Australian Rally Halts; BHP Approves $1.2 Billion for Olympic Dam

Marcus Jacob
12 Oct, 2011
New York City

Australian stocks halted a 5-day rally after metals prices declined in overnight trading in world markets. BHP committed $1.2 billion in capital for the first phase of Olympic Dam project that will quadruple copper production. JB Hi-Fi quarterly comparable sales fell 3.5%.

[R]6:00 PM Sydney – Australian stocks halted a 5-day rally after metals prices declined in overnight trading in world markets. BHP committed $1.2 billion in capital for the first phase of Olympic Dam project that will quadruple copper production. JB Hi-Fi quarterly comparable sales fell 3.5%.[/R]

Australian stocks edged lower after rallying for five days in a row on international worries. Market indexes opened lower 0.5% after Alcoa reported weaker than expected earnings and Slovakian law makers rejected the plan to expand the euro zone rescue fund.

The ASX 200 index decreased 23.3 or 0.6% to 4,204.3 and All Ordinaries index fell 22.4 or 0.6% to 4,266.40.

The Australian dollar gained 1.6% to US$1.014 and gold decreased US$12.24 to US$1,666.32.

In trading, 1.59 billion shares changed hands worth $4.36 billion and of the 10 shares traded six stocks fell.

Slovakia Rejects Euro Zone Fund Expansion in the First Vote

Slovakian parliament, after the U.S. market close, rejected the measure to expand the 440 billion euros rescue fund. Of the 124 members only 55 backed the measure, far less than required majority of 76.

The rejection also led the fall of the current four member coalition government after Prime Minister Iveta Radicova tied the no confidence vote on her government with the approval.

No date has been set for a new vote with the interim government in place.

Stock Movers

BHP Billiton Ltd decreased $0.31 to $37.08 and the miner approved the allocation of $1.2 billion in pre-commitment capital to expand the first phase of the Olympic Dam project in South Australia.

South Australian Premier Mike Rann signed an indenture agreement at the company headquarter in Melbourne today which grants the expansion at the mine.

Annual copper production after the expansion is expected to surge to 750,000 tons from 180,000 tons for decades.

Olympic Dam site is the world’s fourth largest known copper and gold deposit and has the largest known uranium reserves.

Rio Tinto Ltd decreased $0.54 to $67.46. Newcrest Mining Limited decreased $0.56 to $35.84 and Lynas Corp increased 1 cent to $1.24.

Fortescue Metals decreased 9 cents to $4.72 and the iron ore miner said it increased its reserves at the Nyidinghu deposit by 980 million tons.

Energy Resources Australia closed unchanged at $3.29 after the uranium miner announced a plan to raise $500 million in an offering that valued the company at $1.53 a share.

Oil Search Limited decreased 11 cents to $5.95, Santos Limited fell 17 cents to $12.49 and Woodside Petroleum declined 23 cents to $35.36.

Commonwealth Bank of Australia closed up $0.21 to $47.46 and National Australia Bank fell 1 cent to $24.20. ANZ edged up $0.12 to $21.08. Westpac decreased $0.29 to $21.63.

David Jones Limited closed down 6 cents to $3.00 and Wesfarmers decreased $0.14 to $31.61.

JB Hi-Fi managed to recover and close higher 49 cents to $14.36 after the electronics chain operator said comparable sales declined 3.5% in the fiscal first quarter ending in September 30. The company also said at the annual general meeting that it plans to open between 13 and 15 new stores each year in the next four to five years.

Woolworths Limited increased 30 cents to $24.92 and James Hardie Industries SE fell 13 cents to $5.67. Treasury Wine Estate declined 3 cents to $3.83.

Tabcorp Holdings increased 11 cents to $2.71 after it said first quarter revenues increased 2.7% to $759.4 million.

Stockland fell 1 cent to $3.00 and Westfield Group fell 9 cents to $7.60.