More Sites

Mining stocks soar as RSPT ads axed

Reported by AAP
Thursday, June 24, 2010
Topics in this article:
Bhp Billiton,Fortescue Metals ,Gindalbie Metals ,Rio Tinto,Santos
Super-rich getting richerThe world's super-rich could actually be wealthier than anyone first thought.

A ceasefire between the mining sector and federal government following Julia Gillard's rise to power sent mining stocks higher and saw resources super profits tax (RSPT) advertisements suspended.

Ms Gillard, who ascended to the prime ministership after Kevin Rudd declined to contest a leadership ballot on Thursday, told her first press conference as parliamentary leader she would throw the doors open to the mining sector.

Later in parliament, she asked the mining sector to "open their minds" and reiterated the government's view it would be fairer for miners to pay more tax, which they could afford.

The government would negotiate with the mining sector over the proposed RSPT, not just consult it, Ms Gillard said.

She also suspended the government's pro-RSPT advertising campaign, provided the mining sector shelved its ads against the tax.

Her comments were welcomed by mining giants BHP Billiton Ltd and Rio Tonto, the Minerals Council of Australia, the Queensland Resources Council and the Association of Mining and Exploration Companies Inc (AMEC), which all pledged to immediately suspend their anti-RSPT ad campaigns.

The Western Australia's Chamber of Minerals and Energy (CME) also called a "ceasefire" in the ad war.

Rio Tinto said the prime minister's invitation to begin full engagement on all aspects of tax reform was a positive first step.

"We need to end the uncertainty affecting the Australian economy as soon as possible," the mining giant said.

"The RSPT was flawed policy.

"It has already caused damage to Australia's reputation and the national economy."

Others were more circumspect.

Gas-focused Santos Ltd said it welcomed Ms Gillard's comments, but remained concerned about the RSPT's impact on the resources sector,

Among those who took a staunch line by calling on Ms Gillard to abandon the RSPT altogether were Queensland mining billionaire Clive Palmer, AMEC, the Chamber of Commerce and Industry of WA and Fortescue Metals Group Ltd chief executive Andrew "Twiggy" Forrest.

Fortescue shares closed up 11 cents, or 2.48 per cent, at $4.54 after rising more than four per cent in earlier trade.

Fortescue was among the most sold-off stocks when the RSPT was announced, after saying the tax had forced it to shelve two iron ore projects worth about $17 billion because financiers did not value a 40 per cent rebate on losses.

Rio Tinto was up $1.19, or 1.69 per cent, at $71.73 while BHP Billiton finished 51 cents, or 1.3 per cent, firmer at $39.65.

Among smaller companies, Flinders Mines Ltd was up one cent, or 12.05 per cent, at 9.3 cents and Gindalbie Metals Ltd appreciated seven cents, or 5.93 per cent, to $1.25.

EL&C Baillieu Stockbroking director Richard Morrow said investors initially responded positively to the new Labor leadership, but there was a small amount of late profit taking among mining stocks.

"There was an initial knee-jerk uplift in the market in the resources sector right at the start of play and then everyone held their breath until the new prime minister made her first statements," Mr Morrow said.

"The noises that are coming out of that sector and both Ms Gillard and her deputy (Wayne Swan) are very encouraging for the mining companies.

"It involves both parties with an act of good faith in cancelling their public slanging match."

Mr Morrow said the leadership change would likely push up the Australian dollar.

Wealth Within chief analyst Dale Gillham said Mr Rudd's poor handling of the tax proposal was "the nail in the coffin" for his leadership.

"Quite frankly Julia Gillard will have about two months to show she can do what is right for the Australian people," Mr Gillham said.

"If Julia Gillard moves quickly to resolve the issues around the resource rent tax, then maybe this will work positively towards putting more confidence back into our market and we may see it finally start to gain positive momentum."

02/09/2014 23:55Sydney, Australia. 2 September,2014
advertisement