Copper mines, the hot new commodity

Rio Tinto’s $2.7 billion takeover bid was rejected by copper miner Turquois Hill on Monday evening with the company saying the offer did not fully reflect the fundamental value. Rio Tinto (ASX:RIO) submitted the proposal to acquire full ownership of the Canadian miner for C$34 per share on 14 of March.

The offer was a 32% premium to Turquois Hill’s closing price of C$25.68 per share on 11 March this year. The rejection of Rio’s bid blocks the Australian miner from gaining control over Hill’s Mongolian copper mine Oyu Tolgoi. The mine is expected to be the fourth largest copper mine in the world, with the ability to produce 500,000 metric tonnes of copper per year.

Rio’s rejection comes as BHP Group’s (ASX:BHP) takeover bid for Oz Minerals (ASX:OZL) was declined last Monday. Morningstar equity analyst Jon Mills believes that mining companies are becoming more focused on future-facing metals like copper amid a growing demand for energy transition. Share price at Rio Tinto fell 1.38% on Tuesday's open, recovering by close and ending the week up 3.3%.

Get yourself a man who can do it ALL, like ScoMo

For a man who famously claimed, ‘it’s not my job’, ex-PM Scott Morrison had a couple of jobs. The former Prime Minister was exposed earlier this week, accused of secretly appointing himself to five additional ministries.In addition to being the Prime Minister of Australia, Mr Morrison was also acting as the Minster of Health, Finance, Resources, Home Affairs and Treasurer.

The ex-PM doubled down on his decision in a 2GB radio interview where he said it was ‘the right decision’ to assume the portfolios during the pandemic as a ‘safeguard’. As the scandal unfolded many politicians had their own opinions about the matter.

The previous Home Affairs Minister Karen Andrews, who was unaware she was sharing her role with Morrison, immediately called for his resignation upon hearing the news.

Current prime minister Anthony Albanese called Morrison’s actions an ‘unprecedented thrashing of our democracy.’ Social media has exploded with memes following the scandal, photoshopping Morrison into pictures of various professions ranging from models to truck drivers saying the man can do it all.

Morrison is not shying away from the backlash and has taken it upon himself to comment on many of the memes. For someone as time poor as Mr Morrison after working six jobs it’s amazing that he had time for a holiday in Hawaii. 

scomo

 

Luxury wine, a recession staple

Treasury Wine Estates’ (ASX:TWE) revealed on Thursday that it would be mitigating higher costs by pumping up prices across all product divisions in fiscal 2023. Chief executive Tim Ford declared wine an ‘affordable luxury’ even in an economic downturn and remains confident about future sales.

The Australian winemaker delivered a 5.3% increase in full year profits to investors despite mounting Chinese tariffs. The company’s annual report outlined that it is continuing to ‘expand [it’s] multi-country of origin portfolio and invest more strongly across a range of markets.” And they mean what they say.

Over the last 12 months TWE has increased sales outside of China by 106%. It was only two months ago that Chinese official Wang Webin doubled down on the 2020 sanctions, calling them “legitimate, lawful and beyond reproach,” which led the wine marker to turn the other cheek. Shares are currently trading at $13.42, up 8.5% over the week.

The post-pandemic winner

Underlying profits at Cochlear (ASX:COH) have increased 18% over the fiscal year with sales jumping 10% in the last 12 months. Service revenue at the company also rose over the period by 15% to $503.9 million.

The Australian medical device company has attributed the lift in profits to strong demand for goods and services which were inaccessible during the pandemic. Shares are currently trading at $218.86, 1.7% down since the beginning of the year. In 2020, profits fell to $153.8 million, down 42% from 2019 levels.

The company believes the future will be bright, based on strong consumer demand. Cochlear expects ‘trading conditions to progressively improve across the year, with intermittent COVID-related hospital or region-specific elective surgery restrictions likely to continue.’

Profits slide at AGL

As anticipated, profits at AGL Energy (ASX:AGL) have fallen 58.1% over the year. The drop off in profits was attributed to lower consumer prices, increased costs to cover peak electricity demand and the absence of revenue from the Loy Yang Unit 2 generator which went offline in April this year.

The company also acknowledged that outages, market volatility and consumer switching all played a part in the falling profits. Underlying EBITDA fell 2.7% over the year while total consumer services failed to grow, remaining flat at $4.2 million.

Despite missing expectations, the company believes earnings in FY23 will remain resilient due to its large and diversified consumer base, low-cost strategy, and robust risk management. AGL closed at $7.84 on Friday, down 7.8% since the beginning of the week.

Australian unemployment falls again

Labour force data released Thursday by the Australian Bureau of Statistics shows the unemployment rate falling to 3.4% during July, the lowest level of unemployment in 48 years. The last time unemployment was this low, Australia had just switched road signs from the imperial system to metric. With inflation on the rise and mortgage payments increasing, Australia’s unemployment rate has continued to trend downwards.

What we are watching:

  • Monday: The Star Entertainment Group earnings
  • Wednesday: Coles Group earnings
  • Thursday: US GDP growth rate Q2, Flight Centre earnings, Woolworths earnings
  • Friday: Wesfarmers earnings

One good read:

‘The Godfather’ Insight on What’s Driving Markets