Chapter 1: What is the main topic discussed in this episode?
Hello, I'm James Thompson, Senior Chanticleer Columnist at the AFR. Welcome to our weekly news breakdown of all things business, finance and markets. With me today, as always, he's more valuable than a ton of rare earths. It's my Chanticleer colleague, Anthony McDonald. How are you, Anthony? I think you mean less valuable, James. Definitely less strategic. Indeed.
This week, we ask whether the next big mining boom might pass Australia by. We examine what the global wine glut means for Dan Murphy's and look at whether there's any good news on the inflation front.
James, we have to start with the big production of the week, the annual AFR Rich List. It's a once-a-year effort from the Rich List team and compiles Australia's rich and richer.
Gina Reinhart topped the list for the seventh straight year this year with a stonking $39 billion, ahead of Meriton's Harry Triggerboff, cardboard man Anthony Pratt, Glencore's Ivan Glassenberg, and another miner, Clive Palmer. James, our former Rich List editor, what caught your eye this year?
Well, I think it's the AI richlisters, Anthony. They're coming. Of the 15 new debutants on the list, four had something to do with AI. They either have AI companies or they're involved in data centres, which of course power the AI revolution. I reckon my favorite one's Katrina Leslie. Yeah. She's got a business called Swipe Jobs. It uses AI to help match job seekers with the right jobs.
It sounds like a pretty good idea. And although we think of AI as a new thing, this is a pretty serious business. 800 staff, $1.3 billion in revenue last calendar year. It's been profitable for six years. And there's sort of talk that it might head towards the ASX at some stage. Mm-hmm.
This business has helped Leslie arrive on the rich list with a fortune of $2.5 billion, which is pretty impressive, I reckon. I think she's at number 67 on the list with $2.5 billion. Now, not to be the old man saying when I was a boy, but when I was a young rich list editor- Gosh, you know, the billionaires were rarer than they are now.
You know, to have $2.5 billion and only be number 67 on the list, it just shows how, you know, really this is going to be a list of entirely billionaires in a very short space of time, isn't it?
Oh, sure is, James.
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Chapter 2: What could the next mining boom mean for Australia?
Some of those stories like Katrina Leslie, it's those founder stories that really pop out on the rich list. It's great. You know, like there's so many armchair critics out there like you and me, but there's people out there actually doing stuff, right, and creating something. So, you know, you've got Katrina Leslie.
You've got the White Fox couple, Daniel and Georgie Kontos, you know, with that White Fox fashion brand. You've got the Puliches, the Croatian immigrant story that are doing those gem life things. aged care sort of living parks, like they're great.
You've got Marco Rossi from Built, you know, that's the construction company that's building that new Atlassian Tower in Sydney and the new Chifley Tower in the Sydney CBD as well. Like these people that are out there doing stuff. I mean, for me, that's what the Rich List is about.
Chapter 3: How does the global wine glut affect Dan Murphy's?
Yeah, no, great call. And in a world where, you know, as I've said before, we've got a 17-year-old son at home and he's wondering what he should do with his life. In a way, the ritualist says, just go and have a crack at something. There's lots of different ways to make it in this world and lots of different industries are still represented on that list.
So, it's still the greatest annual project in Australian journalism and The team led by Hannah Tattersall and Yolanda Redrup, who's currently on maternity leave, they can be very proud of the great job they've done, and Matthew Drummond, who runs the AFR magazine too.
Now, Anthony, I've spent a little bit of time on Qantas jets this week, so I wanted to ask you about this story about something called Project Sunrise, which is not the name of a cocktail that you get in the Qantas lounge, but it's the name given to Qantas' grand plan to fly direct from Sydney to London and New York.
Now, this has been a big plan for, I'm not going to say as long as I can remember, but for at least the last five years. And it's been always just about to arrive, but this week it suffered yet another setback.
Yeah, five years. You've been generous there, James, and the rest.
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Chapter 4: Who topped the AFR Rich List this year?
First announced in 2017. Oh, there you go. You could have just about started school and finished year 10 by now. Yeah, the big news out of Qantas for the past nearly a decade, like imagine direct flights, London and New York from Sydney or Melbourne. It's sort of the aviation sector equivalent of the 10-minute mortgage. We all want to get there. We want to get there now. Get me to London faster.
You know, no stops. Sounds like a horrendous time in the sky. It does a little bit, yeah. But to do it, I mean, Qantas needs these special new planes, Airbus A350s. They're fitted with a special second fuel tank. It's got enough juice to make it all the way. They announced it in 2017. It got pushed back with COVID, you know, which was hugely stressful for Qantas and aviation sector everywhere.
It's been pushed back again and again. And these first planes were supposed to arrive in December. It's now April next year. There's supposed to be five of them by about late next year and a full 12 by the end of 2030. But the point is, though, it's just getting delayed. This is outside of Qantas' control. It's completely relying on the manufacturer.
But the irony of delays and Qantas standing around waiting for these planes won't be lost on any customers. James, but the point is it needs these planes, right? It's banked a big part of its international growth strategy around these planes.
Chapter 5: What role does AI play in the new Rich List entrants?
Qantas has been hit by the arrival of the Middle Eastern airlines, the Asian airlines to often state back that love taking Australian passengers out to the world. Qantas wants to win back a bit more of that share. It's getting these new planes to help it do them. So every time there's a delay, it's a bit of a kick in the guts. uh, for the Qantas team.
So anyway, I'm sure the planes get here one day. I'm sure we'll be flying direct to London and New York one day, but mate, we all thought it would have been happening by now.
Yeah. Yeah. It must be frustrating as you say, but it's one of those things where it's just in reach. Finally, you know, you can almost put your hand on the engine of the plane, but now it's just slipped a little bit further out of view. I think Qantas' demand for international travel still looks pretty robust from what we can see.
