Resource Stocks in Australia Decline

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
04 Jun, 2010
New York City

Australian dollar fell after rising for two days as metal prices weakened. It traded at 84.60 U.S. cents at the end of the day in Sydney.

[R]6:00 PM Sydney, Australia – Australia’s stocks and dollar declined after metal prices fell in the world market. Finance ministers of G-20 nations are meeting in South Korea today to agree on measures to prevent future financial crisis. Gold coin sales to Europe increase in May. Queensland restricts new developments in Wenlock river basin.][/R]

ASX 200 Index in Australia decreased 0.88% or 39.60 to 4,446.40 and of the index stock, 65 increased, 120 declined and 15 were unchanged.

Australian dollar fell after rising for two days as metal prices weakened. It traded at 84.60 U.S. cents at the end of the day in Sydney.

The London Metals Index, which tracks the prices of copper, aluminum, lead, tin, zinc and nickel, dropped 2.3% yesterday, after data in China liquidated some of its inventory and investors feared slower economic expansion.

Central banks of G-20 nations are delaying their withdrawal of emergency stimulus as debt crisis in Europe threatens to derail global economic recovery.

The finance chiefs of G-20 nations began talks today in Busan, South Korea, to talk about the current financial crises and measures to prevent future global crisis.

Sale of gold from Perth mint to Europe surged in May as euro-zone debt crisis increased the attractiveness of gold for the European investors. Perth mint which produces 6% of world’s gold has its stockpile dwindle as demand surges in Europe.

Buyers from Europe accounted for 69% of gold-coin purchases in May as compared to 51% a year ago, said Ron Currie, Sales and Marketing Director at the Perth mint. Some of the German investors also bought silver, the ‘poor man’s gold’ as an alternate measure to protect their wealth, he said.

The rush for bullion in May at Perth, which was working to full capacity with 20% extra workers, was matched overseas as the U.S. mint sold 190,000 ounces of American eagle gold coins in May, the most since December.

Cape Alumina Ltd, is reviewing its proposed A$380 million Pisolite Hills bauxite mine project as it is no longer viable in its existing planned state, after the Queensland government tightened environmental controls.

The Queensland state government today restricted new development activities that may degrade the natural resources of Wenlock river basin. ‘We are concerned about the future of this project and would now need to review the project’s economic viability,” said Paul Messenger, Managing Director of the Brisbane-based company in a telephonic interview today.

White Energy Co, a coal processing company, has been included in the benchmark S&P/ASX 200 Index, replacing Australian Agricultural Co in a quarterly rebalancing of indexes, Standard & Poor’s said in a press release today.

The quarterly rebalance takes into account the aggregate market capitalization and liquidity of stocks for the preceding six months for eligibility considerations. The change will be effective June 18, the press release said.

ASX Movers

Carnarvon Petroleum Limited led gainers in the S&P ASX 200 index with a rise of 4.4% followed by Ardent Leisure Group 4.2%, Australian Worldwide Exploration Limited 3.8% and Charter Hall office REIT 3.7%.

iSOFT Group Limited led decliners in the S&P ASX 200 index with a loss of 6.9% followed by PaperlinX Limited of 4.4%, Wotif.com Holdings Limited 4.2%, BlueScope Steel Limited 3.8% and Pacific Brands Limited 3.7%.

Other Movers

Australian Agricultural Company Limited, the cattle rancher, fell 1.3% to A$1.42.

BHP Billiton plc fell 2.5% to A$37.76.

Foster’s Group Limited rose 0.7% to A$5.63.

Rio Tinto Limited dropped 2.5% to A$67.31 and the mining company said Dampier Salt Ltd, a Rio Tinto subsidiary, has signed a five year contract with Peacock Salt to supply road gritting salt to local authorities to help combat the effects of further harsh winter weather conditions.

White Energy Limited, the coal processing company, added 2.6% to A$3.49.