Resource companies face cash crunch by Christmas

A cluster of Australian resource companies are at risk of burning through their cash reserves by Christmas, according to the Sydney Morning Herald.

This could force them to consider selling assets or raising funds amid the most bearish market conditions in years.

Cash reserves across the Australian resources industry have halved over the past two years when measured as a percentage of total assets, highlighting the predicament of an industry that appears ripe for a round of rationalisation and consolidation.

Significant names in the resources space including Lynas Corporation, Paladin Energy, Gindalbie Metals and Alumina Limited will all face hard decisions about their finances within months if long-expected funding solutions and approvals do not pan out.

The concerns extend to a host of resources aspirants wanting to bring their first project into operation.

Chinese tighten investment criteria

Australian miners could be forced to renegotiate deals with potential Chinese backers because Beijing has demanded a more cautious approach to valuations as commodity prices fall, according to the Australian Financial Review.

China’s re-assessment of offshore acquisitions was highlighted by a warning yesterday from diversified minerals explorer Ord River Resources that it could not sell a holding in coal explorer Caledon Resources to a Guangzhou government-backed company as planned.

It was the second time this week a Chinese group has raised concerns about the acquisition price of an Australian miner.

Iron ore explorer Sundance Resources confirmed yesterday that it would renegotiate a proposed $1.7 billion offer from Hanlong Mining after China’s top economic planner would only grant approval on the basis of a “reasonable acquisition price”

Chinese authorities are demanding that all new investments be revalued as problems with a number of high-profile projects stoke concerns about prices being paid to secure minerals in the throes of a commodities boom.

Business condemns IR review

Business groups dismissed the first review of the Gillard government’s industrial relations system as tinkering that would make minor changes to the Fair Work Act and strengthen the power of the industrial tribunal, according to the Australian Financial Review.

The panel, which was appointed by Employment and Workplace Relations Minister Bill Shorten, offered some concessions to business, including standard flexibility clauses in workplace deals, a higher hurdle for strikes when employers refuse to bargain, and overturning a legal precedent protecting shop stewards.

Employer groups said the changes were piecemeal measures that would not help productivity or competitiveness and would hand more powers to Fair Work Australia.

The government will consult further over the next month and plans legislation this year to adjust the Fair Work Act. Shorten said there would not be sweeping changes.

Business leaders were disappointed the review didn’t propose pulling back what they said were pro-union provisions of the act, which replaced the Howard government’s unpopular Work Choices system in 2009.