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Clear and Present Danger: Australia to be hit as Chinese economy unravels; The iron ore price will continue to tumble, causing significant issues for Australia
Topic Started: 5 Sep 2014, 03:22 PM (7,330 Views)
b_b
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Ex BP Golly
6 Sep 2014, 09:17 AM
Not at all. Most of the 30% ave wage increase delivered through mining was done by capacity destroying measures such as wage increases not linked to productivity gains, tax breaks, and the welfarisation on the average family.

This was the dividend of your invisible mining shares as an Aussie.

now the goose has stopped laying its lovely golden eggs, govt is raising taxes ( :wak: the carbon tax is removed so energy doesnt go up, but government is raising the price of energy anyway :wak: ) and pressure is starting to be placed on wages and conditions; liberals pushing to lower young people's wages.

After a decade plus of being treated like we are all living in a sheltered workshop, every little thing government does to try to lift this nations productivity will be met with whinging whining people decrying the loss of a handout.

you cant see all of this?

Although handouts continue. Unless you are business directly involved in energy manufacturing you don't have to hand back the carbon tax load you had factored into your prices.

;) That should help Qantas a bit :to:

On handouts- the Doctors are really argueing that the $7 co-contribution tax should be dropped with the $7 per visit still raised but going directly in their pocket.

What a sick f nation we have become!
Now we all have invisible shares which made us rich. Brilliant. Again no explanation why lower iron ore price will affect that average Aussie. Just more "you know, it just does ".

Perhaps you can explain, without the magic shares, how a lower iron ore price affects the income of a pharmacist in Sydney.
(S – I) + (T - G) + (M - X) = 0
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Ex BP Golly
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b_b
6 Sep 2014, 09:32 AM
Now we all have invisible shares which made us rich. Brilliant. Again no explanation why lower iron ore price will affect that average Aussie. Just more "you know, it just does ".

Perhaps you can explain, without the magic shares, how a lower iron ore price affects the income of a pharmacist in Sydney.
Okay. Ill try that again for you.

Government wasted royalties on tax breaks, unproductive wage increases and the global welfarisation of it citizenry

now that it is all falling apart. .......it is time to pay our own way in this world.

With a government looking to maximise efficiencies I should imagine the next time Westfarmers come to them wanting to run pharmacies through the local grocery store, a little Chinese-Australian cross bencher from The Unity Party will not stand in their way, and pharmacists across the nation wont be pulling fantastical incomes for being glorified shelf packers

edit: what percentage of pharmacies are 'compounding pharmacies' and what percentage look like department stores with a pharmacist tucked away in a corner somewhere?
Edited by Ex BP Golly, 6 Sep 2014, 03:28 PM.
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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newjez
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Ex BP Golly
6 Sep 2014, 10:22 AM
Okay. Ill try that again for you.

Government wasted royalties on tax breaks, unproductive wage increases and the global welfarisation of it citizenry

now that it is all falling apart. .......it is time to pay our own way in this world.

With a government looking to maximise efficiencies I should imagine the next time Westfarmers come to them wanting to run pharmacies through the local grocery store, a little Chinese-Australian cross bencher from The Unity Party will not stand in their way, and pharmacists across the nation wont be pulling fantastical incomes for being glorified shelf packers

edit: what percentage of pharmacies are 'compounding pharmacies' and what percentage look like department stores with a pharmacist tucked away in a corner somewhere?
Won't higher wa taxes affect the pharmacy? As long as it is a WA pharmacy.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Admin
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Iron ore slide helps focus minds

September 6, 2014 - 12:15AM
Mark Mulligan

The drop in the price of iron ore has helped focus minds on Australia's economic prospects this week, along with a raft of other data and indicators.

The price of iron ore, used to make steel, bounced around new five-year lows throughout the week before settling on Friday at $US84.30 ($90.21), its lowest point since September 25, 2009. The mineral, by far Australia's most important export, currently sits at just above half its all-time high – about $US190 – which it reached in 2011. The fall stemmed partly from growing supply and slower economic growth in China.

Australia's economic fortunes during the global financial crisis and the subsequent fallout have been largely tied to the mineral, which accounts for more than $1 in every $5 of Australia's export income.

