Australian Miners Slow Down Expansion

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

Australian stocks gained after most markets in Asia closed higher. The Australian dollar pared some of its weekly gains after a China reported inflation touched 3.1%.

[R]5:00 PM Sydney, Australia – Stocks gain in Australia echoing Asian market sentiments. Xstrata Plc puts on hold its mining projects. Peabody slows down work on five of its expansion projects. Metallica Minerals Ltd is weighing its Nickel project’s profitability. Commonwealth Bank unveils expansion plans.[/R]

Australian stocks gained after most markets in Asia closed higher.

ASX 200 index in Australia increased or 70.20 or 1.58% to 4,505.50 and of the stocks in the index, 142 increased, 41 declined and 17 were unchanged.

The Australian dollar pared some of its weekly gains after a China reported inflation touched 3.1%.

Xstrata Plc joined a stream of other companies to put on hold it’s proposed A$6.6 billion investment in Australian mining projects after the government proposed a super tax on mining profits.

“The government still has not allowed consultation to take place on the key issues with this tax, namely its application to existing investments and the 40% tax rate. Tinkering at the margins will not avoid long-term damage this tax could do mining investment in Australia,” said Xstrata CEO Mick Davis in response to questions.

The proposed mines tax has also made Peabody Energy Corp to slow down work on five of its expansion projects in Australia.

Brisbane-based Metallica Minerals Ltd, may not proceed with a plan to proceed ahead with it’s A$700 million nickel project in Queensland if the proposed mines tax makes it unviable.

“If this tax does come in, it threatens the project. We are not going to proceed unless we know we are going to make money,” said CEO Andrew Gillies in an interview over phone.

ASX Movers

Murchison Metals Limited led gainers in the S&P ASX 200 index with a rise of 7.7% followed by CuDeco Limited 5.7%, SMS Management & Technology Limited 5.1% and Centennial Coal Company Limited 4.7%.

Medusa Mining Limited led decliners in the S&P ASX 200 index with a loss of 4.8% followed by Avoca Resources Limited 4.5%, iSOFT Group Limited 3.8%, Elders Limited 2.4% and Commonwealth Property Office Fund 2.0%.

Other Movers

BHP Billiton plc added 2.2% to A$38.44 after gaining 3.2% on a report that the government will announce “major changes” to its proposed mining tax.

Commonwealth Bank of Australia added 1.7% to A$52.30 after company officials confirmed at the annual general meeting that Marsh Harbor branch expansion plans are in full swing.

Metallica Minerals Limited added 6.6% to A$0.24.

Rio Tinto Limited rose 1.4% to A$68.85 after Amcor Limited announced that it has received approval from the US Department of Justice to acquire Alcan''s Medical Flexibles operations from Rio Tinto Limited as part of the Alcan Packaging acquisition.

Tabcorp Holdings Limited rose 1.6% to A$6.66.

Westpac Banking Corporation, the lender, advanced 3.2% to A$23.37.