The only line of defense that we have against Tonicchio is Julia Gillard. Whether we like it or not... Helping an industry is not a sin and it is not the first time it has been done... Any (most) industry deserves to survive...

Tony Abbott is a clever idiot who spruiks of snake oil and unfortunately there is a majority of idiots in this Australian democracy... May as well pack my bags and ride into the sunset... See ya.

BHP Billiton has unveiled the biggest profit in Australian corporate history.

The world's largest miner produced a net profit of $22.5 billion for the 12 months to June 30.

The company's revenue increased over 35 per cent and the results were broadly in line with analysts' expectations.

BHP said the result would have been stronger if not for weather-related disruptions in the supply of coal and iron ore.

Despite that the company says it has managed record commodities production.

"Robust demand, industry-wide cost pressures and persistent supply-side constraints continued to support the fundamentals for the majority of BHP Billiton's core commodities," it said in a statement.

"Another strong year of growth in Chinese crude steel production ensured steelmaking material prices were the major contributing factor to the $US17.2 billion price-related increase in underlying earnings.

http://www.abc.net.au/news/2011-08-24/bhp-unveils-record-profit/2854114

May be BHP could buy Bluescope and make something out of it...

Half a dozen ministers publicly backed Julia Gillard yesterday. The Prime Minister did two interviews to declare she was ''not going anywhere''. It was a show of support and conviction. It was also an indication of the desperate trouble the government is in.

Leadership speculation is starting inside the Labor Party. It hasn't coalesced around a candidate because the voters' choice, as indicated by the polls, would be Kevin Rudd. But the party power brokers who overturned him last year believe they had good reason and are not about to reverse the decision.

No one is sure the other mooted candidates, including Stephen Smith and Simon Crean, would fare any better. It is uncertain that the crossbench independents would agree to Labor staying in government after a leadership change anyway. And it is unclear whether the splintered Labor factional system could actually sort out a change.

Those who believe change is the only survival option are biding their time, because time is at the moment pretty much the only thing Labor has on its side.

They are allowing Julia Gillard to work through the mountain of political problems Labor faces, hoping beyond hope that she might reverse the party's fortunes and betting that her support will eventually fall away, or even that she might stand down, if it becomes clear she cannot.

But the High Court decision this week sparked panic and in a political situation as precarious as Labor's that can quickly take on a life of its own.

If it can be calmed Labor is likely to pass the carbon tax and the mining tax this parliamentary session, which will raise policy questions that could put the focus back on Tony Abbott. That is if Labor can start talking about what it wants to be talking about - managing the changing economy. Oh, and if it can also find a new asylum policy and manage the ongoing Craig Thomson allegations.

Now that the Prime Minister is promising she is ''not going anywhere'', the promise in last year's derided election slogan - ''moving forward'' - is suddenly looking good.

Panic leads to speculation that stirs the winds of change

Bill Shorten left the businessmen around the table in no doubt about his views on Kevin Rudd, or his own ambitions. It was a gathering over lunch in Sydney some weeks ago. The assistant Treasurer of Australia may have been there representing the Gillard government, including its Foreign Minister, but he seemed to be speaking very much for himself.

One of the business people later summarised Shorten's exposition over lunch this way: "There's no way we're bringing that prick Rudd back again." And: "I'm ready to serve as leader." The businessman said: "When we walked out of the room, we all looked at each other and said, 'Wow'."

Shorten was careful not to say that he was running for the prime ministership. But he made it clear that was his inevitable destination. For a 44-year-old junior minister who has spent all of four years in the federal Parliament, his audience of elite businessmen thought it was a spectacularly brash performance.

But it was not an exclusive one. A US diplomatic cable published by WikiLeaks this week showed that the former union leader had been preening himself, even in front of foreign governments, as long as two years ago.

The US consul-general in Melbourne, Michael Thurston, wrote a report to Washington after meeting Shorten, then the Parliamentary Secretary for Disabilities, in 2009:

"Shorten makes no bones about his ambitions in federal politics. During a June 11 meeting, Shorten told consul-general that 'he did not take this job to stand still'. He explained that he had been overlooked for promotion in Prime Minister Rudd's June 6 cabinet reshuffle ... in order to keep the geographical balance in the cabinet between Victoria and NSW. (Comment: Despite words to the contrary, Shorten appeared disappointed while he was discussing this topic. End comment.) ...

