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Lateline Business -

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(generated from captions) development. It gives all of

us on the edge with genetic

problems trying to do things people haven't done before, a

lot of hope. In the past, some

claims of successful cloning

experiments have turned out to

be false. So to verify this

asked Melbourne's Monash latest work, the US researchers

University to verify the

results. Our role was to

validate the claims that stem

cells had been derived in a

primate model. The research

will again raise questions

about how far away human

cloning is. The team behind

the breakthrough say their work

shows it's possible in

principle to clone human

embryos and to harvest human

stem cells. They recognise the

deep political and ethical considerations but say they're

confident they'll be

overcome. If we prove that

these embryonic stem cells have

great potential in curing many,

many diseases and they think

the society will accept this as

a medical treatment. But for

now there are many people who

are opposed, including the US

President, who is repeatedly

blocked legislation that would

research. This bill would expand funding of such

support the taking of innocent

human life in the hope of

finding medical benefits for

others. It crosses a moral

boundary that our decent

society needs to respect, so I

vetoed it. Cardinal George Pell

is also strongly against human

embryonic stem cell research.

He says the Catholic Church

teaches that distructive

experimentation on embryonic

human beings - cloned or

otherwise - is an intrinsically

evil act. The head of Victoria's Police Union has

been suspended from the force

following his testimony at a

police integrity hearing.

Senior Sergeant Paul Mullett

has been on secondment to the

Police Association filling the

powerful secretary's position.

Today he finished giving

evidence to the anti-corruption

inquiry. He's accused of

inappropriately passing on

confidential information. Late

today the Police Commissioner

Christine Nixon suspended

him. I have done this with some

regret, but I believe it's an

appropriate step to take. I

believe that I have suspended

Mr Mullett for the appropriate

reasons. It'll be very

difficult for us to work

together in the future. The OPI

says Mr Mullett was part of a

chain of information that

compromised an investigation

into alleged police links to a

murder in 2003. Paul Mullett

says he's offended by the

allegation and denies it.

Well, an international study of

power stations shows that

Australia's are the worst

polluter. On a per capita

basis they pump out more carbon

dioxide than any others in the

world. As Sarah Clarke

reports, the worst of the worst

are in the NSW Hunter Valley.

A point highlighted this

morning by Greenpeace. At dawn

today, Greenpeace protesters

climbed the Munmorah Power

Plant on the Central Coast of

NSW. After change themselves

to machinery and painting a

slogan on the roof all 15 were

arrested charged with

trespassing. It's a security

risk, there are huge

implications for persons

trespassing within power

stations. The coal-fired power

station was temporarily shut

down. And this is the kind of

coal-fired power station that

we need to be shutting down

first in order to reduce CO2

emissions. Their protest was

timely. A new report by a

Washington think-tank ranks Australia's power companies as

the world's worst polluters per

capita. After studying 50,000

plants, it fond Australia

generates 11 tonnes of

emissions per person every

year. Eraring in Bayswater in

NSW made the top 100 list.

Labor says it plans to do its

bit. 20% by 2020 that's our way

of the future. Mr Howard's

response to any increase

renewable energy target in the

past would be the sky would

fall in. The Prime Minister

blames NSW. Who runs the power

station? The world's biggest

scientific body will release

its final climate report this

weekend warning urgent action

is needed in the next 5-10

years. Scientists here say

that message is already out of

date. The panel's modelling

finished last year and

pollution levels are rising

faster and Arctic ice is

melting more rapidly than the

worst-case scenarios. OPCC was

giving some fairly serious

messages but, in fact, the last

six months has suggested they

may need to be taken a little

bit more seriously. That's a

message it's hoped both sides

of politics will heed.

That's all from us. If you'd

like to look back at tonight's

interview with Farzana Shaikh

or review Lateline's stories or

transcripts you can visit our

website. Virginia Trioli will

be in this chair tomorrow.

I'll see you on Monday. For

now here's 'Lateline Business'

with Emma Alberici.

Thanks very much, Tony.

