asciano eyes murchison oakajee stake

SYDNEY -(Dow Jones)- Australian infrastructure group Asciano Ltd. (AIO.AU) has talked with Murchison Metals Ltd. (MMX.AU) over taking a stake in the troubled Oakajee iron ore export project, but sees little attraction in the privatization of Sydney's Port Botany, Chief Executive John Mullen said Thursday.

Asciano, which carries around half of Australia's container traffic and 38% of its export coal, is looking at ways to expand its most-profitable businesses and is studying ways to carry more bulk commodities in Western Australia, South Australia and Queensland states.

Oakajee, a 50-50 joint venture between Murchison and Mitsubishi Corp. (8058.TO), has been plagued with cost and time overruns and the decision of a major customer, Sinosteel Midwest Corp., to put its main mine development on hold. Asciano's competitor QR National Ltd. (QRN.AU) has previously signaled a willingness to come in as an equity partner to support the ailing plans.

"If as part of a consortium to get the thing going we needed to put 20% into the port and (rail infrastructure) and as part of that we get the opportunity to manage the entire supply chain, we would be interested," Mullen said in an interview with Dow Jones Newswires. However, so far Asciano had only had initial contacts on the subject.

The company would also look to get involved in other iron-ore export projects, such as the duelling plans from Fortescue Metals Group Ltd. (FMG.AU) and Aquila Resources Ltd. (AQA.AU) to develop the Anketell Point port in the western Pilbara, as well as other commodity export opportunities in South Australia and Queensland, he said.

But a stake in the A$2.2 billion planned privatization of Port Botany doesn't appeal, Mullen said, as Asciano's Patrick ports division is already one of the port's major tenants and profit margins would be lower.

"It's more likely to appeal to infrastructure investors," he said.

Mullen, who took over as chief executive of the company in February, said he wouldn't be planning further writedowns of Asciano's underperforming Patrick ports division, despite an overhang of goodwill that has diminished the returns to investors from the business.

Patrick's A$1.68 billion of goodwill accounts for two-thirds of the company's total goodwill of A$2.55 billion, and is equivalent to the value of all the rolling stock in Asciano's best-performing coal division.

Goodwill--in essence, the degree to which the sum paid for an acquisition exceeds its accounting value--reduces the return on Patrick's assets from 25.9% to 7.9%. That number could be improved with further writedowns, but those would depress Asciano's profits.

"I personally just wanted to avoid coming in and doing the usual thing of blaming everything on a predecssor," he said. "The last four years the company has written off money on that basis every year, huge chunks, and you just think if we do another year of that investors would go, 'Not again'."

Copyright ?0?8 2011 Dow Jones Newswires



Read more: http://www.foxbusiness.com/industries/2011/09/15/asciano-ceo-company-has-contacted-murchison-over-oakajee-stake/#ixzz1Y1CGT74D