OneSteel shares were sold off to a new low yesterday when the country’s second biggest steel group revealed plans for a third production cut in as many months.
The shares closed down 5.3% at $2.13 after falling as low as $2.05, a 52 week low after the announcement.
The company revealed that it was making a further cut to its production guidance from its Sydney and Melbourne electric arc furnaces facilities for the financial year to June 30 as demand continues to fall.
OST said it had cut output from the two facilities by another 125,000 tonnes for the 2009 financial year to 725,000 tonnes, down from the previous estimate of 850,000 tonnes.
That production target was down 300,000 tonnes after the cut in January.
"Lower sales in the early part of the second half, due to more extensive market destocking than expected, and lower underlying demand has resulted in our inventory reduction to date being behind plan," OneSteel managing director Geoff Plummer said in a statement to the ASX.
OneSteel said in February it was reducing its steel production from the plants Sydney and Laverton (near Melbourne) from the level set in January due to a drop in demand.
It also in February reduced steel making at its Whyalla facility in South Australia and forecast group annual production of about one million tonnes for fiscal 2009. It had produced 1.15 million tonnes in the year to June, 2008.
The annual estimate remains unchanged.
The company said the reductions for Sydney and Laverton mean the ramp up in production at the facilities over the remainder of this financial year will be slower than previously planned.
"However, production can be stepped up quickly should market activity levels be better than anticipated,” OneSteel said.
OneSteel’s major competitor, BlueScope has taken its Number 5 blast furnace at Port Kembla (the biggest in Australia) offline to start rebuilding the lining in a major project.
Adelaide-based oil and gas producer and possible takeover target, Santos Ltd says it has submitted a draft environmental impact statement for the $7.7 billion liquefied natural gas project near Gladstone in central Queensland.
The company made the announcement in a statement to the ASX this week.
It claimed the operation, a joint venture with Malaysia’s state-owned Petronas, would be the world’s first major project to convert coal seam gas to LNG.
Santos says that a final investment decision for the project is expected during the first half of next year, to allow the first cargoes to be exported in early 2014.
If the plan goes ahead, gas from the Surat and Bowen basins will be processed in Gladstone and exported to Asia.
Santos’s GasLNG President Rick Wilkinson said the EIS is "the largest and most comprehensive document of its kind submitted for assessment in Queensland, at almost 13,500 pages of general and technical information.
“The Statement represents almost 18 months of environmental investigations and reports across 24,000 square kilometres from Roma in the State’s south east, to Curtis Island, off Gladstone in Central Queensland,” Mr Wilkinson said.
Meanwhile Santos chairman Stephen Gerlach says he will retire from the board at the end of this year.
Mr Gerlach will step down on December 31 and will be succeeded by deputy chairman Peter Coates.
His decision was revealed in the 2008 Santos annual report.
"By the time of my retirement, I will have been fortunate enough to have served as a Director of Santos for 20 years and acted as Chairman for eight years," Mr Gerlach said on Tuesday in a statement to the ASX.
Mr Coates has been a Santos director since March 2008 and was appointed deputy chairman in December.
He is the former chief executive of Xstrata Coal, Xstrata Plc’s global coal business, and is currently chairman of Minara Resources Ltd and a director of Downer EDI.
Mr Coates’ term as chairman of Xstrata Australia will come to an end prior to his assuming the new role.
Santos said another of its long standing directors, Professor Judith Sloan, will also be retiring from the board.
Santos shares rose 44 cents yesterday to $17.29, building on Tuesday’s 11 cent rise.
And still in the oil and gas sector, Nexus Energy Ltd secured much needed short-term funding after finally selling its stake in an exploration permit in Western Australia to Shell Development for $US19 million ($A28 million).
The oil and gas group said yesterday it had sold its 15% interest in the exploration permit adjoining the Crux oil project in the Browse Basin, off the Kimberley coast of WA.
Nexus said the sale would provide the company with an important source of near-term funding as the company negotiates "additional funding requirements packages".
The negotiations, which include potential asset sales and debt raising alternatives, are expected to be concluded by April 14.
"Nexus is committed to resolving these negotiations as soon as possible, at which time the company will make a substantive release to the market such that trading in its shares can continue," Nexus said.
Nexus shares have been suspended since March 11, with the company facing a large capital development program for which it needs more funds.
The company owns 85% of the oil rights in Crux, but each year the project is delayed the value to the company falls, because under a deal Shell will take ownership of the permits in 2021.
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