Tonight - the market hones in

on resource stocks as Fortescue

announces a one billion tonne

iron ore foond. It's a very

significant discovery for

Fortescue. It clearly sets us

on the next leg of our

journey. Shoring up the

defences - Andrew Michelmore

takes the top job at Zinifex as

rumours of a takeover bid puts

a rocket under that share

price. And Woodside Petroleum

boss Don Voelte calls on both

sides of politics to relax

immigration laws to help

address the country's skills

shortage. I think that the rest

of the world, or at least a

portion of the rest of the

world are willing to trade pro

professions and jobs more

freely than what maybe some of

the immigration laws here

allow.

But first to the markets, and

after two consecutive sessions

in the black, Australian shares

were unable to hold onto those

gains today. Following an

afternoon selloff the All Ords

fell 56 points dragged down by

falls in Woodside Petroleum and

banking stocks. The ASX200

shed 1%. The index is up 15%

since the start of the year.

In Japan, falls in export

stocks saw the Nikkei tumble

just over 100 points. After

yesterday's big gains, Hong

Kong's Hang Seng dropped 1.5%

and in London the FTSE 100 is

also lower. Western Australian

iron ore prospect or Fortescue

Mining says it's confident of a

big discovery in the north-west

of the State. The mining

hopeful says it has found an

estimated one billion tonnes of

iron ore in the Pilbara region.

Shares in the company

skyrocketed after the

announcement even though it has

yet to produce or export even

one ounce of iron ore. Sue

Lannin reports. Iron ore is

the gold that Fortescue Mining

is depending upon for its

future. If confirmed, this new

discovery in the Pilbara could

increase Fortescue's reserves

by around 40% to up to two

billion tonnes of iron ore.

And it could push chief executive Andrew Forrest up the

ranks of Australia's richest

man. It clearly sets us on the

next leg of our journey where

we have an opportunity to start

to prove up a new resource

which will lead us towards

increasing and expanding our

ore sales towards 200 billion

tonnes. The new deposit is

estimated to hold more than one

billion tonnes of iron ore.

But at this stage the discovery

is still an inferred resource,

which means more testing and

exploration needs to be done

before reserves are proven. We

could have a reserve as high as

another 800 million tonnes.

Until we do additional drilling

we can't make that definition

at this stage. This is going

to need further work, but the

importance of this is that it

supports the company's very

aggressive expansion plans. The

company plans to start shipping

iron ore to China in May next

year, once their Indian Ocean

port facility and rail line to

their major tenements are

completed. But the nearly $4

billion project has been beset

by delays. There's no doubt

that we have challenges in

front of us, but we've already

taken those into account in

setting this new date. We have

also addressed the additional

funds and we have those funds

available and we see no reason

now why we shouldn't meet that

target of 15 May. I think the

market is quite confident now,

including ourselves, that the

company can meet its start-up

ambitions. It's spoken about

second quarter next year and I

don't see any reason why it

can't do that. I think it's

got a good handle on all the

infrastructure

issues. Fortescue Metals

executive director Graeme

Rowley says more discoveries

are expected in its Soloman

project, the area where the

fine -- find was made.

The company is the best performing share on the Stock

Exchange this year, even though

it's yet to ship any iron ore

out of the country. There's a

lot of expectation built into

the share price. At the same

time, there's still a lot of

sceptics around. The company

has tremendous production

ambitions and it really will be

a matter of the company for the

market seeing whether the

company can actually meet those

ambitions. Fortescue hopes to

take on BHP Billiton and Rio

Tinto in the race to export

iron ore to major customers

such as China. Fortescue was

just one of the stories in the

resources sector today, with

Zinifex climbing nearly 12% on

fresh takeover talk. The zinc

miner says it hasn't been

approached, but there's renewed

speculation that rival Oxiana

preparing a hostile bid. It

came on the same day that

Zinifex announced its new chief

executive will be former WMC boss, Andrew Michelmore. And

there was more intrigue in BHP

Billiton's bid for Rio Tinto,

with UBS confirming it's built

a 5% stake in Rio. Neal

Woolrich reports. It could be

a $7 billion gamble by the

world's biggest hedge fund but

analysts say that UBS's

nominees 5% stake in Rio Tinto

is a sure bet. I think UBS have

been incredibly strategic, came

out this morning put on the

ASXThey've taken a hold in Rio

of 5% and I think they thought there may be more positioning

in the Rio deal, so not

believing it's over and there's

further bids. Many are tipping

they could pay $160 to $180 per

share for Rio. Carlo Caiani

says the price could go as high

as $200. We're looking at $180

per share, synergies at least

$3-4 billion in operating cost

and you've got capital

investment expansion synergies,

total another $20. The world's

biggest iron ore producer

Brazil CVRD is not worried

about the prospect of a merger

between BHP and Rio, but Carlo

Caiani says the Chinese and

Japanese steelmakers should be

and ought to take a blocking

stake in Rio. They would be

foolhardy to let this happen.

