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Live. Good morning, welcome to

Business Today for Network, Business Today for Australia Network, I'm Whitney Fitzsimmons. Coming up -

transport boost,

recommendations of a major

upgrade to Australia's road and

rail links. Flow on effect, oil rise due to supply fears and possibly inflation on the

Libya. And building ties, rise due to supply fears in

Mongolia's searching for

partners to exploit its mineral

wealth. Those stories coming up

shortly but first let's take a

quick look at the markets and

local trade is about to start

the session, we'll have more on

around the region trade was that in a moment but yesterday

around the region trade mixed.

For more on the market action

I'm joined by Benn LeBruyn from

CMC Markets. The local market

likely will open shortly what are we

likely to see? I do expect

we'll get off to a interesting having a look at

the last couple of months when

we haven't hat a lead from we haven't hat a lead from the

US, we've seen big reversal in

fortune from one day to the next. Now we were down next. Now we were down 41

points yesterday, so I'm

saying we're going to cancel

out all of yesterday's losses but looking at our SPY futures,

they were up 3 points. Gold and

oil very strong so that underpin some strength in oil very strong so that will

underpin some strength in our

market but I am expecting a positive start. We've also got a lot of company earnings

coming out as well so we'll keep an eye on those but overall a slightly positive start and start and I think we can of the probably keep that up for most

of the day. Alright, let's stay

in the region now. What should we look out for when trade

kicks off? Well certainly

coming out thick and fast so those company reports are

we'll keep an eye on those. The

Dow futures, of course, US

stocks were on holiday last

night but they're showing down about 70 points at the about 70 points at the moment.

That they be playing a bit of

catch up given the tensions in the Middle East, the Middle East tensions obviously is what

we are going to keep an eye on

if there's any escalation or

any updates during our session. Asian markets as well. any updates during our trading

Now given they performed quite well yesterday

given they had the tightening Now the Chinese stock market

in the rates over there. in the rates over there. So we'll keep an eye on them. They

underpinned a bit of strength yesterday and of course oil as well will be watching

electronic trading prices. Now

as you mentioned the US was

closed overnight so let's turn

to Europe. Trade there seemed

to be pretty lacklustre, was

that due to those tensions in

Libya? Most definitely it was.

They got off to a good start in

Europe but certainly sold off

just with that unrest. There

was some positive economic data

there's but led by financials, coming out of Germany with some

the UK ended up down 1%, Germany down 1.4%, Italy was

the hardest hit with their

strong ties to Libya. And Ben,

just before we go, how's greenback performing against just before we go, how's the

the other majors? The

greenback was certainly

stronger overnight with safe haven and risk aversion funds

heading to the US dollar and certainly stronger against the

pound, the euro and the Aussie

dollar as well. So a little bit of strength there overall for

the US dollar. We'll leave it there, thanks there, thanks for the update.

there, thanks for the update.

Now let's take a closer look

at what's happening with currentlicy s and comod

transport minister Anthony Federal infrastructure and

Albanese will national freight national freight strategy

today. Newspaper reports reveal

it's aimed at lifting export

earnings by increasing transport capacity on

Australia's roads and rail

lines. A draft strategy

suggests the Government will

embark on a major roads and

ports expansion with dedicated

freight roads as well as better access and infrastructure for trucks and trains. Special rail lines

would also be made available

exclusively for cargo to

address the problems caused when urban commuter

trains share rail lines. Rising commodity prices have increased the demand for transportation and highlighted the demand for freight

the existing transport bottle

neck, concerns that have cost

the Australian economy billions

of dollars. Truck traffic is

predicted to jump 50% in the

next 20 years. Rail freight by 90%, air freight 90%, air freight by 110% and

90%, air freight by 110% and

containers a cross the whar ves

by 150 pck. Unrest in Libya has

triggered a rise in oil triggered a rise in oil prices

as violence spreads across the

country. And the country is a major and oil producer major and oil producer for the

