Hi everyone
Whats the feeling in the forum about the closure of the Norwich Park mine out near Dysart QLD by BHP/BMA?
http://www.dailymercury.com.au/story/2012/04/11/bhp-closes-norwich-park-mine/
I would be interested to hear your feedback.
cheers
Hi Key Strategist,
I spoke to a real estate agent today and she said it won't have any impact – bahahahaha. Think she was trying to be positiveCheers
AnneHi,
here is a comment from Terry Ryder regarding the news on Norwich Park mine"It was reported on 12 April 2012 that BHP Billiton planned to close its Norwich Park coal mine at Dysart, which is one of the locations included in the report. If this is true, it will have a major negative impact on the Dysart market. We urge investors to be very cautious about this market until the situation is clarified. The reports also serve to emphasise the risks involved in buying in mining towns."
CheersJust found a survey today in the paper
Poll
Is Moranbah still a property hot spot?
Thank you for voting.
Yes
47%
No
52%
This is not a scientific poll. The results reflect only the opinions of those who chose to participate.
Interesting Result – not sure when it started though
Unconfirmed rumour that BMA signed off its EA today.There is 3 day forced BMA mines closure at present with miners on full pay for mine maintenance. The plot thickens…happily!
The statement by BHP that the mine had been losing money "for several months" is an inadequate justification for closing a mine in a region that has just gone through a wet season which included severe floods, When you also consider the fact that the strikes at BMA mines would have recently impacted negatively on bottom lines, a much longer term analysis than "several months" would be required before there could be any true justification for this closure.
Perhaps the true reason is a combination of stopping (temporarily?) short-term losses and playing a card to scare the striking miners?I just read the below article in the Mackay newspaper. In it the BHP spokesman mentions that the Norwich Park mine has "vast resources". At a time when several companies are planning to build their own export terminals, railroads and even towns in the Galilee Basin in order to access inferior grade coal, this closure seems to defy explanation. Adani have already purchased terminal facilities at Abbot Point and land in the Galilee Basin, plan a rail line of their own, expansions to export terminals, have sought approval from the Fed government to bring in overseas workers, and plan to put the coal on their own ships to transport to India.. There are even apparently well advanced plans to build a rail to link the coalfields in the Bowen and Galilee Basins with the iron ore regions in W.A. Why can't BMA make Norwich Park viable?
In the comments from locals below the article (I love reading these) there is mention of Norwich Park being closed "quite a few times" in the past by BMA as a "sacrificial lamb".
My personal opinion is that the timing of this closure with the current strikes underway and the influence BMA is exerting on Moranbah is more than a coincidence. It is already apparent from reading the comments by locals that BMA has succeeded in creating a deep division in local opinion regarding the strikes. These strikes by the miners have been supported by an overwhelming majority, nearly 100% of miners voting to hold them. Some of the issues involve safety, and the insistence of BMA that the union should no longer have the right to carry out independent inspections of safety standards at BMA sites. BMA insists that their own employees should perform these inspections. Right, so the miners should accept that BMA can pay somebody to tell them they're safe in an extremely high risk environment. BMA has been inflexible on these issues. The strikes are costing them millions. So Norwich Park, with it's "vast resources", gets closed. Hardball.
The combined events have considerable implications and ramifications for investors in the area. It seems we are seeing, and some of us personally experienceing, the downside potential of investing in mining towns, particularly those where any one mining company has the ability to wield such overwhelming influence on the community.Tony
http://www.dailymercury.com.au/story/2012/04/12/dysarts-hammer-blow/
These are only my thoughts on the subject.
After reading all the posts, it seems this may happen in most, if not all new mining projects.
These companies are very astute as we know, so to close a mine due to it not being viable, it would seem that:-
a) They have not done their homework, not likely, how many millions are poored into a feasibility studies
b) An oppertunity to flush out the deadwood, they have just signed a new Enterpise Agreement, rehire those they want
c) Possibly slow down the community economy, the mine company likes to be in control.
d) Reduce house and land price and then buy them, then ballot them out to the workforce (Pilbra)
e) Unions have too much control over what happens on site. (point b)Safety as being part of the reason for the closure seems far fetched (I am a safety advisor in the mining industry) BHP are one of the leaders in this area.
Understand I know nothing about the area, I would think that they will be back once things settle down, what this means for the investor will be interesting to follow so please keep this post going.
I am thinking of investing for the first time, in a town 40km from a mine that is still under construction.
Good luck it seems risk is proportinal to reward but don't be slow to repond.
Hi there
I am a new member to this site – but was very interested in getting in touch with other mining town investors.We have property in Moranbah, Blackwater and Dysart, as well as a new build in Rural View (Mackay).
We wanted good yield as I am now a SAHM and needed an income. For M and B we have seen good capital growth – which will be a bonus if it holds until when we sell.
We bought Moranbah 2 years ago and have a great company tenant. We only increased their rent by cpi this year even though friends who also bought in M hiked it right up. I hope that we get some goodwill from the tenant for that.
We have a good company tenant in Blackwater as well with a 2 year lease expiring August 13 so that gives me comfort.
