Energy & Resources Talking Points | 22/08/2017

In today’s talking points: Employment spikes in Australia’s mining states; BlueScope doubles profit but warns of rising energy costs, cartel investigation; BHP posts bumper profits while looking to move out of the US oil and gas industry; Fortescue shareholders to cash in big dividends  

Employment spikes in Australia’s mining states

More evidence of the revival in employment in Australia’s mining and resource sector has emerged. Western Australia, Queensland and the Northern Territory have all seen increases in employment, according to IFM Investors Chief Economist Alex Joiner. The job growth coincides with last year’s turnaround in commodity prices, including iron ore and coal. Although commodity prices have cooled off over the past six months, employment growth has continued to rise. Online jobs portal SEEK has reported that mining, resources and energy is recording that fastest rate of advertising growth of all industries. According to Hays, mining companies are also willing to recruit personnel with no previous experience in the industry.


Read more at:


 BlueScope doubles profit but warns of rising energy costs, cartel investigation.

Australian steel manufacturer BlueScope has announced a surge in net profit of nearly $716 million, almost double last financial year, but warns of rising energy costs posing an ongoing challenge. It is a significant turnaround from 2011 to 2014, when the company had losses up to $2.2 billion and shed more than 500 jobs from domestic steel operations. Outgoing chief executive Paul O’Malley, warned the company still faces challenges with rising electricity and gas costs potentially eating up future profits. “We need more gas in Australia,” he said. Adding to those worries was an ACCC investigation into possible cartel conduct involving BlueScope employees supplying steel products in Australia from late 2013 to mid-2014. “BlueScope has cooperated and continues to co-operate with the ACCC’s investigation,” he said.


Read more at:


BHP posts bumper profits while looking to move out of the US oil and gas industry

BHP posted massive profits of $6.7 billion today, a fourfold increase on the company’s last profit posting. Free cash flows have increased as a result, and BHP has been able to drastically cut debt levels. Although considerable, these profits are in fact well below analysts’ forecasts.

Moving forward, the company is looking to move out of the US oil and gas business. The company acquired US oil and gas assets six years ago for over $20 billion, however these assets have underperformed, placing BHP under increasing shareholder pressure to sell these assets.

Iron ore made up for the largest portion of BHP’s earnings – 44% – and will continue to do so as prices are forecast to rise into the future.


Read more at:


Fortescue shareholders to cash in big dividends

Fortescue has declared that 80% of its profits will be paid to shareholders this year and moving forward. This marks a stark contrast to the company’s previously parsimonious dividend payments while the company focused on investment and development.

In terms of profits, Fortescue’s 2017 profits are more than twice that of 2016, largely due to greater demand and higher prices from China. Debt levels have dropped with 2017’s huge profit gains, putting the company in a strong position to develop further in the future. This is a significant achievement given just a few years ago Fortescue was plagued by low iron ore prices and high debt.


Read more at: