Australia's Miners Drop On Tax Review Proposals
May 02 2010 - 9:28PM
Dow Jones News
Australian mining companies fell sharply Monday as investors
factored in lower earnings for the companies after the government
said Sunday that it plans to introduce a 40% tax on the industry's
profits.
The short-term outlook for shares deteriorated over the weekend
with news of a criminal probe into Goldman Sachs and China's PBOC
moving to increase its reserve requirement. However, the
EU/International Monetary Fund deal to provide Greece with EUR110
billion in loans was an offsetting positive factor.
Analysts cut target prices and earnings estimates for many of
the companies and said that the tax plans could cause potential
mergers and acquisition suitors to reassess their valuation of
target companies.
At 0045 GMT, Macarthur Coal Ltd. (MCC.AU) was down 6.6% at
A$14.44, Mount Gibson Iron Ltd. (MGX.AU) was down 8.5% at A$1.565
and Energy Resources of Australia Ltd. (ERA.AU) was down 6.2% at
A$14.80.
Australia's biggest miners were also hit, with Rio Tinto Ltd.
(RIO.AU) down 5.5%, at A$68.08 and BHP Billiton Ltd. (BHP.AU) down
3.8% at A$39.17.
-By David Fickling, Dow Jones Newswires; +61 2 8272 4689;
david.fickling@dowjones.com
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