Dysart is looking a bit dodgy now that Norwich Park is closed. BUT we have a good company tenant at a great rent until April next year, so if the value drops in short term, I just hope that when we come to sell in a few years that the price will be back to what we bought it for.
Mackay is a build – not sure if I like that frankly – too much out of my control. Won't do that again. But I think we should see some capital gain, even though it is a negative gear (don't much like that! don't like losing money even if we pay less tax – still losing money!)
We are about to buy a Woolloongabba property in our super fund – a real capital growth investment – 20 year hold. Any advice on this would be much appreciated.
It is nice to have somewhere to discuss these issues – if anyone has any thoughts comments, or would like to discuss chat with me personally please pm me.
Cheers
jadatom05Hi Tiger14
It was not my intention to imply that I thought safety was an issue in the closure of the mine, merely that it is an issue in the strikes, which i understand are affecting the operation of 7 BMA mines in the region. The miners feel strongly about the safety issues involved in the negotiations, which increases their solidarity in opposition to BMA. It would be illegal to sack the striking miners, and of course counter productive, as the company needs them. There's nothing like job losses and the perceived threat of further losses to make employees toe the line. The cumulative impact of the strikes on profits at seven mines might give BHP cause to close Norwich Park. The explanation by the company that the mine has been loseing money for several months seems a bit thin under the circumstances.
moxi10 wrote:The explanation by the company that the mine has been loseing money for several months seems a bit thin under the circumstances.Not really. Management at BHP aren’t rocket scientists by any stretch of the imagination. Having worked as subby within their systems they’re their own worst enemy. Their break even price for commodities just keeps on rising. Add to that external cost pressures and many mines let alone proposed projects are being reassessed.
BHP is under mounting pressure to get it’s profit margin up and return better profits to shareholders/investors. There’s a big rethink going on within BHP as shareholders/investors pressure for shorter time frames for ROI instead of their customary long view when planning future acquisitions and expansions.
My gut feeling is that mining town investors are in for a bumpy ride over the next few years with more than a few loosing their shirts on the process.
The Freckle
Hi all,
With regards to investing in mining towns there are a couple of key considerations that should have you minimizing the risks and maximize your returns, maybe providing some clarity for “have I invested in the right place”:
1. Consider your investment property timeline. For the single resourced, single company type areas, your risk is higher so your exit strategy should be sooner. Try get in early to maximize your gain and don’t be too greedy. If the research shows you have missed the boat, don’t enter and help someone before you realize their gains.
2. Understand a mining town without tourism or other local industries feeding the demand for residents and employment within the town have a limited life beyond the mining effect and its property cycle.
3. Try to invest in mining areas with more than one resource being mined or processed. This can shield you from global price fluctuations and economic changes from countries being supplied one resource over another.
4. Try to invest in mining areas with more than one company committed to mining or processing the resource. This can shield you from the financial stability of one company over another, and governmental changes in policy or union movements effecting one company over another as we have seen happening in Dysart and Moranbah.
5. Understand an area nearby new mining project infrastructure commitment will have the least positive effect on the local area market compared with the actual area of mining investment.
6. Additionally to point 5, the area nearby a town with the new project commitments will have the effect diminish sooner than the actual area of mining investment.There are areas you can invest in that tick all of the above points, and some areas tick some of the above points. Remembering there is no perfect investment location, but only a current location that the research and statistics today show might return better than average performances over time.
The fact you all are in this forum shows a level of desire conducive to a better life over those reading what is happening in the life of The Kardashians for example.
Happy investing.
Hi Everyone
The last 3 days has been interesting to observe – All the Doom and Gloom about the Norwich Park Mine closure has been all over the Media yet the announcement made by Anglo American Coal to Double its mine size in Moranbah on the same day has gone virtually unnoticed an as had almost NO press.
The same goes for all the conversations in a number of the threads and posts in the forum
Yes, the mine closure is a setback and for those that got caught in the buying Frenzy over the last 6 months or so they will pay a price (shortterm I believe) but lets remember that there are Four new mines open/opening, 8 existing mines are getting expanded, 36 new mines and 13 mine expansions are being considered…and ONE closes. Hardly a disaster for the region for either Dysart or Moranbah.
Freckle wrote:moxi10 wrote:The explanation by the company that the mine has been loseing money for several months seems a bit thin under the circumstances.Freckle wrote "Not really. Management at BHP aren't rocket scientists by any stretch of the imagination. Having worked as subby within their systems they're their own worst enemy."
When you worked as a sub contract cleaner for BHP 10-20-30? years ago you gained some wonderful insights one day while cleaning the boardroom floor. You discovered that management were all incompetent and inept at performing their jobs. You realized with crystal clarity that investing in anything they were involved in would certainly result in you loosing your shirt. So you've no doubt followed your own advice and stood by on the sidelines ever since, warning others about the folly of investing in anything BHP touched. Over the years, through a process of evolution, you've expanded and broadened your lack of investment strategy to include all other mining companies, and then Australia's entire residential housing market. The success of your strategy is visible in the pathetic position in which BHP finds itself today.
