Rio Tinto Sells U.S. Coal Assets for $2 B; Sydney Stocks Gain

Chandrasekhar Atreya
16 Dec, 2010
New York City

Australian stocks edged higher as commodities rise in Asia. Rio Tinto sells major portion of its U.S coal assets for $2 billion. Australian lawmakers are still not convinced that the merger between Singapore Exchange and ASX Ltd is in the best interest of the country.

[R]6:00 PM Sydney, Australia – Australian stocks edged higher as commodities rise in Asia. Rio Tinto sells major portion of its U.S coal assets for $2 billion. Australian lawmakers are still not convinced that the merger between Singapore Exchange and ASX Ltd is in the best interest of the country.[/R]

The Sydney stock market shrugged off a weak offshore lead to advance to a fresh five-week high led by banks, especially Commonwealth Bank.

The ASX 200 Index rose 0.34% or 16.20 to close at 4,784.00 and the Australian dollar closed at 98.66.S. cents in Sydney today.

Merchandize imports into Australia rose 4% in November to $17.696 billion from October, seasonally adjusted, the Australian Bureau of Statistics said today.

Imports of mineral fuels, lubricants and related items rose to $2.552 billion in November from $2.232 billion a month earlier, while imports of machinery and transport equipment rose to $7.560 billion from $6.989 billion in October.

A survey by International Monetary Fund said a strong link exists between terms of trade in Australia and rising house prices. The current high terms of trade are expected to be long-lasting. Strong population growth and high real income growth in the wake of record high commodity prices this year will continue to support rising house prices, the report says.

Home prices seem to be overvalued by as much as 10% but strong population growth and rising income will continue to support the market, the report says.

Australian lawmakers are still not convinced that Singapore Exchange’s bid for ASX Ltd is in the country’s interest.

Even though the bid won approval from the competition regulator, it still needs the support of Treasurer Swan, the Foreign Investment Review Board, the Reserve Bank of Australia, the Australian Securities and Investments Commission and parliamentarians, several of whom are opposed to the deal.

Macarthur Coal cut its first half profit guidance to a new range of A$97 million to A$102 million after wet weather disturbed mining output and the company blamed the decline on stronger Australian dollar.

New South Wales government approved today the plan to increase the size of Sydney’s A$6 billion development in Barangaroo. The amendment to the plan increases the floor space and includes the development of a new hotel built on a pier jutting into the harbor.

The floor space within the commercial area in the south has been increased from 430,000 square meters to 490,000 square meters, and also includes a new low-rise residential and retail block of about 19,000 square meters.

Rio Tinto announced today that it is pricing for a secondary offering of 25.6 million shares of Cloud Peak Energy at $19.50 a share and expects to generate gross proceeds of $499.2 million.

“With the proceeds from the Cloud Peak Energy transactions and the sale of Jacobs Ranch, the total gross proceeds of the disinvestment of the majority of Rio Tinto Energy America will be at least $2 billion,” Rio Tinto CFO Guy Elliot said.

Iron ore explorer Brockman Resources said today it is in advanced talks with Fortescue Metals Group for rail haulage facilities along with port access and marketing service for its Marillana project in Western Australia.

Stock Movers

Commonwealth Bank gained 44 cents to A$50.94 and Westpac Banking Corp added 8 cents to A$23.15. The other two large banks NAB and ANZ declined.

ANZ Banking Group lost 6 cents to A$23.76 and National Australia Bank lost a cent to A$24.44.

Santos Ltd surged 2.94% to A$12.97 after saying it was in advanced discussions with Korea Gas Corp to purchase 3.5 million tons of LPG per year from the Gladstone project and also take a 15% stake in it.

Woodside Petroleum gained 12 cents to A$43.40.

Virgin Blue added 2.5 cents to A$0.45 after the competition regulator conditionally approved a tie-up between Virgin and Air New Zealand on their trans-Tasman routes.

BHP Billiton added 3 cents to A$45.39 and Rio Tinto eased 2 cents to close at A$87.00.