As demand from China's steel mills continued to rise, Australian and multinational miners and their affiliates pumped billions of dollars into expanding mine sizes and export capacity to capitalise on the high-speed urbanisation of our most important trading partner to the north. Demand for coking coal that is used to fire the steel mills and the thermal coal burnt to make electricity also played to Australia's advantage as a large-scale exporter of the dark combustible.

Like all booms, however, the mining infrastructure bonanza had to end.

For the past two years, policies by successive governments and the Reserve Bank of Australia have been directed at rebalancing the Australian economy away from its dependence on mining-related infrastructure, and towards other productive sectors and industries.

A lift in housing construction, already under way, and planned expansion of public infrastructure will go someway to picking up the slack left by the wind-down in mining infrastructure, as will continuing investment in new gas export pipelines and ports in northern Australia.

However, RBA governor Glenn Stevens has twice appealed to Australian companies in recent weeks to use record-low interest rates and the built-up cash on balance sheets to expand, innovate and hire workers, and so complete the re-engineering job. There was a surprise jump in unemployment in July to a 12-year high of 6.4 per cent and he is particularly mindful of spare capacity in the labour market.

Similarly, private sector economists believe the spike in joblessness in July was an aberration, ascribed to changes in how the Australian Bureau of Statistics defines unemployment. They say August employment data out on Thursday should be better.

"We forecast the unemployment rate to have fallen to 6.2 per cent in August," ANZ economists Savita Singh and Riki Polygenis said in a note, "partly retracing July's surprise rise to 6.4 per cent."

Read more: http://www.smh.com.au/business/iron-ore-slide-helps-focus-minds-20140905-10ct0l.html
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Mike
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http://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/5368.0Main%20Features2Jul%202014?opendocument&tabname=Summary&prodno=5368.0&issue=Jul%202014&num=&view=

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Iron ore lump rose $88m (7%), with quantities up 11% and unit values down 4%.
Exports to China (excluding SARs and Taiwan) rose $115m (15%), with quantities up 14% and unit values up 1%.

Partly offsetting this rise was exports to Japan, down $35m (11%), with quantities up 1% and unit values down 12%.

Iron ore fines rose $788m (20%), with quantities up 7% and unit values up 12%.
Exports to: ◾China (excluding SARs and Taiwan) rose $581m (18%), with quantities up 2% and unit values up 15%
◾Japan rose $176m (56%), with quantities up 72% and unit values down 9%.


When you look at the real picture of Australian Iron Ore exports it is far more positive then simply looking at a fluctuating Iron Ore price.
http://mike-globaleconomy.blogspot.com.au/
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Jimbo
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Mike
6 Sep 2014, 10:54 PM
When you look at the real picture of Australian Iron Ore exports it is far more positive then simply looking at a fluctuating Iron Ore price.
Big picture my arse. Export stats are only half of the picture.

Have you any idea how much stock the Chinese are holding?

They buy the stuff when it is on sale like it is now and stockpile it.

Iron ore isn't milk or chicken. It keeps for quite a while.



Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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Mike
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Jimbo
6 Sep 2014, 11:57 PM
Big picture my arse. Export stats are only half of the picture.

Have you any idea how much stock the Chinese are holding?

They buy the stuff when it is on sale like it is now and stockpile it.

Iron ore isn't milk or chicken. It keeps for quite a while.


Earnings soar for big three miners

http://www.theajmonline.com.au/mining_news/news/2014/august/august-21-2014/other-news/earnings-soar-for-big-three-miners

Quote:
 
Rio Tinto, BHP Billiton and Fortescue Metals Group have all announced impressive figures in their financial reports for the period ending June 30 this year.

BHP and FMG, each reporting for the 2013/14 financial year, and UK-based Rio Tinto, reporting for the first half of the 2014 calendar year, all saw earnings increase dramatically in the respective periods, and most of that increase was off the back of iron ore for all three businesses.

Fortescue, which has enjoyed a coming of age in the last few years as its Pilbara iron ore mines and infrastructure have come online, saw revenue rise 45% year-on-year to $11.75bn in 2013/14.

The miner, which is thriving in its ‘little brother’ role to giants BHP and Rio in the Pilbara, saw net profit rise 56% from $1.75bn in 2012/13 to $2.73bn in the 2013/14 financial year.

“Fortescue’s record net profit reflects an outstanding performance across all areas of our operations,” chief executive Nev Power said.

