Low demand for jet fuel restricting Refining NZ operations leads to around 100 job losses, plus Fonterra to exit China farms

Refining NZ announces staff cuts

Refining NZ plans to reduce its headcount by a quarter as part of plans to simplify its Marsden Point facility, including maintaining a reduced production rate throughout 2021.

Due to the border closure, demand for jet fuel has fallen dramatically, which in turn has reduced the profitability of refineries worldwide.

Yesterday the company confirmed around 100 jobs will be lost under the proposal to continue running the operation at about 90,000 barrels of crude oil a day, compared with its capacity of 135,000 barrels.

The refinery is one of Northland’s biggest employers, with a total workforce of about 550 including about 150 contractors. That is already down from 650 last year.

Refining NZ said its plan would lower operating costs, compared with this year, by about $20 million, mostly from lower labour costs. The restructuring is expected to cost about $5 million which will be funded from asset sales.

The company’s shares rose 1.6 percent to 62 cents, trimming their loss so far this year to 67 percent.

Fonterra calls time on China farming venture

Fonterra is calling time on yet another controversial offshore investment that has underperformed for the dairy co-op. It announced yesterday it expected to recover half the $1 billion sunk into its China farms venture, after agreeing to sell most of them for $555 million.

The two farming hubs in Ying and Yutian have been sold for $513 million to Inner Mongolia Natural Dairy Co, a subsidiary of China Youran Dairy Group.

The co-op will also net $42 million from the sale of its 85 percent interest in its Hangu farm to junior partner Beijing Sanyuan Venture Capital Co.

Impairment charges of $203 million in 2019 year and a further $63 million charge in 2020 were made.

Completion of the sale, which is subject to anti-trust clearance and other regulatory approvals in China, is expected to occur within this financial year.

The proceeds of the sale will be used to pay down debt.

Fonterra units closed unchanged at $4.00.

Eric Watson potentially facing jail time in the UK

Controversial businessman Eric Watson has been held in contempt of court in the UK and potentially faces serious consequences, including possible jail time, for attempting to hide assets from former business partner Sir Owen Glenn.

In a High Court ruling, Justice Christopher Nugee found Watson breached court orders and lied to a UK appeal court when he gave evidence about how his mother gave him money.

The judge described Watson “as a witness whose evidence is almost worthless” after Watson argued he is now dependent almost entirely on funds from his mother to meet his living expenses.

Glenn has been battling Watson through the courts for the past five years attempting to extract the “vast majority” of the £43.5 million Watson owes him after their partnership broke up in an acrimonious exchange of words between the two partners.

The judge said he was “strongly suspicious” that Watson used the time between the end of a trial in 2017 trial and its 2018 judgment to make it difficult for Glenn’s Kea Investments to enforce any ruling.

Major international cinema chain suspends operations indefinitely

Cineworld, the world’s second biggest cinema operator, is preparing to close all its screens in the US and UK after further delays to the new James Bond film ‘No Time to Die’ pushed its struggling business to the brink.

The indefinite closure of 90 percent of Cineworld’s screens, which is expected as soon as this week, raises further questions over the viability of the company and a cinema sector devastated by the pandemic.

In a fight for survival, Cineworld has already asked for accommodation from its lenders over its debts. Last month, the company posted a $1.6bn pre-tax loss for the first six months of the year, as its net debt rose to $8.2bn. The closures include Cineworld’s 543 Regal theatres in the US and 128 cinemas in the UK, which were banking on November’s release of the latest James Bond movie to boost flagging ticket sales.

More than 30,000 staff are expected to be affected worldwide, including 5,500 in the UK.

Australian federal budget expected to boost flagging economy

Australian Treasurer Josh Frydenberg is expected to reveal the largest deficit in decades – more than $200bn – and will outline a range of government initiatives designed to boost growth, including tax cuts, incentives for hiring and investment, and infrastructure spending.

Today’s announcement is already being dubbed Australia’s most important budget in 70 years.

Some of the likely features of the budget include an extra $1.5bn for manufacturing grants, a $3.5bn upgrade to the national broadband network and removing the 47 percent fringe benefits tax on retraining provided by employers to redundant, or soon to be redundant, employees.

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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