Sydney Stocks Decline; Resource Tax in Focus

Chandrasekhar Atreya
22 Jul, 2010
New York City

Stocks in Australia traded lower on the weakness in banks and cautious outlook on the economy. Business confidence in Australia plunges in June quarter. Dart Energy starts trading in Sydney. Billabong seeks $800 million syndicated banking facility.

[R]6:00 PM Sydney, Australia – Stocks in Australia traded lower on the weakness in banks and cautious outlook on the economy. Business confidence in Australia plunges in June quarter. Dart Energy starts trading in Sydney. Billabong seeks $800 million syndicated banking facility.[/R]

Shares in Australia fell in a lackluster session pulled down by weak bank stocks which overshadowed pockets of strength among miners after investors across the region reacted to negative comments by the Federal Reserve’s Chairman Ben. S. Bernanke.

The ASX 200 Index lost 0.86% or 38 points to close at 4,374.70.

Business confidence in Australia, although still positive, fell sharply in the June quarter after worries about the turbulence on financial markets weighed on local firms, a survey indicates.

The National Australia Bank’s quarterly index of business confidence fell 14 points to three points in the June quarter, according to the bank’s survey released on Thursday. The survey however was conducted before the appointment of the Prime Minister Julia Gillard and the replacement of the resource tax. Any reading above zero indicates positive confidence.

The RBA said in a statement on Thursday that it would look for ways to improve the payments system over the medium-term. Payment system is the process by which consumers and businesses transfer funds to facilitate transactions.

Fortescue Metals Group Ltd today escalated its objection against the proposed Minerals Resources Rent Tax and has called for Prime Minister Julia Gillard to discuss the proposal with the wider community.

The company’s CEO Andrew Forrest has also called on the Prime Minister to include Greens leader Bob Brown in those discussions. “Senator Brown appears severely misinformed about the benefits that he himself enjoys from the mining industry,” Forrest said.

A spokesman of the Western Australian Chamber of Minerals and Energy indicated that the chamber hasn’t ruled out reviving its ad blitz.

Dart Energy, the gas explorer spun off from Arrow Energy Ltd, made its debut on the ASX on Thursday at 75 cents a share, nearly 9% above the 69 cents a share issue price used for an institutional placement ahead of its listing.

CBA and Westpac have been mandated by Billabong International to arrange $800 million syndicated banking facility.

The Australian economy is estimated to record growth exceeding the long-run average rate in the second half of 2010, according to data released on Wednesday.

Woolworths has reported its lowest annual sales growth in more than 10 years in the three months ended June rose by just 3.9% falling short of market forecasts.

Gainers and Losers

Mt Gibson Iron Ltd led gainers in the ASX 200 with a gain of 6.21% to A$1.540, followed by Ausenco Ltd 6.16% to A$2.24, Avoca Resources Ltd 4.44% to A$2.82 and Biota Holdings Ltd 4.4% to A$0.95.

Elders Ltd led decliners in the ASX 200 with a loss of 4.6% to A$0.415 followed by Ardent Leisure Group 3.79% to A$1.015 and Alesco Corp Ltd 3.61% to A$2.4.

Production News

Melbourne-based Newcrest Mining Ltd said its fourth quarter output climbed 32% helped by record production at mines in Australia, Indonesia and a new operation in Papua New Guinea.

Production was 526,131 ounces in the quarter to June 30, as against 397,826 ounces a year ago. The Hidden Valley mine in Papua New Guinea produced 18,785 ounces in the quarter compared to 17,680 ounces in the quarter before, the company said today in a statement.

Santos Ltd, Australia’s third-largest oil and gas producer reported an 11% decline in second quarter production after floods in central Australia disrupted operations in the Cooper Basin.

Output in the quarter ended June 30 dropped to 11.9 million barrels of oil equivalent from 13.4 million barrels a year earlier, Santos said in its statement to the stock exchange today.

Gold and nickel miner Independence Group says pre-tax profit for 2009-10 will jump 56% due to higher nickel prices in the latest year. Profit before tax for the 12 months to June was $39 million compared with $25 million the year before, Perth-based Independence said in a statement on Wednesday.

Iron ore miner Territory Resources has reported pre-tax profit of $24.5 million for the June quarter after doubling iron ore shipments from its Francis Creek mine in the Northern Territory.

Resource News

BHP Billiton is expected to deliver a full-year profit of around $13 billion next month after the miner reported strong growth in key divisions during the current financial year.

NGM Resources has recommended its shareholders to accept a $27 million takeover bid from uranium miner Paladin Energy.

Paladin Energy Ltd says it is eyeing more acquisitions after its planned $27 million takeover of Nigeria focused NGM Resources has been accepted by the target company. Paladin CEO John Borshoff said the miner was looking at several takeover targets and aimed to acquire smaller companies via scrip sales and not cash.

Engineering firm Ausenco Ltd won a $32 million contract to provide design services to upgrade a processing plant owned by gold producer Newcrest Mining Ltd. The processing upgrade is at Newcrest’s $1.9 billion Cadia East project near Orange in NSW, Brisbane-based Ausenco said in a statement on Wednesday.

Bendigo Mining and BCD Resources have continued the consolidation in Australia’s gold mining industry by agreeing to merge to create a mid-cap gold miner.