European market and the crisis

has sparked instability and inflation fears. London's

benchmark Brent Crude, gained

$2.50 or 3.1% from Friday's

close to more than $105 close to more than $105 a

barrel. While West Texas crude jumped 6.2% or by $4.15 to over $90 a barrel. Some European companies have started to $90 a barrel. Some European oil

evacuate expatriate staff with concerns of spreading across the oil concerns of instability

producing Arab states. BP says it's suspending offshore

exploration operations and is

monitoring the highly volatile situation. We, like everyone,

are watching this very, very

carefully. We have operations

limited, it's the there that have very, very

of exploration, we have some

people there, dependents have

left the country. We remain

committed to doing business there but

everyone, is watching this very everyone, is watching this

carefully. It was very, very

there though. While Libya is early stages for our business

responsible for only 2% of oil

of the European market is production worldwide, its share

around 10%. Oil production

output in the country accounts for

25% of the country's 25% of the country's economic output. So is vital to the Lybian economy. A supply fears saying adequate capacity in the global

market. But the price market. But the price hikes are also likely to add

as I say, really back into inflation, inflation clearly a problem in the issue for the developed aspect to it. But the other way of thinking about

is that rising oil prices,

rising food prices as rising food prices as well are effectively a effectively a tax on consumption if your wages are

not going up to compensate.

That is going to be the story

in parts of the developed world. So I think

terms of the implications for global growth. Libya usually

exports around 1.1 million

barrels of oil a day. And to find out more of this on the price of oil and for a check of for a check of other commodities I'm joined by Jonathan Barret. Welcome to

Business Today. So happening on the commodities front. We've seen these benchmarks rattled by these rattled by these events out of Libya. How important is Libya. How important is Libya

to global supplies? There's a

lot happening out there, in

particular because we also particular because we also had

the US on holidays last night.

So we didn't get a lot of So we didn't get a lot of that liquidity that we normally get in the markets. Is

that from the US crude markets? markets? That's from the US, the West the West Texas contract we had less liquidity as a result less liquidity as a result of

that we saw the price move up

around 4%. So that was quite a important is important is Libya in the scheme of things? Well, scheme of things? Well, they're

about the 11th largest exporter

and what they actually and what they actually export to the West, I guess, can to the West, I guess, can be

picked up by that excess capacity that OPEC own. So capacity that OPEC own. So I guess it's a

you look where Libya situated geographically, when

you look at what they

contribute to the world we're doesn't spread. It's interesting

because there are some out there saying out there saying that, you know, if Libya does descrend into civil war it would be

devastating for the sector, would see oil rise quite

substantially, what's your view

on that? I'm a bit on that? I'm a bit different.

I feel that because - St It

more about more about the psychologist of it?

Egypt, Libya, Oman, Dubai, you can start to get a it is a concern. Remember Egypt and the Egypt and the Suez, 'Melbourne

Age' - major point. If Age' - major point. If the contagion spreads through contagion spreads through to the straits of you have a greater the straits of Houmz I think you have

you have a greater concern. In relation you talk about because we seeing a number of outbreak, heated outbreak, politically driven in these areas, does

OPEC have a role to

I think very much so because at

prices up through or for the

West Texas up to 100, 120 is no

good for any I think OPEC has always said if

the price does happen to get

through to US $100 through to US $100 they're

going to step in and increase that excess capacity. But one

of the interesting things with

crude at the moment is crude at the moment is they're there's the sitting on there's the technical sitting on the

the market and also that the market and also that weight of hot money which we're seeing really becoming really becoming big players in the feel with crude if it takes go just from just from that speculative or that hot that hot money aspect. So as a result of

through to that 92.50 area be quite 92.50 area breaks and it could

be quite sudden. In the near

term where do you see it

heading though? After this year we've it should be contained if not

lower. Remember crude's gone

from $84 a barrel up to $91.50. And saw $91.50. And saw $147 a barrel a couple of years ago. Exactly. Given the economics, the current economics and if current economics and if we discount the Middle East

