Sydney: Fortescue, Mirvac, Rio Tinto

Darlington Musarurwa
19 Mar, 2010
New York City

Rio Tinto and Chinalco to jointly develop Simandou iron ore project in Guinea. The securities regulators approve a rival trading platform to ASX Ltd. Amcor faces A$697 million lawsuit. Mirvac Group completes the A$150 million debt offering.

[R]3:00 AM New York, 7:00 PM Sydney - Rio Tinto and Chinalco to jointly develop Simandou iron ore project in Guinea. The securities regulators approve a rival trading platform to ASX Ltd. Amcor faces A$697 million lawsuit.[/R]

The Australian stock market rose 0.2% buoyed by rising resource stocks as gold prices increased. European leaders are increasingly expressing their resistance to offer a bailout to Greece and the country may be forced to turn to the International Monetary Fund.

Gold prices advanced 0.1% to $1,125 per ounce.

In Sydney trading ASX 200 Index rose 0.2% or 9.1 to 4,872.20.

Of the ASX 200 index stocks, 105 gained, 72 fell, and 23 were unchanged. Extract Resources led gainers in the index shares with a rise of 14.4% followed by Eastern Star Gas climbing 11.4%.

Other resource stocks gained. Paladin Energy edged up 2.5% to A$4.06 and Minara Resources increased 2.4% to A$0.84.

The Australian dollar increased 0.1% to 92.15 U.S. cents.

Rio and Chinalco to Develop Simandou Project

Rio Tinto chief executive Tom Albanese said today in a statement the company has entered into a non-binding agreement with Chinese company Chinalco to jointly develop the Simandou iron ore project in Guinea.

Under the deal, Chinalco will pay $1.35 billion for an initial 47% stake in the project, which is estimated to have 2.5 billion tons of “high quality” iron ore.

“We have long believed that Rio Tinto and Chinalco could work together on major projects for mutual benefit. We believe the Simandou project is a large scale, long life asset and is the single best undeveloped source of high grade iron ore,” said Albanese.

ASIC Proposes Rival to ASX Ltd

The Australian Financial Review reported today that the Australian Securities and Investments Commission has recommended to Financial Services Minister Chris Bowen that Europe-based Chi-X must be given a license to operate a separate stock trading platform in the country.

Chi-X, if granted a license, will rival exchange operator ASX Ltd.

The ASIC is now responsible for the oversight of real-time trading on licensed markets after a Senate vote last week.

Amcor Faces A$697 Class Action

Amcor is facing a class action commenced by Jarra Creek Central Packaging Shed for its involvement in price fixing in the Australian packaging market in 2007 that may lead to court imposing damages of A$466 million plus an estimated A$231 million in interest.

Although the company’s rival was slapped with a A$36 million fine, Amcor was granted immunity for tipping off the competition regulator.

“Amcor strongly disputes the estimate put forward and will dispute the facts and assumptions upon which the report appears to be based,” said the company in a statement.

ASX Movers

FKP Property Group the decliners in the S&P ASX 200 index with a loss of 8.6% followed by losses in Incitec Pivot Limited of 4.3%, in James Hardie Industries SE of 4.2%, in Infigen Energy 3.9% and in David Jones Limited 3.3%.

Extract Resources Limited led gainers in the S&P ASX 200 index with a rise of 14.3% followed by gains in Eastern Star Gas Limited 11.3%, in Roc Oil Company Limited of 7.3% and in iSOFT Group Limited of 6.0%.

Other Movers

BHP Billiton plc rose 0.09% to A$43.20.

Fortescue Metals Group Ltd decreased 1.0% to A$4.85 after the iron ore producer is looking to raise $8.9 billion from investors in Asia and U.S. to develop its Solomon project.

Mirvac Group advanced 1.3% to A$1.50 after the real estate investment trust priced A$150 million five year fixed rate note to yield 265 basis points more or 8.25% interest rate.

Rio Tinto Limited fell 1.0% to A$76.19.

Telstra Corporation Limited closed unchanged at A$3.17 after the parliamentary debate on the company split was deferred at least two months.