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ASX 200 edges higher, Origin crunched, Mineral Resources falls

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The S&P/ASX 200 Index (ASX: XJO) went up slightly by 0.07% to 7,064 points.

These are some of the highlights from the ASX today:

Origin Energy Ltd (ASX: ORG)

The Origin share price fell around 9% today after announcing its price review outcome and update on FY21 guidance.

The energy business has been engaged in a price review for gas purchased from Beach Energy Ltd’s (ASX: BPT) Otway Basin fields, which was referred to arbitration.

Origin said that the arbitrator has now issued a partial award and on the basis of that decision the new gas price is likely to be materially above Origin’s expectations and recent comparable wholesale contracts. The outcome is expected to result in an increase in Origin’s cost of supply of $30 million to $40 million for FY21, increasing further to $60 million to $80 million in FY22 consistent with an expected increase in volume.

The pricing outcome is binding over FY21 to FY23, with limited rights to appeal. The ASX 200 share will now assess the timing and extent to which this increased cost of supply can be mitigated.

Origin CEO Frank Calabria said:

We are disappointed in this decision which we believe is wrong, and entirely inconsistent with our prior experience in the gas market. This will result in a gas price that does not reflect market prices, and it is therefore a very poor outcome.

Origin has revised its energy markets underlying earnings before interest, tax, depreciation and amortisation (EBITDA) guidance for FY21 to be in a range of $940 million to $1.02 billion.

Mineral Resources Limited (ASX: MIN)

The ASX 200 mining company said that total mining production during the third quarter of FY21 was consistent with the second quarter and up more than 44% on the prior corresponding period. This was in line with mine plans.

Mineral Resources reported that its average realised iron ore price was US$144.8 per dry metric tonne (dmt), which was 5% higher than the previous quarter.

Iron ore shipments were 4.1 million wet metric tonnes (wmt), consistent with the second quarter of FY21 and up 51% compared to the prior corresponding period.

The mining business said that it has produced 10.1 million wmt but has shipped 8.5 million wmt. It has experienced haulage constraints caused by a shortage of truck drivers, resulting from the unplanned sudden state border closers, implemented following COVID-19 outbreaks around the country.

That shortage meant that, on average, hauling capacity of approximately 10,000 wmt per day was sitting idle that could have otherwise been used by Mineral Resources.

Management are not sure when these haulage issues will be resolved and so iron ore shipment guidance for FY21 is now expected to be in the 17.4 million wmt to 18 million wmt range.

The Mineral Resources share price dropped 5.3%. 

Monadelphous Group Limited (ASX: MND)

The Monadelphous share price was one of the best performers in the ASX 200 today, rising around 6%.

The engineering business announced a settlement of claim today.

In August 2020, Rio Tinto Limited (ASX: RIO) filed a writ of summons against a Monadelphous business regarding a fire at Rio Tinto’s iron ore processing facility at Cape Lambert, Western Australia, in January 2019.

Monadelphous announced that a confidential out-of-court settlement has been reached, with the settlement being covered by the proceeds of insurance. Both parties consider the matter closed.

The engineering company said it highly valued its long term business relationship with Rio Tinto and it’s pleased that this matter has been resolved amicably.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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