BHP buyback on the cards, analysts predict

BHP Billiton can continue investing in new projects as well as return money to shareholders, analysts believe.
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The diversified miner posted an underlying half-year profit of $US7.8 billion on Tuesday and said it was on track to reduce its net debt to $25 billion by June.

Analysts said BHP cutting gearing levels to below 30 per cent would trigger a shareholder buyback or investments in further growth.

”We think they can do both,” Deutsche Bank analyst Paul Young said.

”Management believe they can achieve an average internal rate of return of over 20 per cent for the major project options. We see further project approvals with the 2014 full year results”.

Mr Young suggested the Spence copper project in Chile or the Pilbara iron ore business were the most likely candidates for investment funding.

BHP will spend $US16 billion on projects this financial year. UBS analyst Glyn Lawcock said that figure, combined with a debt reduction, would give the company the capacity to complete a shareholder buyback and invest in growth.

”We believe that BHP’s target of maintaining capex at up to US$15 billion per annum keeps the balance sheet flexible enough to balance shareholder value between investments in growth projects and capital management,” Mr Lawcock said.

”We do not believe that BHP is sacrificing future growth for cash returns. It is more a case of not over spending such that projects suffer from lack of ability to manage from a resourcing perspective.”

Mr Lawcock added the Jansen potash project in Canada to the list of projects for possible investment funding.

He estimated that BHP could announce a shareholder buyback of $US5.3 billion at its full-year result.

”To be conservative, the buyback could be over two years enabling further debt reduction also.”

But Macquarie analysts said while BHP could launch buybacks of up to $US7 billion, it was more likely to favour growth investment, citing a rising share price and fierce internal competition for capital.

BHP’s share rose for the ninth consecutive day on Tuesday, its longest rally since mid 2009, to a high of $38.89. Shares were slightly lower at $38.88 in midday trade on Wednesday.

Macquarie said BHP was targeting annual capital expenditure of $US15-16 billion in 2015, double rival Rio Tinto’s 2015 spend of $8 billion.

”And yet BHP’s production is only 40 per cent higher in copper equivalent terms suggesting, this is about more than merely replacing current production, with the focus of future investments being iron ore, copper and petroleum alongside jansen,” Macquarie said in a note to investors.

But Citi analyst Heath Jansen said BHP had scope for a modest buyback. He said he did not expect returns to shareholders to accelerate dramatically until net debt has been been cut to $US20 billion, ”which will not occur until 2015 on our estimates”.

”In addition to capital management initiatives, we expect BHP’s dividend to increase 7 per cent in FY14,” Mr Jansen said.

”The payout ration including buybacks has averaged 50 per cent in the last 10 years, and our forecasts imply a dividend payout ratio of 43 per cent in FY14 and 47 per cent in FY15.

”We expect the total payout ratio after buybacks to be over 50 per cent in FY15.”

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Thai PM Yingluck Shinawatra to face anti-corruption commission next week

Bangkok: The immediate fate of Thailand’s beleaguered prime minister Yingluck Shinawatra will be decided on Thursday next week when judges of the country’s anti-corruption commission summon her to answer a charge of negligence over a controversial rice subsidy scheme.
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If the judges find her guilty she will be suspended from office and face impeachment proceedings in Thailand’s Senate, bringing an abrupt end to the two and half year-rule of Thailand’s first woman prime minister, and plunging Thailand deeper into political crisis.

As renewed violence erupted on Bangkok’s streets, Ms Yingluck lashed out at her political enemies, accusing them of obstructing the implementation of the rice scheme she insisted had benefitted farmers and underpinned the economy.

“I am saddened and must apologise to the farmers as anti-government groups are holding rice farmers hostage and blocking the government from effectively implementing the scheme,” she said in a televised address.

“I must reaffirm the rice pledging scheme is the right policy and there was no conspiracy to corrupt.”

Ms Yingluck’s government is winding down the scheme at the end of February after it had suffered losses totalling as much as $US8 billion because farmers were paid almost 50 per cent above global market rates for their rice.

The government has struggled to find enough money to pay farmers for their latest crops, bringing hundreds of them on to the streets to protest.

Depositors at the Government Savings Bank pulled more than $US1 billion from their accounts on Monday after the bank provided a loan to the agricultural cooperative operating the rice scheme.

Ms Yingluck’s supporters say the anti-corruption commission’s action is part of what they see as a judicial coup orchestrated by powerful figures in Bangkok.

Ms Yingluck, who chairs a body that oversees the scheme that has left Thailand with huge stockpiles of unsold rice, denies any wrongdoing.

Pro-government red shirts in Thailand’s north and north-east have said they will mobilise 500,000 people to fight if she is forced from office, including setting up an alternative capital in northern Chiang Mai.

