UPDATE 1-Australian state to sell around $2 bln in assets as mine boom ends – by James Regan (Reuters India – August 28, 2014)


SYDNEY, Aug 28 (Reuters) – The state of Western Australia on Thursday said it planned to sell government-owned assets, including part of the Port Hedland shipping terminal, for an estimated A$1 billion to A$2 billion ($1.9 billion) as its resource-heavy economy adjusts to the collapse of a decade-long mining boom.

The move will precede other unspecified sales of land and assets that could fetch another A$4 billion to A$5 billion over the next two or three years, said state premier Colin Barnett.

Barnett, said his priority was to reduce debt and regain a triple-A credit rating for Western Australia. He once hailed the state as the economic engine for Australia, but it is now struggling to pay its bills.

“These are the first assets we will open up to the market. They have been identified as priority assets for sale,” Barnett said in a statement.

Moody’s this week downgraded Western Australia’s credit rating to Aa1 from Aaa. “The ratings downgrade reflects the state’s ongoing deficit position, the deterioration in its debt metrics, and a growing risk that this trend may not be reversed soon,” the ratings agency said.

In the years following the global financial crisis, a mining frenzy spurred by a voracious appetite among Chinese steel mills for rich Australian ores had miners scrambling to fill orders, flooding the state with thousands of highly-paid workers.

Multinationals such as BHP Billiton and Rio Tinto spent billions of dollars digging iron ore mines and crisscrossing the arid outback known as the Pilbara with rail hauling line.

But a cooling in China’s economic growth turned the boom to bust

“History shows that this classic mine-and-boom phase is either followed by an evolution into multiple but related industries, or a decline into ghost towns and tumble weed,” said Jemma Green, a researcher at Curtin University in Perth.

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