BHP sounds the alarm

Merger reforms get green light, London law firms lure Aussie talent

November 19, 2024

Welcome to Point Blank.

Today’s brief:

BHP warns we need an alternative to China, high costs and royalties hurt that path
But China’s EV surge, beating Japan, may strengthen our reliance
Resolute coughs up $247m to Mali

Things are starting to heat up. Grab that iced coffee, and let’s go. ☕️

It hasn’t been a great day for NAB. The bank has been sued for allegedly retracting a job offer after discovering the candidate was pregnant, sparking questions about the legal repercussions of its boys’ club culture. On top of that, ASIC is bringing action against NAB for taking too long to respond to at least 345 borrowers in financial distress, including those fleeing family violence, facing medical emergencies, and trapped at home during COVID-19.
Merger reforms are almost here, with the Senate Economics Legislative Committee giving them a unanimous green light. With both the Coalition and Greens backing the Bill, it’s on track to pass in the Senate on 28 November 2024.

London’s the place to be for Aussie lawyers. Top firms are throwing down $300k–$360k for newly qualified associates. With wages being dubbed “inflation-busting”, you can afford a swanky postcode and still come away with a hefty savings stash.
Bird & Bird swoops up technology partner from DLA Piper.
Dentos names Amber Warren as the firm’s first female chair of its Australian portfolio.

Alan Jones, the veteran radio broadcaster, has been charged with 24 offences spanning over nearly two decades of alleged predatory indecent assault, involving eight men—including a 17-year-old and an Olympian. Criminal defence lawyer Bryan Wench, known for representing Australia’s A-listers, rugby league players and pop stars, is now by Jones’ side.
China has overtaken Japan in the EV race, with Japan’s once-dominant car market now trailing behind. Toyota sold 104k EVs last year, while China’s BYD and Tesla racked up 2m and 3m, respectively. Despite Japanese giants like Toyota and Nissan investing early in hybrid tech, traditional advantages like precision manufacturing and supplier relationships don’t hold as much weight when software updates and battery chemistry are the real game-changers.
ATO urges company CFOs to test their lawyers and accountants so that the company doesn’t end up in a scandal like the one with PwC. The ATO Commissioner warns the ATO could take a different view of the legal advice received – no doubt that view is to pay more tax. Corporate tax rakes in $140bn about 22% of government revenue, more than double the OECD average of 10%. Go figure.

Goldman Sachs is shifting the spotlight to copper and aluminium for 2025, leaving iron ore in the dust as China’s weak demand and Aussie oversupply. Goldman sees no demand spike on the horizon—calling for prices to hover around $95/tonne. Meanwhile, China's energy transition and booming EV sales are set to boost copper and aluminium. Goldman's also bullish on gold, predicting it could hit $3,000/oz, while Morgan Stanley warns a strong US dollar and high Treasury yields may cap prices at $2,600/oz in 2025.
On the Australian economy as a whole Goldmans is less optimistic, lowering its growth forecast to 1.8% pa due to some “negative spillovers” from Trump’s reign.

ASX as at market close. Commodities and crypto in US dollars.

Regal Funds is the last man standing by in the chase for Platinum Asset Management, with Wilson Asset Management and Paradice bowing out. With no rivals left in the ring, Regal can sit back and let time do the bidding. The $671m fund also sees bargains in small-cap companies and wants to raise $95m to pursue that venture via seven brokers.
The KKR vs. Bain showdown for Fuji Soft could be the spark Japanese M&A needs. With the yen sliding, meaning Japanese businesses are undervalued, inbound deals are already up 10% this year—and the momentum’s just getting started.
Expectations are high for an M&A boom under Trump, but history might say otherwise. The FTC and DOJ actually filed more M&A challenges during Trump’s first three years than Biden’s. If round two mirrors round one, dealmakers shouldn’t get their hopes up.
Telco company Swoop (ASX: SWP) makes an off-market takeover bid to acquire Vonex (ASX: VN8), with a bidder statement to follow in the coming days.

Diggers

BHP’s chief warns the mining sector can’t count on China forever. With cooling demand and aggressive low-cost rivals like Indonesia flooding the market, Australia risks falling behind. Nickel – key to the energy transition – is being pursued elsewhere due to Australia’s high costs and royalty regimes. Nickel prices have tanked recently, forcing BHP to pause WA operations.
Twiggy’s Wyloo has withdrawn its debt default notice to Hastings, dodging what could have been an insolvency event. For now, Hastings lives to fight another day.
Resolute Mining has waved the white flag, agreeing to a $247m “settlement” (others call it a ransom) with the West African government to free its employees. Looks like resource extraction takes on a whole new meaning in West Africa.
BHP is also sounding the alarm over Queensland’s coal royalty scheme, warning the 43% royalty, being the highest in the world, could scare off investors. But Premier Crisafulli insists Queensland is still “open for business”. Meanwhile, Glencore is urging Albo to hit pause on the coal-to-renewables shift, warning Australia risks falling out of sync with the rest of the world as Trump pushes forward with his fossil fuel expansion plans.

Fin

Chalmers’ new regional bank levy, aimed at helping banks stay open in the bush, is already drawing criticism. The levy would mostly be passed onto customers through higher rates and fees—ironic, given the populist rhetoric about banks exploiting customers during the cost of living crisis. Critics also argue that digital-first banks like Macquarie and ING shouldn’t be forced to prop up their competitors’ legacy models like Bendigo and Adelaide Bank, which still rely heavily on physical branches.

Tech & Media

Canva continues to float IPO move. The multibillion-dollar software company has picked up former Zoom CFO along the way. Co-founder Cliff Obrecht says an IPO will have “at some point”. Canva sits at a $48.7n valuation.
Seven Media has quietly settled the Fair Work case brought by an ex-Spotlight producer, which threatened to expose the network’s dirty laundry. With the Federal Court granting a suppression order, looks like we’ll never know…
A recent Insight Economics report shows Australia’s lost its stride when it comes to backing local investment, with Aussie tech startups now calling out the federal government to do more.

Retail

ACCC publically cross-examined Woolies boss Amanda Bardwell over a 2015 slide deck which claimed: “We’re delivering our most competitive prices to our customers since early 2014”. This, the regulator claims, is evidence that the supermarket giant decides how hard it wants to compete. The ACCC is separately suing Woolies and Coles for misleading discounted prices.