Meanwhile, clashes appear likely to continue on Bangkok’s streets as anti-government protesters vow to step-up their campaign against Ms Yingluck’s government and refuse to negotiate with police over their weeks-long occupation of protest sites across Bangkok.

Labor minister Chalerm Yoobamrung has warned that protesters must leave the sites at key government buildings this week or police would move to reclaim them.

More than 15,000 police have been mobilised in Bangkok for the operation.

On Tuesday a policeman was among four people killed as police clashed with protesters near government buildings in Bangkok’s historic quarter.

In his latest firebrand speech protest leader Suthep Thaugsuban declared that Ms Yingluck should be forced from the country.

“It is time to run this she-devil out of our native land,” he said.

The upheaval is the latest episode in an eight-year conflict that in broad terms pits one elite group of Thais backed by Bangkok’s middle class with another group backed by exiled former prime minister Thaksin Shinawatra, who is Ms Yingluck’s brother.

The protesters have been rallying since November in a campaign to force the powerful Shinawatra family from politics and set-up an unelected body to run the country for up to two years.

The latest violence brought to 14 the number of people killed since the protests began after the government attempted to pass an amnesty bill that would have allowed Mr Thaksin to return from exile without having to serve jail time for corruption.

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G20: Joe Hockey to take NSW infrastructure model to the world

NSW Treasurer Mike Baird, left, and Federal treasurer Joe Hockey speak ahead of the G20 Finance Ministers Meeting and Infrastructure at the Transport Management Centre, Eveleigh. Photo: Tamara DeanTreasurer Joe Hockey will plug the “NSW model” of infrastructure development to the world’s most powerful economic officials when they gather in Sydney this weekend.
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Mr Hockey applauded the state’s strategy of privatising public assets and using the capital to help fund new transport projects ahead of the G20 Finance Ministers and Central Bank Governors meeting.

“I want to praise the NSW Government for its approach to recycling of government investment in existing assets into new assets,” he said. “The sale of ports, with the proceeds going into new road infrastructure, is a benchmark for the rest of Australia and arguably many countries around the world and I will be using that as a clear example to G20 finance ministers this weekend.”

Australia will use its presidency of the G20 in 2014 to foster stronger global growth and will push for infrastructure investment to be a key growth engine. On Saturday night, Mr Hockey will host an “investment and infrastructure working dinner” as part of the G20 program. The G20 meeting in Sydney will be a who’s who of global finance, including Janet Yellen, the first female chair of the US Federal Reserve, and International Monetary Fund chief Christine Lagarde along with finance ministers who preside over 85 per cent of the world economy.

“This is where the rubber hits the road in terms of the future of the world economy and I look forward to meeting with my fellow finance ministers and central bank governors over the next few days as we shape the destiny of the world economy,” Mr Hockey said.

The NSW Treasurer, Mike Baird, who joined Mr Hockey in his infrastructure pitch, said Australia was considered an “infrastructure capital of the world” by foreign industry players because of the number of existing assets that are likely to be privatised in future and the pipeline of new projects.

Since coming to office in 2011, the O’Farrell Government has privatised the Sydney desalination plant, Port Botany and Port Wollongong and will “recycle” the capital raised to fund new infrastructure projects. Last week Mr Baird announced the NSW Government will sell Macquarie Generation to AGL Energy for $1.72 billion. The long-term leases of the Port of Newcastle will be finalised before the state budget in June.

Mr Hockey would not be drawn on whether the state government should sell its electricity distribution network – the so called “poles and wires”. He said that was a decision for the NSW government.

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Asylum seekers’ personal details made public on website, Immigration Department concedes

Details of asylum seekers across Australia were revealed, Immigration concedes. Photo: Luis AscuiUPDATE: Asylum seekers could win refugee status over bungleMichael Gordon: Stop transfers until we have answersTony Wright: Australia put these people at riskDesperate calls for help as violence erupted on Manus
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The Department of Immigration has conceded that details of thousands of asylum seekers held in Australia were inadvertently made accessible online.

A report in Guardian Australia on Wednesday said that the personal details of a third of asylum seekers held in Australia – making up about 10,000 people – were released by Immigration in a serious breach of privacy.

The department was alerted to the breach and pulled the data down.

The information included all asylum seekers held in a mainland detention facilities, on Christmas Island and several thousand in community detention. Children were also included.

Despite the federal government’s insistence about the need for greater secrecy when it comes to immigration and border protection, the report said that a database containing the full names, nationalities, location, arrival date and boat arrival information was revealed on the department’s website.

On Wednesday, in response to questions about the breach, a spokeswoman from the Department of Immigration, said ”this information was never intended to be in the public domain”.

”The department acknowledges that the file was vulnerable to unauthorised access. The file has been removed and the department is investigating how this occurred to ensure that it does not happen again,” she said.

