Mining companies urged to switch focus to expansion
A REPORT from EY has warned the global mining industry faces the risk of exhausting its asset base if companies don't invest urgently in future expansion opportunities, according to the Australian Financial Review.
The pressing need for a “switch to growth” ranked at the top of the 10 biggest business risks for mining and metals companies in EY’s Business risks in mining and metals 2015-2016 report, released on Monday.
Long-term growth was essential for the sustainability of the mining industry, yet public capital markets remained focused on cost-cutting and maximising returns, the report said.
More mining collapses inevitable despite desperate moves for survival
Insolvency firm KordaMentha says more collapses in the struggling mining services sector are inevitable in 2015, but banks and companies will fight hard to get restructuring deals up instead to avoid a “bloodbath”, according to the Sydney Morning Herald.
In the next 18 months banks and bondholders would be reworking firm’s debt facilities – requiring “creative solutions”, restructures of balance sheets and ultimately changes of control, KordaMentha partner Scott Langdon said.
Bradken to explore merger
Bradken chairman Nick Greiner says the beleaguered mining services group's share price has “overreacted” to the company's recent woes, as it entered into 60-day talks with Chilean industrial group Sigdo Koppers to explore a merger with its grinding media group, Magotteaux, according to the Sydney Morning Herald.
CHAMP Private Equity teamed up with the Chilean firm to inject $70 million into Bradken via redeemable convertible preference securities, preventing it from breaching its debt covenants.
The company also struck a deal with its lenders to lift the company's gearing covenant to 3.5 times until December 31, giving the company valuable breathing space as it works to complete a restructure and start the merger talks.