They know if BHP Billiton and

Rio Tinto merge we're looking

at upward pressure of anything

from 50-100% increase in iron

ore prices even if there is

kind of oversupply. He argues

that the commodity cycle has

peaked with inventories already

rising, so BHP's bid is

high-risk. But market

commentator Marcus Padley says

some investors are

underestimating the length of

the commodity boom. Things are

going to remain particularly in

the iron ore market strong for

not 18 months or two years,

which is how far analysts tend

to look ahead for forecasts but

for a decade. They're talking

about iron ore remaining a

tight market until 2015 and

possibly beyond. That sentiment

as sent investors rushing for a

takeover target. Today, it was

the turn of Zinifex whose

shares jumped 12% on rumours

that Oxiana's managing director

was preparing a four for one

share offer. It's taken that

long for the market to figure

out that may be happening.

Both have denied it and now

it's up to someone to actually

put their hand up and say

whether it's on or not. Today's

surge reverses a recent slide

which saw Zinifex shares drop

by a third from their peak in

July because of falling zinc

prices and the high Australian

dollar. They are, of course,

going to see stories about

takeovers which are going to

bounce them fairly easily

because stories will be easily

believed from this sort of, in

this sort of market especially

after that price drop. While

Zinifex's future ownership

remains clouded its management

has received some stability,

with Andrew Michelmore

appointed as CEO ending a

7-month search. The industry

veteran spent final months at

WMC Resources fending off

Xstrata before succumbing to

BHP's offer. Let's look at

what's happening elsewhere in

the world. I'm joined from

London by Jamie Chisholm deputy

markets editor with the

'Financial Times'. Welcome to

the program. It's about midday

there and the market's already

off 0.5%, what's driving the

selling? Well, it's quite

surprising actually because

initially the FTSE 100 was up

on the back of a statement by

Barclays the UK bank. They put

out a statement late into their

exposure to US subprime

mortgages. They announced a

$1.3 billion write-down.

That's shocking, but actually

people have been concerned.

There's been rumours around the

market the write-down might be

$5 billion. Last Friday the

shares in Barclay, a large bank

fell by #9d% in the matter of

half an hour or so. Barclays

brought forward a statement

saying look, this is exactly

what the situation is, we're

now telling you what's going on

and initially the market went

up. It just shows how worried

people still are. They gained

6% Barclays today and they've lost that again now and they're

basically flat. The reason the

market's down just to sum up is

because people are worried

about credit market

exposure. Given the extent of

the losses we saw from Merrill

Lynch and Citigroup, the losses

from Barclays seem

benign? Yeah, they do seem

fairly benign. Barclay's

shares are down about 40% from

their peak this year. 40% for

a bank of that size is a lot.

As I say, they dropped further

at the end of last week. These

are fairly benign. They can

absorb it clearly and

interestingly Barclay's did say

the rest of the business is

going along quite well.

