C.G.F.A. ir 'profit squeeze'

Press, Volume CXII, Issue 33058, 27 October 1972, Page 18

C.G.F.A. ir 'profit squeeze'

(N.Z.P.A.-Reuter —Copyright)

SYDNEY, October 26.

Consolidated Gold Fields Australia, Ltd, would find it difficult to maintain its 1971-72 level of profitability in the current year, the chairman (Sir Brian Massygreene), told shareholders at the annual meeting.

In 1971-72 the group net profit declined 10.9 per cent to sB.sm.

Sir Brian Massygreene said he saw very little prospect of any improvement in prices for the group’s products and little, if any, possibility of costs being held at present levels. He said: “I have drawn your attention before to the concern with which I view the rate at which costs continue to rise in Australia. This trend did not abate last year because of a seemingly never-ending rise in wages. “There is now a real squeeze on profits and despite the implementation of the most far-reaching measures to reduce costs in every group operation I must admit that we are failing to contain the pressures. “I have no solution to offer, but it is as well that shareholders, the public, union members, and union officials should be aware that the problem is serious,” She said.

Goldsworthy’s expansion project to increase production to 8m tons annually by April, 1973 (last year the company produced 6.3 m tons), was proceeding according to programme and budget. Proven reserves of iron ore mineralisation at area C, about 190 miles south of Port Headland, have risen to 500 m tons. In August the

company announced reserves of 481 m tons.

The mineralisation was of a type not previously mined in the Pilbara and the metallurgical properties of the ore, and its acceptability by the steelmakers, had yet to be established.

Exploration costs were $2.3m during the year. Current work was largely for copper at Gunpowder, nickel, uranium, copper, and zinc in Western Australia, and for tin and copper in Tasmania.

Sir Brian Massygreene said there could be no doubt that if the Australian dollar should be deliberately revalued against the United States dollar and the pound sterling, C-G.F.A.’s receipts (and its profits) from the sale of minerals and other exports on to the world market would suffer. Arguments against revaluation far outweighed those in favour of it and another revaluation would be an unwise and unfortunate move, he said.