July 15, 2024

Australian Gold Miner Takes Big Hit as Price Slides

HONG KONG — Rising operating costs and slumping commodities prices continue to create problems for global mining firms.

The latest company to come under pressure is Newcrest Mining, Australia’s biggest gold miner, which said Friday that it would write down about 6 billion Australian dollars, or $5.7 billion, worth of assets and scale back planned spending on exploration and new projects.

Newcrest, which has gold mines in Australia, Papua New Guinea, Indonesia and Ivory Coast, said its moves were because of “the current market environment and outlook, including a recent sharp deterioration in the gold price, the largest in 30 years.” The company also blamed rising costs and the strong Australian dollar.

Major miners of ore and other raw materials have been drastically scaling back spending and dropping plans for new projects in recent months. BHP Billiton and Rio Tinto, two of the world’s biggest mining companies, both announced the departure of long-serving chief executives early this year after a number of financial setbacks.

While revenue at the world’s 40 biggest mining companies in 2012 was basically unchanged from the previous year at $731 billion, net profits fell by 49 percent, to $68 billion, according to a report released Friday by PricewaterhouseCoopers. Forecast 2013 capital expenditure by the companies of $110 billion is 21 percent lower than last year’s spending, the report said.

“While longer term demand fundamentals remain, mining companies need to handle rising costs, increasingly volatile commodity prices and other challenges such as resource nationalism in order to regain investor confidence,” Ken Su, the China mining practice leader at PricewaterhouseCoopers, said in a news release accompanying the report.

Producers of a wide range of metal products are also struggling.

On Wednesday, the Aluminum Corp. of China, known as Chalco, said that because of weak market conditions, it would impose a temporary shutdown of 380,000 tons of production capacity, equal to about nine percent of the company’s output of primary aluminum products last year.

Newcrest’s problems are more directly tied to the dynamics of the global gold market. While demand from the two biggest consumers of the precious metal, India and China, is expected to hold steady, the price of gold has been subject to high volatility in recent months.

Spot gold prices have recovered some of the ground that was lost during a sudden, two-day rout in April, when prices fell about 13 percent. But at about $1,410 per ounce, prices for the metal are down 16 percent so far this year and 21 percent since October, when the current downtrend began.

Shares in Newcrest closed down 7.6 percent Friday after it announced plans to reduce capital expenditure in the financial year beginning in July to around 1 billion dollars, down from a previous estimate of 1.5 billion dollars. The company also said it would reduce outlays for exploration by about half, to about 85 million dollars.

Newcrest said it is targeting gold production of 2 million to 2.3 million ounces in the coming financial year, an increase of about 4 percent based on the middle of the range.

Australia was the world’s second biggest producer of gold after China last year, with output of 250 tons.

Article source: http://www.nytimes.com/2013/06/08/business/global/australian-gold-miner-takes-big-hit-as-price-slides.html?partner=rss&emc=rss

DealBook: Chinese Companies Head For the Exit

HONG KONG–Fed up with slumping share prices, prickly regulators and aggressive short sellers, an increasing number of Chinese companies listed on American stock exchanges are heading for the exits.

The most recent case is also the biggest yet. On Wednesday, the directors of Focus Media Holdings, a display advertising company based in Shanghai, whose shares had come under attack by short-sellers, said they had accepted a sweetened $3.7 billion privatization bid from a buyout group that included the American private equity giant Carlyle Group, several Chinese private equity firms and the company’s chairman.

The deal would delist the company from Nasdaq. It includes $1.5 billion in debt financing from a consortium of Wall Street banks and mainly state-owned Chinese lenders and would rank as China’s biggest-ever leveraged buyout. Pending shareholders’ approval, the company expects the transaction to close in the second quarter of next year.

Including the Focus Media deal, which was first announced in August, Chinese companies began a record $5.8 billion worth of privatization bids in the first nine months of the year, according to the data provider Dealogic. That was a 42 percent increase from the same period a year earlier, and proposed Chinese delistings accounted for a record 16 percent of such transactions globally during the period, up from 6 percent a year earlier.

