Power shares

[k14]

London April the 8th
"The Report sets out our ambition to reach net zero greenhouse gas emissions by 2050. And our new targets to achieve a 30% reduction in emissions intensity, and a 15% reduction in absolute emissions, by 2030.
To deliver these targets, we will spend approximately $1 billion over five years on climate-related projects, and research and development.
As well as working hard to reduce our own emissions, we are also working in partnership with our customers and others to reduce greenhouse gas emissions throughout the mining and metals value chain, from mine to end- product.
Including ‘hard to abate’ sectors, such as aluminium smelting, steel-making and shipping, where there are currently no commercially viable pathways to decarbonisation."

Rio Tinto plc 2020 Shareholder Conference Call - Speech, Simon Thompsonpdf, 119.18 KB
And in the conference and call recording RIO LOOK to be taking environmental issues very seriously and are reducing their carbon footprint. They are optimistic about Aluminium long term with increasing uses in the car industry for one.They have adopted Climate action 100 plus with carbon reduction goal and new low carbon tech initiatives to become net zero steel and aluminium producers. This makes hydro power based Tiwai a valuable asset going forward ( especially with its high purity) as it will help with the environmental commitment for the company. also mentioning that with the chinese restructure of aluminium production will rebalnce the supply demand situ. Most of the questions were about environmental issues. Makes me more optimistic about Tiwai stayingfor the longer term.
Rio Tinto plc 2020 Shareholder Conference Call - Speech, Simon Thompsonpdf, 119.18 KB

Good info. I think this would support keeping Tiwai open long term, although shorter term I could see them reducing production to say 400MW (which I think is 2 pot lines) with the other two mothballed until world Al demand picks up again. Demand will surely take a few years to recover from the current situation?

[Cyclical]

Update from MEL. Some good info, including:

"COVID-19 lockdown has reduced weekly demand in April 2020 by around 16% compared to the same period last year"

https://www.nzx.com/announcements/351665

[macduffy]

Update from MEL. Some good info, including:

"COVID-19 lockdown has reduced weekly demand in April 2020 by around 16% compared to the same period last year"

https://www.nzx.com/announcements/351665

Presumably that means national demand, but the announcement seems, to me at least, to mix national and Meridian numbers rather carelessly.

[King1212]

Does not matter down or not...what investors are looking now are the reliability of paying dividend as income n strong cash flow. So utilities will do good not to mention with winter approaching n winter grant to most people...

[macduffy]

Does not matter down or not...what investors are looking now are the reliability of paying dividend as income n strong cash flow. So utilities will do good not to mention with winter approaching n winter grant to most people...

So, do you think that a 16% reduction in demand, if sustained, won't have an effect on profits, cash flow, dividends?

[King1212]

Does not matter...so long there is dividend..that will please the investors...almost all companies now will not pay a cent....

[King1212]

Ok..let talk the current situation here....

A lot of investors were in huge pile of cash ...most scares to get in stock market n saw fundamentals are not right yet. Then...they also sacre to put their money on the term deposit... because most had experienced that the banks went bust....leaving thier money unguaranteed.

So...most will get in utilities... energy....n Telco sectors

[trader_jackson]

So, do you think that a 16% reduction in demand, if sustained, won't have an effect on profits, cash flow, dividends?

I would have thought this would have a big impact on dividends... especially, as I've already touched on earlier, almost all of them pay out around 90% of free cash flow in dividends... with the whole idea of paying huge premiums for these power co's being that they can grow their dividend at above the rate of inflation annually, year after year, it would be bad news if one was to come out with no dividend increase (Cents per share) on last year, and the really bad news would be if one was to come out with even just a slightly reduced dividend on the prior financial year, which I would imagine would send people running for the high hills, instead of paying near ridiculous valuations to get what is really a return not that much higher than a term deposit.

[macduffy]

because most had experienced that the banks went bust....

Not New Zealand banks, King, some finance companies did, many of their depositors were bailed out by the govt guarantee which, incidentally, the banks had also paid a levy for.

[King1212]

Yes I understand .....but recent discussion on the forum.... people has heaps of cash but fear to put term deposit.

TJ...I am still confident they will pay dividend...maybe reduce dividend....because winter grant will keep income in...