-- QR National CEO: Company Cautious on Near-Term Mining Sector
Outlook
-- QR National CEO: Resources Demand Fundamentals Still in
Place
-- QR National CEO: Remains Optimistic About Longer-term
Resources Demand
By Robb M. Stewart
MELBOURNE--The froth has undoubtedly come off the mining boom
that has helped buoy Australia's economy but there is reason to be
confident demand for key commodities will be strong longer-term,
the chief executive of freight company QR National Ltd. (QRN.AU)
said Thursday.
The comment from Lance Hockridge in an interview following the
release of a strong jump in QR National's full-year profit comes as
politicians and executives debate whether the mining boom has
ended.
"If that means a lot of the hot air, the hubris around it has
disappeared, I'd agree," said Mr. Hockridge, adding the company was
operating in "cautious mode" as demand for coal and other materials
has weakened.
"But the fundamentals are still there. I don't believe it is the
end of the growth in the resources sector," he said, adding his
view is based on close conversations with mining companies on their
development plans.
Australia's resources and energy minister, Martin Ferguson,
earlier Thursday declared an end to the boom a day after mining
giant BHP Billiton Ltd. (BHP) shelved plans for a roughly US$30
billion expansion of its Olympic Dam copper and uranium mine in
South Australia state and postponed a multi-billion dollar
extension to its iron ore harbor on the west coast.
"The resources boom is over," Mr. Ferguson told Australian
radio. "We've done well -- A$270 billion (US$283.6 billion) in
investment -- the envy of the world."
Mr. Hockridge said it had long been clear that not all mining
projects proposed before commodity prices began to slump this year
would proceed, or that all projects that do would reach anticipated
production levels. But the industrialization and urbanization under
way in key consumers like China and India is set to continue,
driving demand for steelmaking raw materials and fuels, he said.
"Hence why we remain optimistic."
QR National, the country's largest coal haulage company, remains
on track to raise capacity by 30%, he said. It is adding 71 million
tons of capacity in its central Queensland coal network and has
committed to adding a further 25 million tons in the state.
"The nature of our business is that we invest today for
tomorrow," Mr. Hockridge said, adding capacity was being added with
so-called take-or-pay contracts with customers in place.
His optimism, however, comes as mining companies in Australia's
coal-rich eastern states are cutting jobs, reducing the number of
contractors they use, closing poorer performing mines and delaying
expansion projects. BHP has said no major new projects are likely
to be approved before mid-2013, and it has delayed indefinitely
plans to exploit one of its coal assets in Queensland in the face
of sharply higher costs and weaker prices. Rio Tinto PLC (RIO) is
cutting jobs at one coal mine and said it will shut another rather
than seek to extend its operating life.
Still, Rio Tinto remains committed to investing US$16 billion in
its global operations this year, with much of that being spent on
iron ore in Western Australia. BHP also said it is pushing ahead
with more than US$22 billion in spending worldwide in the year
through June, and Chief Executive Marius Kloppers said almost US$1
billion is currently being pumped into Australian iron ore
operations a month.
"The long term picture for me hasn't changed," Rio Tinto Chief
Executive Tom Albanese told a resources industry conference in
Perth on Thursday, although he said there continues to be soft
demand from China.
QR National earlier posted a 22% jump in net profit to 440.9
million Australian dollars (US$463.6 million) for the year through
June from A$360.9 million a year earlier, while revenue for the
financial year increased 9.6% to A$3.5 billion from A$3.2
billion.
Write to Robb M. Stewart at robb.stewart@wsj.com
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