‘‘A lot of Chinese entrepreneurs want out of the U.S. markets. Share prices are depressed, and there are a lot of these deals in the pipeline,’’ said David Brown, greater China private equity practice leader at the auditing firm PricewaterhouseCoopers.

Valuations of companies from China that are listed in the United States have come under pressure in recent years after a wave of allegations of fraud and other accounting scandals. The Securities and Exchange Commission has deregistered the securities of nearly 50 China-based companies and has filed about 40 related fraud cases.

At the same time, a cross-border regulatory dispute over auditing procedures for Chinese companies listed in the United States escalated this month, when the S.E.C. charged the Chinese affiliates of the world’s four biggest accounting companies with violating securities law for failing to turn over documents related to their auditing work on businesses in China.

The standoff between United States and Chinese regulators over the auditing issue has raised concerns among multinational corporations that operate in both countries.

‘‘Failure to reach an agreement will create regulatory dead zones that harm investors and businesses,’’ the United States Chamber of Commerce said last week in a letter to securities regulators in Beijing and Washington. ‘‘The threat of retaliatory actions by regulators, on both sides of the Pacific, may create a regulatory protectionism that will harm both economies.’’

Article source: http://dealbook.nytimes.com/2012/12/20/chinese-companies-head-for-the-exit/?partner=rss&emc=rss

The Boss: Translating Your Skills

My parents expected my seven siblings and me to be independent, to learn to take care of ourselves. In third or fourth grade in Germany, I went to an indoor public swimming pool with friends and got lost returning home. The trip required taking two buses. I got on the wrong one for the second leg of the trip and ended up in a bar on the Rhine River. Even though I didn’t speak fluent German, I was able to tell the bartender my name and phone number. Someone called my parents and gave me an ice cream cone while I waited for them to pick me up. Times were different then; it was safer.

When we returned to the United States, we lived in Pennsylvania for a short time, and when I was 14 we moved to North Carolina. In high school, I worked at a local hospital, writing procedure manuals for nurses. I read about everything that went on in a hospital. I knew then that I wanted to go into the business end of health care.

In 1980, after graduating with a business degree from the University of North Carolina, Charlotte, I got a job as a management consultant at what became Cap Gemini Ernst Young. When I was leading a health care business unit there, I was given the chance to move to a middle-market division that had some Internet companies as clients.

Shortly after I accepted the assignment, the dot-com bubble burst. Even so, I set a goal of being the No. 1 division in the company a year later. We got to No. 3. Then I led a high-tech group, followed by an entertainment division. After that, I returned to health care.

I was with the company for more than 20 years and rose to senior health care practice leader. I was nervous about taking some of the positions I did, but I learned that I could handle them. I never wanted to regret that I hadn’t taken risks. The key is to jump in and ask questions. You learn things that you can apply to other jobs.

I joined Premier in 2003 as the president of Premier Purchasing Partners, our supply chain division, and became chief operating officer of our health alliance three years later. In 2009, I was promoted to C.E.O. Premier has an uncommon business model. We’re owned by nonprofit hospitals and health care systems, serving as a group buying organization for them. We receive fees from manufacturers when hospitals buy their medical supplies using our standardized contracts. We also collaborate with our members to improve health care quality and safety, and to lower costs. I like to think we’re a profit-making business with a social mission.

A few years ago, I completed the International Masters for Health Leadership program at McGill University in Montreal. The program required several weekends and full weeks on campus. I was the only American in my class.

During the program, executives and public servants from around the world discussed their individual situations. No matter how different the problems seemed initially, it became obvious that health care systems all over the world are facing similar challenges. No nation has managed to develop a perfect health care model that delivers the best quality at the best price, and every model has trade-offs. Hybrid systems, based on public and private partnerships, are emerging around the globe. 

As told to Patricia R. Olsen.

Article source: http://feeds.nytimes.com/click.phdo?i=2dfb7fa6bf229bb30a0423412436c933