Backed by Suncor, Mitsui and ANA, LanzaTech launches new jet fuel plant in Georgia to produce 10m gallons of bio-jet fuel and diesel a year

Alternative aviation fuel: LanzaTech, the Kiwi-founded firm now in Chicago that pioneered turning steel mill waste into biofuel, has launched LanzaJet, a new company that will produce sustainable aviation fuel (SAF).

Big backers: Canadian oil sands miner and processor Suncor Energy and Japanese energy and steel trader Mitsui & Co are investing US$15 million and US$10m, respectively, to establish LanzaJet. Japanese airline ANA is also backing the project, along with the US Department of Energy, which has granted US$14m to the project.

Green light: The funding will be used to build a demonstration plant in Georgia that will produce 10 million gallons per year of SAF and renewable diesel starting from sustainable ethanol sources. Production is expected to start in early 2022. (LanzaTech)

Slow payers: A new report has revealed almost half of retail tenants did pay their rent for May. Data from Re-Leased’s Covid-19 Rent Collection Impact Report found commercial rent payments for commercial property leases up to May 27 were slightly ahead of the same period in April though well down on what would be expected at that time in the month.

The report is based on anonymous and aggregated data from over 10,000 properties and 30,000 leases managed by New Zealand commercial property clients.

Not so bad: The coronavirus lockdown has cost Property for Industry $500,000 in unpaid rent, though the company said 90 percent of rents due in April and May had been paid. It said it had agreed to rental abatements and deferrals with 45 tenants amounting to about 1.2 percent of its annual rent.

Agreeable outcome: Chief executive Simon Woodhams told shareholders at the company’s online AGM yesterday that the abatements and deferrals were almost evenly split. Around 6 percent of its tenants were contractually entitled to some form of immediate rental relief in early May, while they were unable to access their premises. Property for Industry shares closed unchanged at 2.41 just 10c below where they were pre-Covid. In late March the shares traded as low as 1.60.

On a roll: The New Zealand dollar has continued to spike higher, mirroring the tone of global equities markets that remain upbeat about countries emerging from Covid-19 lockdowns. While the pandemic crisis is far from over and is now ravaging countries such as Brazil, social unrest in the U.S. continues to escalate and threats from President Donald Trump to call in the army to quell riots all combined to weaken the US dollar, pushing other currencies, including the New Zealand dollar, higher.

Kiwi in favour: The kiwi was trading at 64.10 US cents late yesterday after hitting 64.30 cents earlier, up from 62.80 cents at the same time on Tuesday. The trade-weighted index was at 71.14 from 70.12 yesterday. The move higher is unlikely to sit comfortably with the RBNZ given the outlook for the export sector is very dependent on the global economy and a strong currency would only exacerbate the impact of weak demand.

No dividend for a while: Media company NZME has confirmed it has secured an extension to its existing debt facilities to July 2023. The current facilities with Westpac NZ and Commonwealth Bank of Australia had been due to expire in six months. The new term of the bank facilities provides the Company with certainty of funding for the next three years, but with a 90 basis point increase in the margin to base rates.

Higher interest rate: In 2019 NZME’s net debt reduced by $23.6m to $74.7m and the Board continues to focus on debt reduction. But it seems shareholders keen to see dividends reinstated are out of luck as the facilities restrict distributions until July 2021 at the earliest. As with previous facilities, the new $110m facilities will step down each year to a level of $75m at 31 December 2022. NZME will hold its much anticipated AGM next week.

Punters flock back: SkyCity’s gaming business is trading ahead of expectations since it reopened on May 14. Revenue from electronic gaming machines has recovered to 80 percent of the daily average in the eight months preceding the pandemic. By contrast, the casino’s table revenue has experienced a slower start due to physical distancing rules restricting the number of people gathering around a roulette wheel or a game of blackjack. In the last week, table revenue was still only half of normal domestic business.

Cheap hotel deals: SkyCity’s occupancy has averaged 32 percent since reopening, although it has been as high as 90 percent on weekends when special discounts are running. Average room rates are approximately 35 percent lower than before the Covid-19 pandemic. Locked down punters have been able to experience SkyCity’s Online Casino which now has 21,000 registered customers and was profitable in both April and May.

Vehicle sales plunge: New car and commercial vehicle registrations were down by almost a third in May as restricted trading conditions reduced sales to 8,313 new vehicles, a year-on-year decline of almost 4,000 vehicles on last May’s figure. Overall, the Covid-19 shutdown has seen almost 20,000 fewer new cars on the road in the past five months, reflecting the effective closure of trading during the April lockdown, where only about 10 percent of normal sales took place, according to Motor Industry Association sales numbers. Hardest hit were sales in the commercial sector, which were down 37.2 percent to 2,912 vehicles.

Not so lucky: Australian Treasurer Josh Frydenberg has confirmed the lucky country’s first recession in 29 years after official figures showed the economy contracted 0.3 per cent in the March quarter due to the coronavirus pandemic shutdown and is widely expected to contract more sharply in the June quarter. However, he said the fact the economy had contracted only 0.3 per cent, which was slightly better than the 0.4 per cent expected, showed “our remarkable resilience”.

‘It’s all relative’: Talking up the outcome, Frydenberg said Australia’s economic performance in the March quarter compared “very well” to other nations. He listed contractions in China of 9.8 per cent, France of 5.3 per cent Germany of 2.2 per cent, Britain of 2 per cent and the United States of 1.3 per cent.

Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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