west at it again, page-15

Interesting article, but I believe there is more to the business than just assets on balance sheet. These guys are also project developers. They don’t just hold and recycle assets they improve and develop them. They are not a bank, they are a group of entrepreneurs and it’s worth remembering they are not stupid. We all know the value one good employee can add to your business. Image 500 highly skilled, highly intelligent entrepreneurs (an 900 support staff).

On the question of assets on hand, I think it needs to be considered that the cost today to build the infrastructure that BNB holds has increased significantly. Steel, cement, labour etc have all increased dramatically (some over 100% since asset construction). It now costs much more to build the power stations, rail lines, freeway, ports, wind farms and transmission lines. That is if you can get the parts. Many companies are waiting or paying premiums to get on the supply wish list with China pushing out something like a new coal power station each week.

These are all essential, not discretionary items of infrastructure with generally guaranteed returns. The demand on this infrastructure is increasing and so is the return on investment. Just consider the rising cost and demand for power stations and transmission lines and the increasing demand of rail links and ports, as mining companies cannot get it out of the ground fast enough.

Interest rates look to be on the way down. The banks have reviewed the debt and are happy. Development pipeline is continuing and is massive. They have announced no profit downgrades. Wind sale looks good and is due to be announced soon . They may choose to radically pay down debt with proceeds. Would this keep the sceptics happy, let’s hope so!