"Shorten, who is somewhat rumpled in appearance, prefers to get down to business quickly in meetings ... Despite his lukewarm relationship with Prime Minister Rudd (he sided with Kim Beazley in the 2006 ALP leadership ballot), Shorten struck us as highly ambitious but willing to wait - at least for a while - for his moment in the sun."

Shorten does not conceal his ambition. "Bill is pathological about being leader," said one of his colleagues in Labor's Victorian Right faction this week. And he seemed completely nonchalant about the cable's publication. His response to reporters was perfect: "The nice comments are all true but the less flattering comments I don't agree with."

As the Gillard government's fortunes took another blow this week with the High Court rebuff to its Malaysian plan for asylum seekers, leadership speculation intensified. Shorten's name was in high-velocity circulation. So was that of the Defence Minister, Stephen Smith, also from Labor's Right. The Climate Change Minister, Greg Combet, from the Left, is also much-mentioned. These men constitute the next generation of Labor leadership candidates.

The reality is that none of these men is campaigning. And no one is trying in any serious way to enlist them. The accelerating velocity of the game of who-will-be-leader whispers indicates three things. First, the Labor caucus increasingly believes Gillard cannot win an election. Second, there is a creeping desperation about what to do. And third, Labor has conditioned the media to be on standby for a leadership challenge whenever a Labor government gets into trouble.

And there are good reasons why Shorten, Smith and Combet are not campaigning. It was the gleeful excitement with which Labor decapitated itself last year that has it in so much trouble today. Labor thought that the coup against Kevin Rudd was an emphatic pronouncement on Kevin Rudd. It was not. It was a verdict on Labor itself.

It conveyed graphically to the public that federal Labor, like its NSW chapter, was not a party committed to governing well and soberly. Its supreme loyalty was to the perpetuation of its own power, at any cost. The strike against Rudd was a strike against Labor's own credibility and seriousness.

The underlying reason for the Gillard government's woes is its perceived legitimacy. By every rule and by every law Gillard is an entirely legitimate Labor leader and Prime Minister. But in the public mind she has never recovered from the way she seized power. It's harsh enough for a deputy to destroy a leader.

But it's worse that Gillard's strike was without warning. And Gillard has never given a real explanation for why it was necessary. Merely saying the reason was that it was "a good government that lost its way" is not only dismissive of Rudd, but of the office of prime minister and of the electorate. With weak legitimacy in the public mind from the outset, two further blows have undercut Gillard's claim to rightfully occupy the highest office in the land. One was her party's failure to win the 2010 election. The other was her breach of an undertaking that she would not introduce a carbon tax. This allowed the opposition to plausibly argue that she had only been able to get through the election under false pretences.

On top of that triple failure to establish legitimacy in the public mind, what would another change of leader achieve? Could Bill Shorten, Stephen Smith or Greg Combet claim to be any more legitimate than Gillard? Of course not. "Knocking off Julia Gillard now would make us look even more ridiculous than NSW Labor," one cabinet minister said, correctly, this week.

When Rudd stood before the Labor caucus for the last time as its leader, he said: "I'm deeply concerned about the importation into the federal parliamentary Labor Party of practices we've seen elsewhere, whether it's with Morris Iemma, whether it's with Nathan Rees, or with others in NSW. I don't believe these sorts of tactics have a place in the federal parliamentary Labor Party."

He was, of course, right. Labor is now paying the high price for catching the NSW disease.

Some in the Labor caucus argue a fresh face in the leadership would at least win the government a chance to be heard afresh. But here is the second reason Shorten, Smith and Combet are not running. They would be fresh faces, certainly, but all polling suggests they would be less popular choices than Gillard.

Stephen Smith is preferred as Labor leader by just 7 per cent of voters in a seven-way comparison by Essential Media published on August 3. Greg Combet attracted support of 2 per cent. And Bill Shorten? Exactly 1 per cent. Gillard's support was a dire 12 per cent in the same poll, but still higher than any of the next-generation alternatives.

To change to any of these "fresh faces" would be a change without an improvement. And this is the third reason none is organising a challenge. To take the leadership now would be a poisoned chalice. Shorten may be pathological about being leader, but he is not insane. Paul Keating and John Howard each served 22 years in Parliament before becoming prime minister, Kevin Rudd 9 and Julia Gillard 11. Only Bob Hawke managed it in two. Bill Shorten is not Bob Hawke.

But there is one other leadership alternative, the man who attracted 37 per cent in the Essential poll. As a cabinet minister said yesterday: "The obvious thing to do it to put Kevin back. 'Oops, sorry, we got it wrong'."