However, they also said that

they recognise things might not

get better and the credit

market system might not become

less fluid for quite a while

yet. There are still worries

out there. Further to this

subprime crisis, quite a

curious development in the last

24 hours with the rate of home

loan applications in America

actually jumping to a 1-year

high. Now that seems extraordinary given the state

of the housing sector. Is this

an indication perhaps that

people are now trying to pick

the bottom of the market? Well,

it may well be that. We need

to remember those figures are

on a weekly basis. So we

perhaps can't read too much

into them. But it's a positive

sign. Let's not quibble about

that. The US market didn't

seem particularly excited by it

yesterday. The Dow finished

down 70 points I believe and

fell sharply at the enas did

the ASXOver with you today. We

seem to have late selloffs

which is a sign of skittishness

still. But as far as the home

mortgages market in the US is

concerned, at some stage people

are going to start going in and buying houses again, because

earnings are still OK in the

US, it's not a problem in that

regard. And now some key US

inflation data due out in the

next few hours. What's the

market expecting and how do you

expect that to then play out on

Wall Street? OK, well the

forecasts are for a minimal

rise in inflation. If it's any

greater than that the market

could be spooked. There's a

very clear reason why that

might be the case. Everyone is

still hoping and believing that

the Federal Reserve if needed

can reduce interest rates to

help the market, but however if

inflation is picking up they

might not have the capacity to

do that and, of course, that

could make equities tumble

begun. We'll have to wait and

see what the figures are. Jamie Chisholm, thank you very much

for your time. Thank you. Back

home, and on our market today,

direct mailing company Salm at suffered the day's biggest

loss.

Channel 7 boss David Leckie

has blasted the Federal Government's television

policies, which he says are

holding his company back. Mr

Leckie spoke out after Seven's

annual general meeting, which

unlike many other AGMs this

year saw shareholders strongly

support management and the

board. Dana Robertson reports.

It's been another

record-breaking year for the

Seven Network reflected in the

26% increase in its share

price, which is why chief

executive David Leckie could

indulge himself on the

weightier issues in life. Where

are the Chaser's? Aren't they

asking for their lawyers? It

wasn't only the ABC Mr Leckie

had in his sights. Government

rules which allow pay-TV

operators as many channels as

they want but restrict

free-to-air television, also

came under attack. The whole

point of this whole thing is

that 9 o% of Australians watch

free-to-air every night, 90%.

We produce 75% of all

production in this country and

the Government continues not to

give us an even

give us an even chance. Limited

multi-chanelling on free-to-air

will be allowed from 1 January,

2009 followed by full

multi-chanelling when the

analog system is turned off on

a date to be determined. Seven

has been a strong supporter of

multi-chanelling and this media

analyst says there are good

reasons why and they're about

ratings and revenue. In a

multi-chanelling environment a

gain of 45 or 50. And the

reason for that, according to

Roger Colm an is that Seven has

been the biggest investor in

Australian content over the

years, which means its library

will give it ready-made content

for rebroadcast in a

multichannel environment. Last

time we looked, which was a

decade to 2004 on the ACMA data

Channel 7 have spent $2.8

billion versus Channel Nine

$2.2 billion and Channel Ten

only $800 million. There was

one shareholder question and it

wasn't about the company's

humiliating and costly loss of

the C 7 case earlier this year.

Even the remuneration report

received 93% shareholder

approval prompting chairman

Kerry Stokes to comment that

Seven doesn't have the problems

that other companies - a fs

reference to Telstra's AGM last

week. Seven last month paid

$127 million for wireless

Internet provider Unwired and

is forming a partnership with

Tivo. Kerry Stokes says it's

part of his plan to keep Seven

up-to-date with changing

technology. I'm just determined

that Seven should be determined

and it should have an

opportunity to participate

across a broader range of

delivery platforms. That's our

ambitions. Despite already

spending around $100 million on

the C 7 case, Mr Stokes

reaffirmed his determination to

go ahead with an appeal.

Wesfarmers says it will set up

a special fund to remunerate a

high-paying executive to head

up the newly-acquired

supermarket chain Coles.

Wesfarmers has paid almost $20

billion for Coles and will

officially take control of it next Friday. It's looking to

the UK and to the US to recruit

a high-profile executive to

turn around the underperforming

food and liquor division. The

company told shareholders at

its annual general meeting in

Perth a pool of funds would be

set aside for significant bonus

payments to expectives. We need

internationally experienced and

best practice expectives in

this business, particularly in

the leadership role and to get

it we're going to have to

provide an incentive. Richard

Goyder expected shareholders to

be happy to reward those

expectives who perform. On a

day when others in the

resources sector were lighting

up the market, Woodside

Petroleum stood out for all the

wrong reasons. The oil and gas

giant slashed its 2008

production forecast by around

20% and was punished

accordingly. Woodside also

told investors not to expect

any growth in output in 2009 or

2010. Still, there is considerable promise from this

company which expects demand

for Liquefied Natural Gas to

outstrip supply at least until

2015. I caught up with chief

executive and managing director

Don Voelte a little earlier

this evening. Don Voelte,

welcome to Lateline Business.

Now you've failed to meet

production targets for the last

two years and the market has

punished you today. What went

wrong? Well, I don't think

anything's going wrong.