premium which has been built

in, crude should be about US

$80 to US $75 a barrel but this particular point at the moment

is a concern because as we said

it can spread to the region and that will cause a spike in

crude. If I had to do anything there I would wait until I see what the US does and if $92.50

goes on the Front month that

will give us a clue that prices

will either go higher or will be contained. We've spoken

about the US Middle East and

Libya and those types of

countries around there, if my

understanding is that Libya's, as you said, it's the 11th

largest exporter but it's a major exporter to Europe. Now

if there is continued problems

with supply constraints going

to Europe will Europe look for other countries as other countries as suppliers, say, for example, Russia? They Libya is a little bit more

unique than Egypt because

obviously all the income

basically comes from oil.

you look at the just break out

some of the population

statistic, 36% are unemployed

as well so you have a potential as well so you have a potential

there that could be a major

issue and I think Europe in

order to safeguard her supplies

will look for other areas in

the region. But as I said, I

think it should be contained

relatively soon but if it does move overboard in terms will step

move overboard in terms of

will step in to placate that

supply. Should the market just

be prepared for a protracted period of volatility? Look, I think this is the interesting thing because when it thing because when it all

started we started to talk about this whole new change, this new paradigm in terms of what people expect, particularly out of these

areas. So I think the market

should be expecting more volatility, particularly as each region decides to take its

own control. The end result, I think l be if spread if that oil prices will think l be if it continues to have to go higher because it will be that Middle Eastern

premium which will be put into

the price. Let's move on to another story in the

commodities sector that's gold. It's hit over $1,400 per ounce.

Is that largely driven by Libya

or are there other factors at

play here? I any it's play here? I any it's a

combination. Yes, Libya is a concern. People move to gold. Inflation, people will move to

gold. And I feel that gold. And I feel that because we've got more involvement in

gold via the ETFs we see a natural oh, I can trade this, this and

this I need more exposure via

the ETFs so I will buy more of

that. Just to break in there because we're because we're nearly out of

time but we've also seen this

jump is silver, it's jumped by

3.8% recently x what's driving

that because traditionally it's

gold that's the safe haven and

has the intrinsic value so why

silver? Silver is a great

precious metal because it is

precious but it's also used in

industrial applications. But is it because it because gold is so expensive? It it because gold is expensive? It has one thing to

do with it, yeah, because gold is expensive but also silver's

trading tho those highs not

seen for about 30 years. The only other level we when the Hunt brothers tried to

corner it 1978, 79 when it

reached $50. I feel if anything

silver is playing catch up but

platinum hasn't yet so if

anything platinum is the

underperformer which we might

see pick up soon. And we'll

probably talk to you about that

next time. We'll leave it there nk thank second largest steel maker

OneSteel has posted a increase

in net profit. The result came

in at $126 million for the 6 months in December up from $11

9 million a year earlier. The strong Australian dollar cut

into earnings and margins in

the steel making unit and will

remain under pressure in the second half due second half due to delays in

rising raw material costs and

increased domestic prices. And the chief of OneSteel's rival Bluescope says the company's

$55 million

months shows that the steel

industry in developed economies

is performing near the Bott

boot m of its cycle. Paul

O'Malley says the result was largely driven by a strong Australian dollar and higher

raw material costs which offset

lower demand from the Australian market. It may Australian market. It may be

boom time for iron ore miner boom time for iron ore miner bs u for steel manufacturers times

are tough We've seen a

upward action in volatility in the profit yablts out of the

spending delart 2.5 purchasing those raw spending delart 2.5 billion

a year. Since 2002 that's fold increase in the increase in the cost of coking coal. Bluescope Steel posted a

loss of $clr 55 million for the 6 months to December 2010, a bigger loss than the previous year. One of factors influencing the result is the high Australian dollar. It's obviously makes dollar. It's obviously makes it very tough to compete against imports but from an export perspect ive lower. Very simply at parity if we rr at 80 cents to the US dollar we probably would had a dollar we probably would have closer to $200 million. Bluescope says it's

looking to break into the iron ore market to try to bring down costs but analysts say it's unlikely for another few years. You would expect to see