Freckle wrote "BHP is under mounting pressure to get it's profit margin up and return better profits to shareholders/investors. There's a big rethink going on within BHP as shareholders/investors pressure for shorter time frames for ROI instead of their customary long view when planning future acquisitions and expansions"
With over $200 billion dollars worth of projects currently underway in the Surat and Bowen Basins, the closure of one mine at a time when strikes and floods have had a major impact on production results, should be looked at in the context of the broader picture. As I have pointed out in my previous posts, I believe a major factor in BHP's decision to close this mine has been a strategic decision to put pressure on the striking workforce. It's also possible that they have considered that there are not enough skilled workers to meet the demands at their other (more profitable?) expanding mines in the surrounding region. A combination of forced transfers and sending a message to the CFMEU and striking workers may have seemed like an attractive option. I don't believe this decision reflects on the financial viability of their other mines, or those of other companies in the region, to continue operating
Freckle wrote "My gut feeling is that mining town investors are in for a bumpy ride over the next few years with more than a few loosing their shirts on the process".
The Freckle
Certainly the ride will be bumpy, and some of us probably will lose our shirts, especially when the ride ends. But the most certain to lose, and the most losers, will be those who stood by, too frightened to take the risk of getting off the sideline.
The closure of Norwich park does not herald the end of the road. It's just a bump.
Cheers
TonyKeyStrategies wrote:Hi EveryoneThe last 3 days has been interesting to observe – All the Doom and Gloom about the Norwich Park Mine closure has been all over the Media yet the announcement made by Anglo American Coal to Double its mine size in Moranbah on the same day has gone virtually unnoticed an as had almost NO press.
The same goes for all the conversations in a number of the threads and posts in the forum
Yes, the mine closure is a setback and for those that got caught in the buying Frenzy over the last 6 months or so they will pay a price (shortterm I believe) but lets remember that there are Four new mines open/opening, 8 existing mines are getting expanded, 36 new mines and 13 mine expansions are being considered…and ONE closes. Hardly a disaster for the region for either Dysart or Moranbah.
Good point and especially for those with company leases in Dysart, don't go jumping ship just yet. Ride out the lease and you might find things turn around. Investing is all about the highs and lows, you just have to be patient sometimes.
"Coincidentally" the latest advertising campaign by the mines against excessive government taxes adding to the oppressive burden of costs associated with operating mines in Australia resulted in full page ads in The Australian one page away from articles about Norwich Park being closed. BHP Strategy…. leave some coal in the ground temporarily at Norwich Park=money in the bank. Force some employees to transfer to other short-staffed company mines= break the spirit of the strikers. Park and transfer machinery to other sites where it's needed, shut the mine temporarily, initiate new advertising scare campaign= leverage against more taxes, supply Coalition with additional ammunition to use against Labor government, fool the populace into being more supportive of big miners, and further dampen the local over-heated housing market. None of this costs BHP much, and they stand to benefit from it in several ways.
The good thing about this from a property investor's viewpoint is that none of it really alters the fact that coal is booming, mining is booming, the Surat Basin is booming, and there is a shortage of accomadation there.Other than some fortunate posters who continually kick winners and either meet or exceed their investment objectives most investors hit choppy waters at various from time to time. All the planning and due diligence under the sun seems to pale when things go south. Hopefully it wont wipe you out and you can either have a dignified exit or ride it out until things improve, which they normally do. Most would not have predicted BMA pull out nor the concreted action in Moranbah and I can empathise with anyone that has been affected by these events. Although I expect that you will be okay if you can ride it out in the short term.
Having said all of that, none of us are entitled to expect any company not to do anything that is not in the best interests of that company. Companies can change plans, they don’t need to justify it to anyone other than shareholders, the board and employees. Productivity is a major problem right now and the trade union movement are not helping the situation. When a company decides to do something that catches people out by surprise then we all just have to accept it, easier said than done for the majority that wont be affected but that’s the way it is.
As for the doomsters claims for coal and iron ore (sticking with minerals) supply falling off a cliff, I just cant see that happening. China has along way to go on this one and there are other markets increasing demand and then there is India. Yes. other supply sources have came on line during the recent price peaks but all this means is that prices come down but supply must at least remain constant to feed the increasing demand.
There is an interesting article on mining towns and the recent Dysart situation on the link below. According to that article it aint so bad after all.
Mine closure expected to bring down rents and prices in Dysart, Queensland: Agents
JT7 wrote:schmoo wrote:Has anyone bought recently in Emerald? How are the bank valuations going there when it comes to getting finance? Are they valuing the houses much lower like they were in more high risk areas like Moranbah?Hi Schmoo,
I’ve got a couple in Emerald including one purchased recently and had no problems with finance and the banks at all………..
Jack
hey JT7 what financial institution did u finance through for your emerald property and what was your LVR? did you have a few to choose from for emerald?
thanks
St George and most recent through Fastlend – The loan product is ‘Performance Plus’. Both at 90% LVR.
Richard Taylor @ Taylored Financial Solutions is my MB. He is superb. My wife and I call him ‘Magic Man.’
Richard is also a regular contributor on this forum.
Jack
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