Monsters of Rock: Northern Star enters the power business as iron ore miners go ballistic
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Well known for its roots within WA’s Goldfields, Northern Star Resources(ASX:NST) has always seemed driven to become a dominant force in Kalgoorlie-Boulder’s economic and social fabric.
Having become the first company to consolidate the Super Pit under one owner, Northern Star has added the final piece to its Kalgoorlie puzzle by paying US$95 million to buy US gold miner Newmont’s power business.
The domination of the historic gold town’s business landscape was a long-held dream for Northern Star’s succession of bosses, who all came through the city’s famous WA School of Mines institution.
They can now add its largest privately owned power plant to the mantlepiece, alongside ownership of the Super Pit, Mt Charlotte, the Jubilee gold operation, Kanowna Belle gold mine and most importantly naming rights for its professional basketball team, the Goldfields Giants.
Northern Star will pay a further US$70 million on top of the US$25 million option it paid for the rights to purchase the 110MW gas-fired Parkeston power station when the ASX-listed gold miner purchase Newmont’s half of KCGM.
The plant primarily supplies electricity to the Super Pit but also to households and businesses in Kalgoorlie, also known to those in the area as the centre of the universe.
For Northern Star the company says it will lower power costs and put the gold miner in charge of its own destiny when it comes to transitioning to renewable energy.
“The purchase means our Kalgoorlie power supply will now form part of our studies into ways to meet our commitment to becoming carbon-neutral,” Northern Star MD Stuart Tonkin said.
Northern Star were hammered alongside other gold miners on news the ‘hawkish’ Jerome Powell is being nominated to return to the chair of the Fed Reserve by US President Joe Biden.
Iron ore, coal and uranium miners led the ASX materials index to a 2.3% gain on Tuesday.
That was led by a near 10% rise for Fortescue Metals Group (ASX:FMG) in response to positive news around China’s economic policy.
It came despite a host of media attention around reports its chairman and reborn green energy advocate Andrew Forrest lobbied the Australian Government to begin the phaseout of the diesel excise rebate for big miners.
The call has been roundly rejected by both business leaders and authorities.
That would represent a $300 million hit to Fortescue’s own bottom line but there are no signs FMG itself has any interest in paying its rebate the Government.
Iron ore futures in Dalian hit the upper 10% limit for the January contract after spot prices rose above US$95/t for 62% fines overnight.