Bluescope go out and pay top dollar for iron ore asset ats this stage. They would like to

buy something they could integrate operation and control and I think it would be quite hard to get there in the current get there in the current market without paying a without paying a mudge premium. With higher steel

prices forecast, Bluescope expects expects to deliver a break even

result for the second result for the second half of the financial Kerry Stokes has unveiled his $4 billion deal aimed bringing together his media

interests. The new creation to be called Seven West Media will

be the biggest Australian be the biggest Australian media company. It company. It combines the Seven Television Network and its transforming the Perth based publisher into a national player. He didn't do the talking but he's pulling the strings. This combined

company will company will have the scale to do things in Australia that do things in Australia that we weren't able to do before. It

gives us the opportunities take advantage of changes in the technology both here and overseas. It gives West Australian Newspapers or range of new in the Seven Television Network, a Network, a magazine business

and a share of Sky Yahoo!. From a largely single

stream media business WAN will have 4 very meaningful business

streams based across the country. The range of business streams will cover the major

media components of advertising spend in Australia. When you

look at the combination of the businesses businesses we believe that we can achieve $15 million of

synergies in the very near media assets they have quite different assumed efficiency gain of $15

million in the scheme transaction is actually quite small. Peanuts? Yeah,

Seven West Media with a high dividend yield. Part of the complex deal to the various owners

will be a capital raising by include ck a 4 fsh convertible share offer worth

$653 million. And a public offer worth $40 only will West Newspapers shareholders be part

of a group car yig much

debt than they're accustomed

to, $1.6 billion, but they're

also being asked to help reduce it. These businesses if they

generate as much cash flow generate as much cash flow as they should they should the management in

place will look at paying that

debt down before any further acquisitions or growth in confident that they will pay down that Kerry Stokes doesn't look like

standing still for too long. We're talking about

have aspirations of satisfy the ambition s of the people

who work in this industry and I

think it might have - it in the future look a little bit bigger than Australia. Hopefully the ride

won't be too frightening business that's been publishing nothing but nothing but a newspaper for more more than 150 years. Well ECB policy make verse sounded a

fresh warning on inflation as euro zone data show region's economic keep upward pressure on prices. European Central European Central Bank chief economist Jurgen Starc said the bank bank will react quickly to high inflation. It could raise its

main interest rate from 1%, sooner than expect. Activity in the Eurozone's fact r sector grew faster than prices. Inflation across the 17

nation zone is forecast to

increase from the present level

of 2.4% and is tipped to stay

above 2% this above 2% this year. Well Australia's hosting its first

visit by a Mongolian prime

minister with high hopes of

energy deal between the two country. Prime Minister Sukhabbataryn Batbold is hoping

to develop Mongolia's resource

deposit bus there's a long road ahead as the serious labour and equipment ahead as the country suffers shortages and a lack of basic infrastructure. Sukhabbataryn Batbold is focused on continuing to

continuing to build wealth in

Mongolia and he's Mongolia and he's better

positioned to do so than most.

He's Mongolia's richest man and the country's prime

minister. Honoured to speak to

you about Mongolia and our

policy in terms of foreign investment, the opportunities

we think that we could provide to our partners and investors. Mongolia's economy is tiny but fast. And is tiny but it's growing fast. And it has one of the world's best world's best performing share markets. It's growing economic prosperity stems from its

riches in copper and coal and its proximity to resource

hungry China but Mongolia lacks the equipment and technical

know how required to extract

its resources. And that's where Sukhabbataryn Batbold thinks

Australian companies can Australian companies can step in. We, like Australia, in. We, like Australia, also blessed with the abundant natural resources and I think we are lucky countries in that sense and both countries have the same economic

