The No 1 topic of conversation will, of course, be the coronavirus and its impact on local operations. The pandemic has triggered the biggest and most comprehensive remediation and surveillance program ever undertaken by Rio and other international companies.
That is in part due to the severity of the disease and its emergence in China.
The good news for big business is banking lines of credit, unlike during the global financial crisis, are not affected. Starbucks has now reopened 85 per cent of its 4292 stores in China and cinemas are open again.
The big white hope in China is to see traffic congestion again, with logjammed trucks and more cranes in the sky, because that will show the economy back on the move.
A hefty stimulus package is expected, which will boost the steel industry and hence Rio.
Australian electronic retailers also report truck movement as crucial because most of their supply is air-freighted, and while the factories are running again, the trucks sometimes have to travel around several locked down provinces to get the goods to the airports.
Rio, like most big companies, has restricted international air travel, and it is now limited further depending on where the disease has spread. Hong Kong was already being avoided because of the riots and the Middle East because of the political turmoil, and now Iran is a disease hotspot.
Traditional pitstops in cities like Tokyo, Seoul and Beijing are off-limits, which explains why the non-stop Qantas London to Perth flight is so popular for local business people.
Teleconferencing works to an extent but ultimately people in business want face-to-face meetings to conclude deals.
Like many big companies Rio had so-called business resilience plans in place at its different operations so that when crises like coronavirus hit they are ready.
The plans went through annual drills to make sure everyone knew what would happen.
At the mine sites if demand was stalled the first to go would be the autonomous trucks.
The operations centre is based in Singapore, which in early February had to go into its own recovery plan when it discovered a suspected case of the disease in the building it shares with local bank DBS and others.
There are 400 people in the Rio office who immediately had to work from home in quarantine for two weeks and now work on strict rotations with two teams of 200 who work in the office one week in turn with no crossover to limit the spread of disease.
Secure communications lines were put in place to allow people to work remotely and the office to function as normal.
Across the Rio empire the priority is around people, like the 450 staff in Mongolia who eat food imported from China.
Some 200 calls are made to suppliers to put in place contingency plans and ensure everything from tyres for the trucks are available to the bunkers refuelling the big ore freighters.
Rio earns half its revenues in China or around $US25bn ($38bn) a year so it is obviously monitoring movements closely and looking for the rates of new infections to slow and the number of cranes on the horizon in the big cities to grow.
Some hope that as the weather warms in the northern hemisphere the rate of infection will slow, and as there fewer cities in the southern hemisphere with big populations the impact will be less.
Now with China’s impact seemingly having peaked, there are only 73 other countries to worry about.
ACCC mulls appeal
The ACCC will decide as soon as Thursday whether it plans to appeal against Justice John Middleton’s decision in the Vodafone-TPG merger case.
The decision against the regulator was handed down three weeks ago and while a decision on the appeal is not necessary for another week, ACCC boss Rod Sims was keen to make his plans known early to let the businesses get on with life.
The full reasons for the decision were made public on Wednesday but have been with the parties for three weeks looking at confidentiality issues.
Sims declined to confirm either the timing of his decision on the appeal or the likely outcome.
He made it known in a speech last week he thought Justice Middleton was plain wrong in taking the word of witnesses like the TPG boss David Teoh at face value rather than considering the obvious chance given his track record and the commercial logic of doing so that he would return to the market.
Justice Middleton said “there is no commercially relevant or meaningful chance that TPG will roll out a retail mobile network or become an effective competitive operator”.
The merger he noted was “a rational and businesslike solution to combat the competitive strength of Telstra and Optus”. On simple maths the incumbents would prefer two rather than three competitors and a combined Vodafone-TPG would make it easier for the new telco oligopoly with Telstra and Optus. This said, the hurdle to appeal the decision is large and it is expected Sims will let the judgment rest undisturbed.
TPG’s lawyers Herbert Smith Freehills in a client note confided its competition team now led by Liza Carver had acted and won on five of the seven appeals against the ACCC in the last 15 years.
Ballantyne faces jail
His old stockbroker Stephen Macaw is still working in the offices of his former firm EL&C Baillieu, some one month after resigning from the firm, but on Thursday former NewSat chief Adrian Ballantyne appears in court to learn whether he will do jail time.
Ballantyne pleaded guilty to authorising false invoices to channel funds from NewSat to his private company. NewSat, which was to spearhead Australia’s emergence as a satellite launch base, collapsed in 2015 with $200m in investor funds.
Market reaction
RBA chief Phil Lowe must be bemused at the reaction to Tuesday’s rate cut, with the sharemarket closing down 1.7 per cent yesterday and minimal news from Canberra in terms of a fiscal response to the slowing economy.
The market reaction followed the 2.9 per cent fall on Wall Street after the surprise early 50 basis point cut in the US Fed funds rate. US stocks rallied initially then fell on the realisation that the Fed thinks the economy is worse than the market expected.
The trading theory says buy the rumour and sell the fact.
This time the reaction to a rate cut the market had demanded was to fall, which shows they hold little respect to the central banks they clearly control.
AMP fund manager Shane Oliver says of the seven times the Fed has cut between meetings since 1998 the sharemarket has been higher after one month on six occasions, and higher one year later just twice.
US Fed boss Jerome Powell spoke for RBA boss Philip Lowe when he said the Fed can’t do anything about the spread of the disease. What the banks can do is ease the hit on the economy from the attempts to contain the spread of the disease.
Wednesday’s GDP showing a 0.5 per cent increase in the fourth quarter to bring 2019 growth to 2.2 per cent, marginally ahead of estimates.
The market is expecting at best zero growth this quarter.
In both Australia and the US the reality is interest rates are so low now any move will have minimal impact on the real economy.
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