Today's business news in Australia covers a wide range of sectors, showcasing significant activities and developments in mining, rare earth exploration, corporate leadership shifts, remuneration trends, healthcare mergers, energy policy debates, consulting reforms, and financial refinancing deals.
Mining Union Battles BHP Over $1.3 Billion Pay Dispute
The Mining and Energy Union (MEU) has initiated a case against BHP's labour hire firms, a move that could cost the mining giant an additional $1.3 billion annually. On Wednesday, the union filed 10 "same job, same pay" applications aimed at labour hire firms at three major BHP open cut mines in Central Queensland: Goonyella Riverside, Peak Downs, and Saraji.
The applications seek to increase wages for approximately 1,700 workers employed by WorkPac, Chandler McLeod, and BHP’s Operations Services. The proposed pay rise, ranging from $10,000 to $40,000 annually, aims to align their wages with those of directly employed workers. This case will test the Albanese government’s new labour hire laws, involving complex comparisons of skills, rosters, and pay structures, including bonuses.
MEU Queensland President Mitch Hughes criticised BHP's reliance on casual labour hire, describing it as a "rort" undermining wages and job security. "BHP's casual labour hire model has proliferated like a cancer in the coal industry," said Hughes.
BHP estimates the new laws will lead to operational costs equivalent to 5,000 full-time jobs, affecting dividends by an estimated $0.30 per share. This ongoing dispute marks a significant test of the new labour hire laws and their impact on Australia's mining industry.
Brazilian Rare Earths Secures $66M for Expansion
Brazilian Rare Earths has capitalised on its rising share price by securing $66 million from fund managers at $3.30 per share, although this price is a 9.6% discount on the last close, it is more than double its IPO price of $1.47 from six months ago.
The funds will be used for exploration drilling, feasibility studies, environmental work, and potential acquisitions. As of March 31, the company held $26.9 million in cash with a market cap of $811.4 million on the ASX. Canaccord Genuity and Petra Capital managed the placement, which was not underwritten.
The company announced high-grade rare earth mineralisation from exploration at its Pele target earlier this week, likely boosting investor interest. Among notable investors, iron ore magnate Gina Rinehart owns 6.4% of Brazilian Rare Earths, acquired during a $21 million private round before the December 2023 IPO.
The company holds 461 square kilometres of tenements in Brazil and an initial JORC resource of 169 million tonnes at 1526 parts per million total rare earth oxides, estimating its potential in the billions of tonnes.
Chemist Warehouse Poised for Historic Sigma Healthcare Takeover
Chemist Warehouse is on the cusp of a significant $8.8 billion reverse takeover of Sigma Healthcare, pending approval from the competition regulator. A key factor in this potential earnings boost is Chemist Warehouse's thriving advertising division, which constitutes 20% of its sales through retail media strategies.
Retail Media Powerhouse
Founded by Melbourne’s Verrocchi and Gance families, the company owns Strat, an in-house media buying agency managing $130 million in billings. It also operates several promotional channels, including The House of Wellness TV program, a quarterly magazine with News Corp, and a radio show on Nine Entertainment’s network. The potential Sigma merger would expand these capabilities through Sigma’s Amcal and Discount Drug Store brands.
Growing Retail Media Market
Retail media in Australia is valued at $4.3 billion, with major retailers like Coles, Woolworths, Endeavour Group, and Amazon already significant players. Chemist Warehouse's model is highly praised by industry experts, and the merger would further solidify its position in the market.
Catherine West Takes Charge at Nine Entertainment Amidst Crisis
Catherine West has assumed the role of chairwoman at Nine Entertainment, replacing Peter Costello. Nine faces immediate challenges, including a cultural crisis and an uncertain future amidst significant trading multiple drops and industry-wide regulatory battles.
West's extensive career includes 17 years at Rupert Murdoch’s Sky network and her role as deputy chairwoman at Nine since September. Despite recent tensions, her leadership and media law expertise are seen as strong assets for navigating these hurdles.
Nine's challenges include managing regulatory issues over free-to-air sports, looming deals under the News Media Bargaining Code with Meta, and competition with REA Group. Additionally, the future of Nine’s streaming platform, Stan, adds to the complexity of the company's strategy.
Salary Increases Slow as Economy Cools
The surge in salary increases seen during the pandemic has subsided as the economy cools and skills shortages ease. Data from Hays and the Australian Bureau of Statistics (ABS) indicates a dip in wage growth, the first since December 2020.
Employee Expectations Lag
The Hays 2024-25 Salary Guide shows that only 86% of companies plan to raise salaries in the next year, down from previous years. While many employees expect significant pay rises, only a small percentage of employers intend to meet these expectations.
Work-Life Balance Gains Importance
Work-life balance has become the top priority for job seekers, with many preferring hybrid work schedules. Employers and employees alike are adapting to new expectations in the post-pandemic world, with a gradual shift in focus from salary increases to other benefits such as flexibility and work-life balance.
EnergyAustralia CEO Criticises Slow Pace of Labor's Energy Scheme
EnergyAustralia CEO Mark Collette has expressed concerns regarding Labor’s Capacity Investment Scheme, suggesting it may hinder Australia’s renewable energy goals. Collette pointed out the inefficiencies in the current tender approach, which often leads to delays and unviable project selections.
Amidst political commitments and debates on emission targets, Collette advocates for a simpler market signal to boost renewable energy delivery. Despite these concerns, there remains optimism in the sector, with significant investments reinforcing confidence in green energy projects.
Senate to Unveil Consulting Sector Report: Emphasis on Scrutiny, Avoiding Conflicts
The Senate inquiry is set to release its final report on the consulting sector today, focusing on new measures to improve transparency and reduce conflicts of interest. The report is expected to propose increased scrutiny but may not address more structural changes, such as separating the Big Four accounting firms' audit and consulting divisions.
Potential Reforms Still in Play
Historical examples and proposed measures could lead to stricter regulations and increased accountability for the largest consulting firms, aiming to ensure they adhere to the same standards as smaller government suppliers.
Pioneer Credit Secures $300M Refinancing to Boost Growth
Listed debt collector Pioneer Credit has secured a $300 million refinancing deal with Challenger, Nomura, and Revolution Asset Management. This move will see New York’s Fortress Investment Group exit after a 2½ year partnership.
The four-year facility, arranged by Nomura and Lavan’s Perth partner Joseph Abberton, offers a lower interest rate, potentially saving Pioneer Credit between $8 million and $12 million annually. This financing, coupled with a $10 million equity placement, positions Pioneer Credit well for future growth amidst past challenges and a recent turnaround in performance.
