It’s all about the mining in the Financial Review today, with a front page story reporting that a
spending boom in mining and infrastructure over the next decade is being
endangered by a skills shortage and project cost increases that are forcing
major companies to defer expansion plans and rethink budgets.

But there’s no shortage of skills at BHP
Billiton, says Yvonne Ball in the Fin.
While the boards of most Australian companies usually have only two
executives as directors – the CEO and the CFO – the mining giant now has four
executive directors among its newly expanded 12-person board, after the
promotion of Mike Salamon to the newly created role of executive president and
the appointment of two senior executives. The
shake-up comes amid persistent speculation that the BHP
chief Chip Goodyear will step down in 2007 and return to the US.

Among the promoted, young gun Marius Kloppers
and highly regarded finance chief Chris Lynch to the board. Kloppers is the big
winner from BHP’s executive reshuffle, says
Matthew Stephens in The Australian. The changes mean
the 43-year-old South African emigre has become the most senior operational
manager at the world’s biggest miner, outside, of course, of Goodyear. And it
sets him well on the way to becoming the “first vegetarian ex-hippie to run Australia’s
biggest company.” And though he’s not considered the clear favourite to succeed
Chip, he’s clearly been given a chance as a line manager of much of the
non-iron ore bits to show his form, says John Durie in the Fin‘s Chanticleer.

The Asia-Pacific tourist region is set to become a new
discount airline battleground as Qantas rolls its successful Jetstar model into
the area by January 2007, reports The Age.
CEO Geoff Dixon said yesterday Qantas had high hopes for expansion in the area.
Jetstar International, as the new discount offshore carrier will be known,
would expand in two major steps.

And Qantas’s decision next week on its $20 billion order for
next-generation aircraft arguably amounts to the biggest investment in history
by an Australian company, says Durie. The reason Qantas is confident to commit
to spending now is because the new planes, whether Boeing or Airbus,
will cut the costs per seat by some 25%, and will cut its
fleet age down from 10 to six years,
putting it on par with its Asian competitors.

Meanwhile, Virgin Blue founder Sir Richard Branson has other
things on his mind, reports The SMH. The founder of Qantas’s
main local rival says he’s willing to stump up more cash and find a new partner
to buy out the discount carrier’s 62.4% owner Patrick Corp if Toll’s $4.6
billion takeover bid for the stevedore fails.

And the next week will test the resilience of what has been a
remarkably resilient sharemarket this year, says Stephen Bartholomeusz in The Age. Yesterday Singapore
Power-sponsored SP AusNet announced it had successfully sold $1.42 billion of
stock to retail and institutional investors, both domestic and offshore. If the
two remaining big floats in the pipeline, Goodman Fielder (about $2 billion)
and Spark Infrastructure ($1.6-$1.7 billion), successfully negotiate the
book-build process, that would be testament to the capacity of the market,
particularly the domestic market, and a revealing indication of the amount of
capital pumping through it.

On Wall Street, the US
stocks closed lower overnight, undone by worries about weak energy supplies and
unusually cold winter weather. An uncertain outlook on the housing market,
disappointing sales from McDonald’s and a less than enthusiastic Treasury
auction further dented sentiment. The Dow Jones closed down 55.79 points at
10,755 – MarketWatch has the full report here.

Peter Fray

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