“Talk about selling the farm. Xstrata (LON:XTA), Sinosteel, and Ukraine's Palmary are already having an early Christmas dinner by swallowing the pride of our mining mid-tier,” reports Robin Bromby in today’s Australian.
Australia is for sale. Is this a good thing? It depends on if you get any of the proceeds from the sale. But you’d think long-term ownership of Australia’s mineral assets is a good idea, considering we’re in a long-term resource bull market. However, it may shift the investment focus away from the big resource blue chips and mid-level producers to the smaller companies. Down the food chain we go.
“Stand by,” Bromby explains, “for the foreign predators to pick off Zinifex (ASX:ZFX), Oxiana (ASX:OXR), Minara Resources (ASX:MRE), Lihir Gold (ASX:LGL) and - although we'll believe this when we see it - Newcrest Mining (ASX:NCM). It is a worrying sign for the local investor. The loss of these on top of Midwest Corp (ASX:MIS), Consolidated Minerals (ASX:CSM), Resource Pacific (ASX:RSP) and Jubilee Mines (ASX:JBM) means a drastic hollowing out of our resources sector.”
So what’s the problem? “It reduces to a handful the number of locally listed companies that are actually in production; the concomitant factor is that, apart from the global majors, investors have too few choices outside exploration plays.”
We continue to look for mid-level producers. And we don’t mind so much the exploration plays either. The risk of failure is much higher, of course. But so are the rewards for success.
We apologise for being too British in yesterday’s Daily Reckoning. “To answer your query if there's anything more Australian than beer and cricket, try footy (Aussie Rules) and meat pies!!! Cricket is so British.”
Noted. We love footy (go the Saints!). But the meat pies…not so much.
What were the last few days all about? The best explanation we found was over at www.fintag.com
Bernanke: Here, take some more drugs. They are on the house.
Dow: But this stuff isn't good enough. I want my money back.
Bernanke: It is all I have for another couple of months.
Dow: We need strong stuff. The kind that sets our hearts fluttering.
Bernanke: If I gave you more, the USD would collapse.
Dow: Stuff the dollar.
Bernanke: And Chinese inflation is reaching a decade high and we are importing it too.
Dow: I want to get to 14000 again. What is wrong with you?
Bernanke: I am doing the best I can to get 3M libor down but it won't shift.
Dow: Bring back Greenspan. Bring back Greenspan.
Dan Denning
The Daily Reckoning Australia
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About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 and has covered financial markets form Baltimore, Paris, London and, beginning in 2005 Melbourne. He’s the editor of The Daily Reckoning Australia and the Publisher of Port Phillip Publishing.
Comment by Ali. on 14 December 2007:
I don't know wether foreign takeovers of our resource companies are good or bad, all I know is that the average aussie is sleepwalking into the future, and this is bad........and that's all I've got to say 'bout that !
Comment by novosonic on 15 December 2007:
send us your poor and unwashed,
come to california, it's where
the action really is.........
Comment by Pete on 15 December 2007:
I agree Ali. I am 27, and so many people I know have no idea whatsoever about our current financial climate. They just want to buy a house and get a plasma
Comment by kage on 15 December 2007:
Yay, Saints forever !
Comment by ithatheekret on 17 December 2007:
We can't blame Benny , look who his mentor was ......
As Forrest said " stupid is as stupid does ".
Now I'd just like to see Benny go for a good long jog around America , might open his eyes up , but then again ........