In a Herald/Nielsen poll that pitted Rudd and Gillard head to head in June, 60 per cent preferred Rudd as Labor leader and 31 per cent the woman who replaced him. Rudd receives a rock-star reception when he campaigns for Labor colleagues.

But what about Rudd's own warning against the revolving-door syndrome? Among the leadership candidates, Rudd is the only one Labor could present as not being just another blundering bid to hold power, but the reversal of an earlier blunder. He is the last Labor leader to win an election.

So why not make Rudd leader? There is a substantive electoral reason. And there is a big obstacle of internal Labor politics. The electoral reason is that, even if Rudd were to return, he would still face the same policy problems Gillard confronts, the ones he bequeathed her. Can Rudd solve the asylum seeker problem, for instance? Rudd would have to persuade his colleagues that he could solve the policy problems of Labor.

The internal obstacle is the pride, fear and self-interest of the Right faction bosses who dispatched him, the so-called faceless men. Remember, the Right dominates the caucus.

As one said this week: "What, we all have to put the shackles on and file obediently back into the North Korean concentration camp?" And this Right faction boss, who was rewarded by Gillard with a promotion, spoke of his fear of Rudd retribution: "I would be dismissed in the first 15 minutes of the new regime, and that doesn't do anything for my enthusiasm."

Rudd, five weeks into his eight-week leave for heart surgery, is not organising a challenge either. One of his caucus supporters said yesterday: "Rudd isn't campaigning and his view of the world is pretty clear - he doesn't have to." The party would need to ask him to return.

Labor has some hard thinking about a tough choice. On the current polling, most of the caucus will lose their seats at an election. Are they prepared to forgo their only realistic leadership hope in order to protect the pride and promotions of the faceless men? Or can the Right eat large lumps of crow and bring "the prick" back?

Keen to serve, just not now

The chair of Bluescope Steel's remuneration committee has defended the decision to pay about $3 million in bonuses in a year where the company posted a $1 billion loss.

Bluescope director Diane Grady says the payment of those short-term incentive bonuses was "in the best interests of the company", and "not an easy decision".

"By law, that is directors' responsibility - to act in the best interests of the company," Ms Grady told shareholders at the company's annual general meeting in Sydney yesterday.

The company's annual report showed Bluescope paid about $3 million to 11 "key management personnel" executives.

Chief executive and managing director Paul O'Malley received about $720,000.

Ms Grady said a pay freeze, limited short-term incentive bonuses and no long-term incentive bonuses in recent times had caused Bluescope to lose staff.

She said there had been "nearly a dozen" key managers below the executive leadership team who have left the company, primarily targeted by resources related companies.

"If our executives believe that no matter what they do, no matter what they achieve, there will be no STI, it will be difficult for us to retain them - and replacing them could well be even more expensive," Ms Grady said.

"Many cashed up resources related companies would love to get their hands on Bluescope's talent."

In August, Bluescope reported a $1.054 billion net loss for the year to June 30, 2011, a massive turnaround from the $126 million profit in the prior corresponding period. 

Ms Grady said the board decided to pay out short-term incentive bonuses because executives "have genuinely earned their non-financial KPIs" (key performance indicators).

"They have delivered on a range of specific initiatives which have improved our financial situation or have positioned the company for future growth," Ms Grady said. "Executives have worn the pain of reduced remuneration in the past, without complaint.

"They are not a greedy bunch. This year we felt it was fair - and wise - to recognise what they have achieved by paying STI."

Bluescope Steel chairman Graham Kraehe reiterated company guidance issued in August, which was for a "significant" reported net loss after tax including restructuring costs. The company expected to post a "small" underlying net loss after tax.

Mr Kraehe said it had been an "unprecedented tough trading environment" in 2011.

"The board knows that the company's financial performance and share price is unacceptable," he said.

In terms of current trading, Mr O'Malley said capacity utilisation internationally had remained below 80 per cent, a sign that steel making margins would be low.

"As a result, in recent months major steel companies have followed Bluescope's lead and either shut or mothballed blast furnaces, particularly across Europe," he said.

Yesterday, Bluescope was down three-quarters of a cent at 70.25c.

http://www.adelaidenow.com.au/business/bluescope-steel-standing-firm/story-e6frede3-1226198192022

So, Diane Grady thinks it's in the best interests of her company that she gives $3 million of shareholders' funds to 11 of its executives for not doing their jobs & managing the company such that it achieved a $1 billion loss in the past 12 months?