Basically we are in

extraordinary times.

Contractors, equipment,

availability of services, all

lag a little bit. I think

internally we've taken a really

hard look at how we forecast

production. Our ongoing

operations we usually get

spot-on target. Of course

acquisition die vestments this

year we had a couple of die

vestments that came off the

top. Where we probably are a

little bit too overoptimistic

and where we've had to revise

simulation run social security

where we ramp up new projects.

Frankly we're lucky as a

company, we get a lot of new

projects we take a little bit

more time to stabilise

production. Because of this we

have the short spurts of

production that doesn't quite

meet the targets that we had

set. Costs and labour shortages

are often given as the

explanation, but it's not like

you couldn't have envisaged

those, is it? Well, I'm not

sure anybody could envisage

exactly what's going on in this

country right now, what's going

on in this industry. This

nearly $100 oil, this LNG

market that we face today,

where everybody wants it and

there's not enough product to

go around and then you add the

miners and what the miners are

doing especially in Western

Australia, these are

extraordinary times and even

the best estimates of

escalation and increase in cost

and in shortages of labour, I'm

not sure any of us are getting

it right. Are you encouraged by

the emphasis both sides of

politics are putting on

addressing the skills

shortage? I think they're both

addressing it. I'm not sure if

the proposals they've set

forward are going to do enough,

to be quite honest with you. I

think the serious labour

shortage problem that we have

in the country to do what we

need to get done in this

country, the promises may not

be enough. There may be more

issues around immigration and

other things temporarily as it

may be that may have to be considered by whoever,

whichever side of politics wins

this coming election. You know

it's a situation where it's extraordinary times for Australia. I guess the

question has to become, is do

we want to do all this or not

as a country? And then we have

to decide that if we do want to

do all this how we best address

it? I think it's going to take

more than what's on the table right now that has been offered

up. We're ready to work. It's

not just Woodside. I think

we've talked enough to my peers

and mining companies and other

ENP companies and we come out

to the same place. What is

needed then? I think that the

rest of the world or at least a

portion of the rest of the

world are willing to trade

professions and jobs a lot more

freely than maybe what some of

the immigration laws here

allow. I think some of the

issues around the unions are

issues that have to be

addressed and talked to. It

all gets down to a common

communication among the

different parties and calm,

rational thinking through these

issues. So Kevin Rudd's

education revolution and John

Howard's technical colleges are

not quite the answers you're

looking for? Without

denigrating those two, because

those two are important, as a

foundation, as education, trade

schools, the industry working

harder at retaining people and

making it a good place to work,

and I think we're working on

that very hard. Yes, I think

there are other aspects that

can be looked at. Some of them

might be a bit too far, maybe a

little bit too much too soon.

But at least we have to discuss

that and explore those

issues. What sort of things?

What do you mean? It's not

readily apparent to most people? Things like relaxation

on 457 visas, the amount of

time a worker can be in the

country with a certain set of

skills and allowed to work on

projects or construction

projects versus being moved

back out of the country. The

amount of sponsorship that

companies can give. Clearly

this has to be discussed to

make sure that there is not a

negative impact to the

Australian worker on wages or on amount of work hours that

they want to work, things like that. In your presentation

today you mentioned a number of

countries you're already

drilling in and then possibly

Brazil? We've had a certain

farming arrangement in Brazil.

