plan, as the miner focused on cutting costs.
The relaunching of Kings early next year would avoid the need to remobilise contractors because the existing construction workforce at the neighbouring Firetail project could be rolled over to the new mine.
Steel industry braced for a new normal
The Australian Financial Review reported that the steel sector was expected to make a moderate recovery next year, with subdued demand and weak price rises putting company earnings under severe pressure.
World production of steel will rise by a muted 2.9% during 2013, helped by a 3.5% year-on-year increase in output in China, according to a survey of 20 steel executives and analysts.
Average prices were expected to climb by just 2.3%.
Newcrest tipped to miss guidance
The share performance of the nation's biggest listed gold producer, Newcrest Mining, has been anything but golden this year, says The Australian.
The 24% fall to $A22.55 a share amounts to a value loss of $5.4 billion, increasing pressure on chief executive Greg Robinson to deliver on his promise of achieving consistent and predictable performance from the Melbourne-based group.
The building pressure – the stock is the eighth-worst performed of the top 100 stocks in 2012 – comes as investor sentiment in the gold sector has soured in response to the $US85-an-ounce, or 4.8%, retreat in gold prices in the past 30 days to $1657 an ounce.
But more challenging for Robinson, on his return from his summer break, will be his response to market talk that, although Newcrest is coming to the end of its $3.2 billion capital expenditure on expansions and new developments in Papua New Guinea and New South Wales, it is likely to miss its production guidance for the 2013 financial year.