What a joke .... Ms Grady says that a director must act in the best interests of the company. I agree ... therefore, I think she should do the shareholders a favour & resign as soon as possible.

Ms Grady claims that nearly a dozen of its key managers had left the company, implying that it was because they didn't receive any short term incentive payment. Well, if they were so deserving, why couldn't they have had a slice of the $750,000 that was paid to the CEO or the total of $3 million that the top 12 executives received?

Ms Grady claims that if the company's managers don't believe that they can achieve their incentives, they will lose heart & leave. Good riddance if they can't perform.

Ms Grady claims that Bluescope's competitors would like to recruit members of its management team, because they are so "valuable" & therefore it is important that the company takes steps to keep those managers from leaving. What a crock of codswallop!!

I've been in business for more than 40 years & have been a director of a number of major multi-nationals & I can confidently confirm that the last manager I would want to employ is one with a record of non-performance.

Guess what sweetheart, that's the world we live in or have you forgotten the 1,000 employees who have paid the price for your incompetence & your refusal to manage honestly & with integrity & meet your primary obligation which is to protect the shareholders' interests?

Ms Grady's views are typical of today's directors & senior management: they expect to be paid regardless of performance, when they should be shown the door.

from Crikey …..

Bluescope: this isn't a company, it's a black hole

Glenn Dyer writes:

BLUESCOPE STEEL, CARBON PRICING COMPENSATION, CARBON PRICING PACKAGE, STEEL INDUSTRY

BlueScope Steel, which will get hundreds of millions of dollars under the carbon tax in compensation and free permits for the steel industry, surprised investors today by launching an ''accelerated" fund-raising to cut debt. And it's no small amount, it wants to raise $600 million to repay a soaring debt bill that the company though it had under control.

A combination of poor profits, the high value of the Australian dollar, weak demand and restructuring costs aimed at trying to "right-size" the group, saw a 50% blow out in the company's debt burden in four months. The company has already announced plans to cut exports, close a blast furnace and other facilities and sacked about 1000 employees in NSW and in Victoria.

The reported issue takes the amount this company had drained from shareholders since December 2008 to more than $2.5 billion and every last dollar of that money has been eaten up by the company's businesses.

This is not a company, it is a black hole, a bottomless pit.

BlueScope is going to get hundreds of millions of dollars of benefits from the carbon tax. Based on their 2010 carbon emissions and a starting price of $23, the company could get up to $801 million in the first three, fixed price years of the scheme in free permits, with hundreds of millions more to come in the following years.

BlueScope also have access to a $300 million steel industry adjustment fund. Julia Gillard, under pressure from unions and the manufacturing sector, brought forward $100 million of that in August so that BlueScope could access it immediately rather than wait for the carbon price to kick in. In total, BlueScope comes out of the carbon pricing package tens of millions ahead of where it is now.

But to get that largesse, the company had to remain alive and in business, and out of the hands of administrators.

So today's fund-raising, which was revealed to the market before trading today and came five days after the company held its AGM last Thursday and didn't mention the rapidly rising debt in the prepared speeches by the chairman and the CEO, even though today's statement clearly illustrates the problem.

BlueScope said its net debt had increased to $1.555 billion by October 31, up from $1.068 billion at June 30.

With that sort of increase, you would have thought that 17 days after October 31, the board and management would have been in a position to reveal the problem and talk to shareholders about it at the AGM last week.

But nary a word at a meeting which was dominated by shareholder objections to the payment of nearly $3 million in bonuses to management, despite BlueScope losing just over a billion dollars in the June 30 year.

The board and chairman Graham Kraehe spent time defending the bonuses and reaffirmed the forecast for a big loss for the December half year at least, but no word of the growing need for new capital which suddenly became a problem so large that a $600 million "accelerated" issue at a huge discount, is now needed urgently.

The fully underwritten, 4-for-5 entitlement will be made at 34 cents, compared to Monday's closing price of 61c. That in itself tells us that BlueScope is in desperate need of a lot of new capital, very quickly. There will be a heavy dilution of existing shareholders who do not take up their entitlements.

Institutional and retail shareholders will be asked to put up the money, again.

BlueScope raised just of $1.4 billion in a similar issue in May and June of 2009. That was also designed to restructure the company's debts as well. That issue came only five months after $550 million was raised from investors in late 2008.