Fairfax Media has also contacted Immigration Minister Scott Morrison for comment.

Guardian Australia has not identified where the database was located online and said it told the department about the information before it reported the breach.

Refugee Council of Australia president Phil Glendenning said the release of asylum seekers’ information was “outrageous” and unprecedented.

“We are deeply disturbed by this,” he told Fairfax Media.

Mr Glendenning said the breach ran the risk of exposing people who were already vulnerable to “very serious danger”.

This not only included reprisals if asylum seekers were sent back to their country of origin, but their families – either in home countries, or transit countries in between.

The Refugee Council is also seeking particular assurances about the safety of people in community detention who may have had their location revealed.

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O’Farrell government breaks election promise by backing central coast coal mine

That was then: Premier Barry O’Farrell in 2011 with (from left) Chris Holstein (Member for Gosford), Darren Webber (Member for Wyong), Barry O’Farrell (Premier), Alan Hayes (Australian Coal Alliance), Chris Spence (Member for The Entrance) & Chris Hartcher (Member for Terrigal & Minister for Energy). Photo: Supplied”Unjust” mining laws slammed by former judgesMore NSW news
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The O’Farrell government has been criticised for breaking a key election promise by recommending approval of the Wallarah 2 coal mine on the central coast.

Before the 2011 state election, as opposition leader, Barry O’Farrell said a Coalition government would not approve the mine because of its impact on drinking water catchments.

However, the Department of Planning and Infrastructure has now recommended the project be approved, subject to strict conditions.

NSW Planning Minister Brad Hazzard said the Independent Commission Against Corruption hearings into mining approvals under the former Labor government had resulted in “seismic changes” in the way planning decisions were made.

“Three years of Eddie Obeid and mates at ICAC has underpinned a critical need for the integrity of an arms length independent decision-making process through the Planning and Assessment Commission,” Mr Hazzard said.

“The Green groups are playing dangerous political games if they are arguing in the face of ICAC recommendations supporting independent processes.”

Nature Conservation Council Chief Executive Officer Pepe Clarke said the department’s decision was a “bitter blow” to the people of the central coast and to Premier O’Farrell’s credibility.

“Mr O’Farrell gave a personal guarantee before the election that, under his government, mining would not be permitted to occur in drinking water catchments, no ifs, no buts,” Mr Clarke said.

“At the time, Mr O’Farrell and Central Coast MP Chris Hartcher were even photographed together wearing T-shirts emblazoned with the words ‘Water, Not Coal’.

“The position they adopted helped the Coalition win key marginal seats of the central coast. It is time Mr O’Farrell’s government delivered on his promise by creating binding legal protections for water catchments to ensure proposals like Wallarah 2 cannot be approved.”

Mr Clarke said that if it proceeds, the Wallarah 2 project will undermine several waterways and result in the extraction of up to 5 million tonnes of coal a year for 28 years. He said the former Labor government rejected the project in early 2011 because of uncertainty around subsidence, unacceptable impacts on surface water quality and uncertainty around ecological and heritage impacts.

“The mine would operate for less than 30 years, but the damage mine subsidence could do to local aquifers and streams would be permanent,” Mr Clarke said.

“This was a point that Mr O’Farrell clearly understood and was prepared to campaign on when in opposition. Now he is in power he has the opportunity and a moral responsibility to ensure this project does not proceed.”

Planning and Infrastructure Executive Director Chris Wilson said the department’s assessment of the project was supported by independent studies and had found there were no environmental or amenity reasons to stop the project going ahead, subject to strict conditions around the protection of water supplies.

“After careful consideration of all potential environmental, social and economic impacts the department is satisfied that the economic benefits of the mine can be realised without significant adverse impact,” he said.

“The department found the company has comprehensively addressed those factors which underpinned the refusal of a separate application in 2011.”

Mr Wilson said the project would be in line with the NSW Aquifer Interference Policy and have minimal impact on underground water tables and would not adversely affect the region’s water supply.

He said there would be no significant subsidence impacts on the region’s water infrastructure or major water courses.

He said any discharges from above-ground facilities would be limited under any environmental protection licence and could be adequately controlled.

Recommended consent conditions had been developed in consultation with the NSW Office of Water and a range of other state and federal agencies.

The conditions included performance measures requiring the mine to have negligible or minor impacts on all major streams, creeks and rivers and the development of an extensive ground- and surface-water monitoring network.

“The Wallarah 2 project would generate a significant number of employment opportunities in the local region, including 300 direct jobs and an estimated 500 flow-on jobs in related industries,” Mr Wilson said.

“It would also have direct economic benefits to the state, including an estimated $134 million in taxes and $207 million in mining royalties.”

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