It's a set of deep water blocks. It's something that's

very early on right now. It's

a very high-risk exploration at

this point. We're shooting

seismic. We'll know a lot more

about that potential down the

road, maybe 12 months than what

we know right now. But I would

put that on a definitely

high-risk, high wild cat

area. If we can just come back

to Australia and the Pluto

project, is it fair to say that

that is now the jewel in the

Woodside crown? No, North West

Shelf is. Of course, but you

don't own 100% of the North

West Shelf? We certainly don't,

but we own enough of the North

West Shelf and it's such a huge

project, it's the heart and

soul of the company. It pays for basically everything at

this point. We think Pluto

will join that as a crown jewel

I guess you'd call it. Things

are going along quite well at

Pluto right now. The cost and

the schedule still looks very

good for us. We have an awful

lot of that project now

contracted. So your question

is basically right. I just

don't want to forget about what

really made our company and

that was our one sixth interest

in the North West Shelf. But

you are right in the respect

that Pluto is a lot bigger

equity interest for us. A

smaller field, bigger interest,

so basically it's a multiple

for us. And that's why we get

some of these high P to E

earnings, investment ratios for

ourselves. You mention you've

only got a one sixth stake in

the North West Shelf, are you

tempted to increase that

holding? I saw a report in

today's paper where Shell is

maybe considering selling some

of their oil production,

possibly to - China National

Offshore? At that point if they

do, which is unilateral in

those two parties, if they

decide to do that, we have

certain contractual rights,

right of first refusal so we

can jump in and take our

proportion of that sale if we

desire to do so we price that

surprised, perhaps disappointed they get from CNOK. Were you

to see that story, given

perhaps you should have had

first dibs on the stake? Well,

who hasn't... you know, who's

to say they didn't come to us

first? Did they? I'm not going

to tell you if they did. But

you do reserve the right to be

involved in those negotiations

should they go ahead? We have a

contractual right and a right

of first refusal. Shell has a

right to talk to anybody they

want to about any one of their

assets. Clearly, we respect

that right, we have the same

right for our assets and we wouldn't expect them to meddle

in our businesser. There's been

some speculation around the

decision by Shell Australia

chief Russell Chaplin to quit

the Woodside board, did he

discuss that with you? No, it

was quite a surprise to the

chairman and myself when we received his letter. I believe

he had gotten some - let me

back up a little bit. Shell

nominates three different

directors to become Woodside

directors. Of course they have

arms length in their company

and the corporate veil and all

that. In Russell's particular

case, he's a really nice

gentleman. I've really

enjoyed, I'll enjoy him just as

much when he's not a director.

I believe that his situation

that Shell had him in as

chairman of Australia, the

amount of interest and the

amount of activity that they're

doing that's in direct

competition with Woodside in

Western Australia and the Timor

Sea, I think he got to a point

where he just felt that the

conflicts were possibly a bit

too much to handle and it would

just be easier for him to

resign that position and to

have it turned over to somebody

else. So I believe it was a

very cautious, a legitimate

decision that he individually

made with the conoccurrence of

Voelte, thank you very much for Shell as his employer. Don

your time. Thanks, Emma.

And now a look at tomorrow's

business diary which again is

dominated by the annual general

meeting season.

A look at what's making news

tomorrow's newspapers. The in the business sections of

'Age' says confidence is

growing at BHP, but shareholder

pressure will force Rio to

reconsider its offer. The

'Australian' leads on today's

surprise news from Fortescue

Metals. The Australian

'Financial Review' covers that

same story and the 'Sydney

Morning Herald' says Kerry

Stokes is in no hurry to spend

Seven Network's $2 billion cash

reserve. That's all for

tonight. But as I leave you,

the FTSE 100 in London is down

1%, and the Dow Futures are

indicating another down day.

They're off about a third of

1%. I'll see you on Monday

night. If you want to review

tonight's program, you can

visit our website. I'm Emma

Alberici. Goodnight.

Closed Captions by CSI

THEME MUSIC

APPLAUSE AND CHEERING Hello, Karratha! Oh, my goodness! Hello. How are you doing? Magnificent. absolutely wonderful. Oh, you are looking

Karrarseholes. calls you a pack of I don't believe it when Carnarvon Ladies and gentlemen... the biggest band in Australia Right now, can we introduce at the moment in Karratha -

Come on! Powderfinger! Let's go, boys. (Sings) # Push me right over # And hold me down under the waves # If I'm out of breath # Maybe I'll recognise my mistakes # 'Cause nothing I've done, yeah # Is worthy of showing to you # It's just meaningless bullshit # And promises all there to you # 'Cause I need # Somewhere # To begin Yeah, yeah # Somebody gotta let me in # Colour me red and gold soul # Your sweet love has blessed my # Colour me red and gold # Come bless my soul # Well, I left the thunder # And rain of my past all behind # When I'm looking back over my time # There's a shadow that falls # 'Cause nobody knows there in Spain # Just what happened to me # Life has tipped me right over # And left me to be ever changed # I need # Somewhere # To begin # Somebody gotta let me in # Colour me red and gold soul # Your sweet love has blessed my

# Colour me red and gold # Come bless my soul