United States could hit debt limit in two months, Floods hit coal prices: Economy Roundup

United States treasury secretary Timothy Geithner has said the US could reach its $US14.3 trillion debt limit by March, urging Republicans to increase the country’s ceiling or face economic consequences.

“Even a short-term or limited default would have catastrophic economic consequences that would last for decades,” Geithner said in a letter to US Senate Majority leader Harry Reid.

But the Republicans are calling for sharper spending cuts, especially in programs the Obama administration has spent the last two years engineering, including health reform.

“The American people will not stand for such an increase unless it is accompanied by meaningful action by the president and Congress to cut spending and end the job-killing spending binge in Washington,” House of Representatives Speaker John Boehner said in a statement.

Back home, CSR has said it will pay a special dividend to distribute the $800 million it received as part of the sale of its Sucrogen sugar business, which it finalised last month. CSR shares have risen over 2.4% after the announcement was made this morning.

The company was sold to Singapore’s Wilmar International for $1.843 billion.

“CSR also announced today that it intends to consolidate its shares, in a ratio of one share for every three CSR shares currently held, if the proposed capital return is approved by shareholders,” the company said in a statement.

ANZ has said in a new note that flooding in Queensland has resulted in the closure of 8% of the global thermal coal exports supply.

According to a report by Reuters, ANZ analyst Mark Pervan has said coal mines with an annual capacity of 57.3 million tonnes of thermal coal have said they will reduce production or have declared force majeure.

The note comes after several major mining companies have declared they are struggling to continue normal operations due to the flooding.

Also in the mining sector, Xstrata has said it is too soon to know when it could reopen the Blakefield South Coal mine, which was shut down due to fires.

“Our intention is to starve the fire of oxygen,” a spokesperson has told Reuters.

Shares open lower on weak commodity prices

The Australian share market has opened lower this morning due to weak leads from overseas and a subdued performance from commodities overnight.

The benchmark S&P/ASX200 index was down 16 points or 0.36% to 4708.2 at 12.00 AEST, while the Australian dollar failed to gain ground above parity and remained at US99.4c.

ANZ shares lost 1% to $22.86, as Commonwealth Bank shares gained 0.2% to $50.02. NAB lost 0.2% to $23.71 as Westpac fell 0.2% to $22.13.

Virgin Blue has appointed former Fairfax Media executive Sankar Narayan as the company’s new chief financial officer.

“Sankar will lead our financial, information technology and centralised procurement divisions, be responsible for improving financial efficiency and play a key role in driving the group’s growth,” Virgin Blue chief executive John Borghetti said in a statement.

Atlas Iron has said production from the Western Australia mines is increasing, with managing director David Flanagan saying the mines are providing strong cashflow.

“Increased exports, reduced costs and strong iron ore pricing have delivered a significant increase in cash reserves to $171 million as at 6th January 2011,” Atlas said in a statement.

White House commission slams BP

A White House oil spill commission has slammed BP for making several cost-cutting decisions that eventually led to the Gulf of Mexico oil spill.

“Whether purposeful or not, many of the decisions that BP, Halliburton, and Transocean made that increased the risk of the Macondo blowout clearly saved those companies significant time (and money),” the report said.

“The root causes are systemic and, absent significant reform in both industry practices and government policies, might well recur,” the report said.

But despite the report, BP shares have remained surprising resilient overnight, moving up 1% on the FTSE.

In the United States, stocks have remained soft due to mixed expectations of official payroll data, which is due out tomorrow. The Dow Jones Industrial Average fell 25.65 points or 0.22% to 11,697.24.