Australian Mining Sector Cuts Capital Spending Plans

Marcus Jacob
29 Nov, 2012
New York City

Australian markets traded higher and latest survey showed a sharp decline in mining industry capital spending plan. Rio Tinto said it plans to cut $5 billion in operating and support costs by 2014.

[R]7:30 PM Sydney – Australian markets traded higher and latest survey showed a sharp decline in mining industry capital spending plan. Rio Tinto said it plans to cut $5 billion in operating and support costs by 2014.[/R]

Australian stocks closed higher and participated in the world markets rally. However, the latest survey from the government showed sharp decline in mining sector capital spending.

The ASX 200 index increased 30.40 or 0.7% to 4,477.70 and the broader All Ordinaries gained 27.46 to 4,490.06.

Australian dollar inched higher to $1.0445.

The latest quarterly survey by the Australian Bureau of Statistics showed a decline in capital spending plan by 3.3% to $5.9 billion and mining sector plans to cut spending by 8.1% from the previous quarter to $9.6 billion.

Total capital spending that includes building and other structures is now expected to increase 11% in the current financial year, down from the previous estimate of 21% and a sharp fall from the 30% surge in the previous fiscal year ending in 2012.

Stock Movers

BHP Billiton Limited gained 21 cents to $34.21 and Rio Tinto Limited advanced 48 cents to $57.18.

Rio said it plans to cut more than $5 billion of operating cost by the end of 2014 and the company was cautiously optimistic about a pick-up of growth in China.

Lynas Corporation Limited slid 1 cent to 67.5 cents, Iluka Resources decreased 3 cents to $8.20 and Fortescue Metals increased 6 cents to $3.86.

Mirabela Nickel closed unchanged at 45 cents and Newcrest Mining climbed 28 cents to $25.61. Kingsgate jumped 12 cents to $4.89 and Whitehaven Coal up 4 cents to $2.85.

Transfield Services added 5 cents to $1.70 and engineering contractors WorleyParsons down 1 cent to $24.51.

Monadelphous Group decreased 7 cents to $21.76.

Oil Search Limited gained 3 cent to $7.03 and Santos Limited slipped 7 cents to $10.93.

Woodside Petroleum jumped 28 cents to $33.60 and Origin Energy Limited increased 17 cents to $10.84.

Seven West Media closed unchanged at $1.62. Harvey Norman Holdings slid 1 cent to $1.80.

Woolworths climbed 36 cents to $29.35 and Kathmandu closed unchanged at $1.47.

David Jones Limited up 1 cent to $2.45 and Wesfarmers climbed 38 cents to $35.69. Breville Group gained 10 cents to $5.95.

Billabong International Limited increased 1.5 cents to 93 cents.

Commonwealth Bank of Australia advanced 46 cents to $59.44 and Bank of Queensland increased 9 cents to $6.94 and ANZ gained 27 cents to $24.09.

Macquarie Group jumped 35 cents to $31.90 and Perpetual Limited up 1 cent to $30.99. National Australia Bank added 7 cents to $23.95. Westpac climbed 20 cents to $25.23.

The company had guided profit between $110 million and $130 million and later halved the estimate between $55 million and $65 million in 2011. In one week, the stock fell more than 40% to $3.25.

Toll Holdings added 5 cents to $4.48, Leighton increased 10 cents to $17.17 and property developer Mirvac Group lowered 2 cents to $1.47.

Westfield Group added 1 cent to $10.44.

Qantas up 1 cent to $1.32, Flight Centre slipped 6 cents to $27.12 and Virgin Australia closed unchanged at 43 cents.

QR National closed unchanged at $3.58 and Telstra down 2 cents to $4.31.