path. Australia is in many way

asnatural partner with Mongolia when it comes to the

development of its resource and energy sector. Australia's

successfully face many of successfully face many of the

challenges that now confront

Mongolia when it comes to

harnessing the value of its minerals an energy deposits. One Australian company already in Mongolia company already in Mongolia is Leighton Holdings. It ep ploys more than 700 staff at various Mongolian coal Mongolia Leighton has an

extraordinary relationship with

the Government and we find that

the Government in their

professionalism, regulatory authorities have shown a

genuine interest in trying to bring the Mongolian resources

to the world market. Other

Australian companies in

Mongolia include Rio Tinto and

Fortescue Metals. It was left

to Fortescue's head of to Fortescue's head of Asian operations to address operations to address the forum

and he made no is credit of and he made no is credit of the urgent need urgent need of improvements to

Mongolia's serious

infrastructure bottle necks. It is only of government support and the provision of large scale rail

infrastructure that we believe that you can expeditiously

exploit these great mines and

resources. And that was a point not lost on Mongolia's Prime Minister. It is difficult Minister. It is difficult and challenging task for Mongolia

but the opportunity and

political will are there. And it remains to be seen if that

political will could also

ultimately result in Mongolia surping Australia as China's

quarry of choice. BP's making a massive direct investment in

India with a $9 billion tie up

with Reliance Industries. UK energy giant will take a 30%

stake in oil and natural gas assets controlled by Reliance Industries. The transaction

will give Reliance, which St -

access to BP's experience in

deep water drilling to expand

production. We are delighted

to partner with BP

partnership will bring in not

just more investment but also

technology that can result in

more oil and gas discoveries, higher recovery rates and

enhanced gas production. This

partnership will help unlock the huge potential of India's

vast but yet unexplored

acreages. For BP the deal

provides an opportunity to enter a market where energy

demand is rising may help it recover demand is rising quickly and it may help it recover from the

disastrous Gulf of Mexico oil

spill last year. Analysts have

welcomed the deal which would

generate up to $20 billion in

revenue. What's touted as world's most luxurious cruise

ship has made a stopover in

Hobart. The Silver Spirit is making its maiden voyage around the world. This the world. This vista greeted the 460 guests on board the ultra luxury cruise ultra luxury cruise ship when

it docked the Hobart. The art

deco inspired liner takes the passenger back to a bygone erasmt each suite has its own butler and 9 butler and 9 different pillow tieps. It boast astheatre, show

lounge, beauty salon and lounge, beauty salon and day spa, gym, resort style casino, library, bar and boutiques. The difference compared to the other ships of the difference compared to other ships of the fleet other ships of the fleet is that we offer more opportunities. 6 of them in fact. Ranging from an fact. Ranging from an outdoor hot rock grill to hot rock grill to the $200 a head in the who hol deas on board the Silver Spirit? The so fist Kate and Kate and they appreciate more

than the fun, they the relax, they appreciate the quiet pace. About 80 of the guests are doing the entire world tight lipped celebrity believed to be a retired

retired American film director

rumoured to be on board. But luxury like this luxury like this comes at a price. To do the 17-day cruise from Auckland to Sydney you will will need at least $10,000. will need at least $10,000. The most expensive could is $67,000. Let's take a look at what's 'Financial Times' business and markets page reports that News Corp is buying Shine Group for $673 million. And the Hong $673 million. And the Hong Kong

business page reports that Every Bright shares to raise capital. I'm Whitney Fitzsimmons, thank joining me, enjoy your day. Closed Captions by CSI

This morning - Libya on the brink - Muammar Gaddafi's

brutal 40-year rule threatened,

reports military jets have

fired on protesters. He has to

get out. Either he get out or out anyway. This Program is Captioned

Live.

Also this morning - the stepmother of slain Australian

girl Zahra Baker charged with

second degree murder. The state

has no credible evidence to suggest that anyone other than

Lisa Baker was involved in the

murder of Zahra Clare Baker. Australian jock pal free Baker. Australian jock pal free

Plan lose s his appeal bull Gare ya. And Australia's