They're not going to have any problems filling planes, but this is a bit of the next chapter for them, so they'll be keen to get it started.
Yeah, and they've got a huge fleet turnover coming, $15 billion worth or something. This is the centerpiece of it, right? So they just need to hurry up and get these big ones in the sky. And James, just quickly, it wouldn't be the Chookpod without a bit of rates chat, as mentioned. We got another look at the inflation picture on Wednesday with the monthly inflation data.
Was there anything to be hopeful about in there?
Oh, well, look, headline inflation went from 4.6% to 4.2%. That sounds good, doesn't it? Sounds great. Until you start looking at the detail, of course, and that had a lot to do with the cut to the fuel exhaust, which we don't pay for now, but our kids and our grandkids will pay for it. Forever. In forever, that's right.
And I guess the bad news was that underlying inflation actually ticked a bit higher, 3.4% up from 3.3% the month earlier. Anthony, these inflation numbers are important, but it's all coming. We really are only now starting to see... the effects of the energy shock created by the Iran war coming through, higher plastics prices, higher food prices, all that sort of stuff, it's still to come.
And I think it'll still roll out really across the balance of the rest of this calendar year. So I don't think anyone in the RBA headquarters in Martin Place in Sydney will be celebrating. They still have to be really watchful. And I think there's still at least one more rate hike to come.
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Chapter 6: What is Qantas' Project Sunrise and its significance?
Never been a better time to do a deal on that sense. I mean, this AI trade, it's got a rocket under their share prices. It's capturing attention. Yep. I mean, I had a fund manager this week, James, a domestic one, someone I never thought would say this. Say, why doesn't BHP go out and raise $20 billion and really have a crack?
Yeah.
Imagine that. So, yeah, I mean, capital is as cheap as it's ever been. So anyway, it's plenty for us to think about. James, the biggest sort of question at the mining summit was about Australia, right? And what role do you think Australia plays in this next mining boom? Is it going to be as big for us as the China boom?
I don't think so. Olivia Markham was deliberately provocative, I think, and said that on a global sense, in global financial markets, the mining sector is largely irrelevant, quote unquote. And unfortunately, Australia is... slightly less relevant to what it once was in the global sector.
So BlackRock's been reducing its exposure in Australian mining shares over the last five years, and that reflects two things. One is the sort of rising cost levels in Australia. The other thing is the commodities we produce here. So obviously iron ore, powerhouse of the Australian industry, hugely profitable. Coal, another powerhouse, again, pretty profitable.
But what the world wants for this AI trade is copper. Lithium. And those aren't huge growth industries in Australia. People are looking to places like South America. They're looking to America itself, where Rio and BHP have got a big project called Resolution Copper. So I think- This boom is not going to be as centred on Australia as the China boom was.
Yes, critical minerals can be very strong for Australia, but it's nothing like the volumes and the profit pools that iron ore and coal generate. It's different to that. And so, yeah, we are going to take a little bit more of a backseat here, I think. That's nothing new. BHP and Rio have been telling us that for a while, that iron ore demand is plateauing. Profits are still pretty good.
But the next 30 years doesn't look like the last 30 years did. Not at all. I'm still not sure we've quite figured that out yet.
Yeah, those critical minerals place, James, they're not building, you know, these massive long trains and all the infrastructure you saw up in the Pilbara. It's just, it's a different game.
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Chapter 7: Is there good news on inflation for consumers?
They basically went broke. So no one's making money out there in wine. What's the problem with wine? There's plenty of people out there selling expensive wine. I would have thought they were minting it. Is there something wrong?
Well, you're not drinking enough, Anthony, and neither am I, and neither are our listeners, to be frank. I mean, those alcohol consumption numbers that you referred to earlier, that's really the central problem. It's not just an Australian trend. It's a trend right around the world.
And so how a lot of winemakers have responded to that is through what's called premiumization and the great strategy that treasury wine estates had that they want to get out. I'm picking round numbers here. They want to get out of the under $10 a bottle business, and they want it to be in the over $10 a bottle business, so the more premium end of the market.
But the problem is there's so many grapes around the world, so much wine capacity, that that's infected the premium end of the market too. So there's just too much wine in the world, too many wineries, too many grapes, too much product. And that's brought down prices to some extent, but certainly margins for most winemakers. It's just become a really, really tough business.
So I think that's why we've seen, you know, treasury wine estates struggle. They had been very reliant on this trade into China, which was whacked by tariffs, and now it's been that those tariffs have sort of come off. But it's just harder to get into the Chinese market. The Chinese aren't spending as much on wine as they once were. So, again, a lot of those growth corridors have been shut off.
I think even in America, you know, this push to GLP-1 drugs like Azempic and Wegovy, they've also hurt the wine business, you know. People on those drugs don't eat as much and they don't drink as much alcohol. And I think the estimates are around 12% of the US population is taking one of those drugs at the moment. So everything is pushing against the wine business and it's just really hard.
Jane Herdlicker used to run Virgin Australia and Jetstar. She had a few things to say about this idea that people aren't drinking as much at Investor Day, didn't she?
Yeah, she did. And Baron Jerry's Tom Curith, to his credit, I mean, he was brave enough to ask it. You know, he said, abstinence is up. When people do drink, it's less frequent. Shifting more to on-premise. So, you know, when they're out and about rather than drinking at home, how do you think about it? And Jane really pushed back. I mean, she said, you know, that's not all true.
You know, there's lots of different behaviors out there. She said her 18-year-old son was pretty stoked when mom told him that she was going to be running... because he knew it owned BWS. She said, really? I thought you'd be happy about Dan Murphy's and apparently BWS is where the young ones shop, James.
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