“The accelerated ramp up to 155mtpa in March and the sharp reduction in costs over FY14 are a tribute to everyone at Fortescue.”

FMG is using the earnings boost to continue its debt repayment program – paying off the debt racked up in the development and expansion of its Pilbara assets.

“We remain steadfast in our commitment to debt reduction, with another US$500 million to be repaid in October 2014, taking repayments to US$3.6 billion in less than a year and moving us closer to our gearing target of 40%,” Power said.

While headlines over the past two days have been dominated by BHP’s announcement that it plans to split into two companies (which AJM covers this week here and here), the company (relatively) quietly announced impressive profit figures of its own for 2013/14.

BHP’s profit was up a massive 23.2% in the financial year, to $14.9bn, off the back of a modest 1.9% lift in revenue to $72.4bn.

The company’s revenue from its iron ore operation rose from $20.0bn in 2012/13 to $23.0bn in 2013/14, an increase of roughly 15% year-on-year.

“In the last 12 months we have delivered on our commitments,” said chief executive Andrew Mackenzie. “Our operational performance continued to improve, enabling us to exceed production guidance for a number of our core commodities, including iron ore, metallurgical coal and petroleum liquids.”

Revenue from copper and coal mining assets went down slightly year-on-year, but overall revenue was just up, and profit was dramatically lifted thanks in part to productivity gains, Mackenzie said.

“Productivity-led volume and cost efficiencies of US$2.9 billion were US$1.1 billion ahead of plan, meaning we have now embedded more than US$6.6 billion of sustainable, annualised productivity-led gains over the last two years.”

BHP’s biggest competitor in Australia, Rio Tinto, also announced positive financial results recently off the back of iron ore and productivity gains.

Rio’s underlying earnings for the first six months of 2014 were $5.5bn, up 21% year-on-year. Underlying earnings per share were up 156% to $2.98.

The bulk of Rio’s earnings came from the iron ore sector, which achieved underlying earnings of $8.7bn, up 6% year-on-year.

Rio’s chief executive, Sam Walsh, said: “Our outstanding half year performance reflects the quality of our world-class assets, our programme of operational excellence and our ability to drive performance during a period of weaker prices.

“These results show that our current strategic and management focus is making a meaningful contribution to cash flow generation.”

Rio, like FMG, has held a sustained focus on reducing net debt, and has done so by $6bn since this time last year, Walsh added.


Just so you understand the rising export volumes will contribute to GDP growth in this quarter. So while prices may fall export volumes are ramping up. China will always buy our Iron Ore as it the best product at the best price. Our miners are the most efficient and productive in the world.

So while you say China is buying more now, it has been buying more all year long and will continue to do so. Hence why our exports of Iron Ore continue to rise despite what you may think.

http://mike-globaleconomy.blogspot.com.au/
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Foxy
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Zero is coming...

we know who the iron ore expert is don't we,

Foxbat you expert you.
Peter
b_b
5 Sep 2014, 05:25 PM
It's the investment cycle which we (Australia) have to manage. The iron ore price is pretty irrelevant unless you are a shareholder of the mining companies.
wow, how is the end of your nose???
peter
Edited by Foxy, 7 Sep 2014, 12:58 AM.
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Jimbo
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Mike
7 Sep 2014, 12:29 AM
Just so you understand the rising export volumes will contribute to GDP growth in this quarter. So while prices may fall export volumes are ramping up. China will always buy our Iron Ore as it the best product at the best price. Our miners are the most efficient and productive in the world.

So while you say China is buying more now, it has been buying more all year long and will continue to do so. Hence why our exports of Iron Ore continue to rise despite what you may think.
Mike,

Nothing you say is wrong. It is blindingly obvious.

China will continue to buy our ore, but they will buy it at a knockdown price.

But if you think that China will continue to expand its housing stock and infrastructure at the pace that it has been, then you are mistaken.

Iron ore sub $75 USD by Christmas.

Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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ggriff
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b_b
5 Sep 2014, 05:25 PM
It's the investment cycle which we (Australia) have to manage. The iron ore price is pretty irrelevant unless you are a shareholder of the mining companies.
Not really around 20% of Australia's GDP is generated from Iron ore so the governments budget is
severely hampered by the low price. This will in turn affect everybody :(
Tony has already warned that the budget surplice will take longer to achieve.
Edited by ggriff, 7 Sep 2014, 01:32 AM.
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