Sydney Drops; Santos Sells Stake in Gladstone

Chandrasekhar Atreya
17 Dec, 2010
New York City

Australian stocks edged down led by banks and lower mining stocks. Santos sells 15% stake in Gladstone LNG for A$665 million to fund the project. Western Australia revises its full year budget surplus upwards. Reserve Bank of Australia plans a liquidity facility to help banks conform to Basel norms.

[R]6:00 PM Sydney, Australia – Australian stocks edged down led by banks and lower mining stocks. Santos sells 15% stake in Gladstone LNG for A$665 million to fund the project. Western Australia revises its full year budget surplus upwards. Reserve Bank of Australia plans a liquidity facility to help banks conform to Basel norms.[/R]

The Sydney stock market closed lower today led by weak banks and mining stocks.

The ASX 200 Index fell 0.44% or 20.90 points to close at 4,763.10 for the day and gained 0.36% for the week and the Australian dollar closed at 99.03 U.S. cents in Sydney today.

Foreign Minister Kevin Rudd in Brazil said that Australia will provide Latin America with $100 million over the next four years for development assistance.

“In 2010, Latin America has over 190 million people living in poverty and through Australian expertise in areas like microfinance and agriculture we can make a significant difference,” Rudd said today.

Santos sold a 15% stake in the Gladstone LNG project to Korea Gas Corp and France’s Total S.A. for A$665 million as it launched its $500 million institutional placement to fund the construction of the project that is likely to cost the company some $16.16 billion to build.

Korea Gas and Total are taking 7.5% stake each and Korea Gas has agreed to buy 3.5 million tons per year from the project, which is expected to give start production in 2015, for the next 20 years.

Orica Inc, the world’s largest explosive maker, said today that it back on track to post increase in profit for the tenth year in a row in fiscal year 2011. It also hopes to begin construction of an $800 million ammonium nitrate plant in Peru.

“Although the global economic recovery is quite patchy, we are increasingly confident that the recovery in sales and profits is sustainable. We expect the net profit after tax to be higher than the $676 million achieved in fiscal year 2010, taking in adjustments for the de-merger of DuluxGroup and exchange rate movements,” CEO Graeme Liebelt told shareholders in the company’s AGM.

The Reserve Bank of Australia and the Australian Prudential Regulation Authority have released plans today to establish a liquidity facility that will help banks in the country to meet the norms of Basel liquidity norms.

The Western Australian government in its mid-year review revised its full year surplus from its previous estimate of A$286 million to A$758 million, mainly due to higher iron ore royalty inflows from increase in prices.

The review predicts that surpluses for 2011-12 and 2012-13 will be about A$1 billion before it drops to A$147 million in 2013-14, mainly due to a sharp fall in the state’s share of the GST from 7.1% this year.

Weather in key eastern and western crop regions of Australia is predicted to be wetter than normal over the next three summer months thus raising concerns about crop flooding and increase in wheat prices.

Stock Movers

Miners fell in trade due to lackluster metal prices.

BHP Billiton lost 0.5% or 35 cents A$45.03 while its rival Rio Tinto Ltd was down more than 1% at 1.55% to close at A$85.65. Newcrest Mining lost as much as 69 cents to close at A$40.77.

Financial stocks were mostly negative with ANZ going down 17 cents to A$23.59 and Commonwealth Bank slipping 24 cents to A$50.70. National Australia Bank lost 29 cents to A$24.15. Westpac was the only one to gain 4 cents to A$23.19.

Santos was in a trading halt after saying it sold 15% stake in the Gladstone LPG project and last traded at A$12.97.

Despite the court verdict lifting bans on several former James Hardie directors, the company stocks ended down 1.33% to close at A$6.68.