Australia’s major mining companies have been reporting financial results while the sector has been given a boost by positive Chinese trade data and a strengthening gold price.
China posts positive trade data
China has reported better than expected trade data, calming fears of a slowdown in the world’s second largest economy and lifting the Australian share market to almost a three-week high. China’s exports unexpectedly jumped 10.6 per cent in January while imports rose 10 per cent. Australia’s trade with China climbed 33.1 per cent at the beginning of the year, supported by shipments of iron ore, energy and grains.
Gold gains to hit three-month high
The price of gold has risen above $US1,300 for the first time since November last year after posting a shaky start to 2014. The precious metal has been aided by the US Federal Reserve’s tapering of economic stimulus, pushing investors back into the safe haven asset. The gains came in the same week US Federal Reserve chair Janet Yellen pledged to maintain continuity as she leads America’s central bank, affirming the Fed’s confidence in US economic recovery.
Bill Evans predicts downward pressure on gold
Westpac Banking Corporation
(ASX:WBC) Chief Economist, Bill Evans told FNN 2014 is going to be a negative year for the commodity profile in general with more downward pressure expected for the price of gold:
“There is always a question mark about gold. Gold has had a terrible time in the last few years. I don’t see any sort of a return to inflation that would provide that much sought after boost for gold. I also believe that the conditions for the US dollar will be improving through the year, and of course about 50 per cent of the movement in gold is a function the US dollar. A high US dollar would tend to see even further falls in gold.”
Reporting season results
BHP H1 profit better than expected
The world's largest mining company BHP Billiton Limited (ASX:BHP, LON:BLT) has reported a better than expected first half profit result and lifted its dividend by 3 per cent. The mining giant’s interim net profit rose 83 per cent to $US8.1 billion in the last six months of 2013 while its underlying profit gained 31 per cent to $US7.8 billion. BHP’s result was aided by growth in its iron ore, coal and petroleum businesses in the same period the company achieved 10 per cent production growth and records across three commodities and 10 operations.
Rio rebounds to FY13 profit
Rio Tinto Limited (ASX:RIO, LON:RIO) has rebounded from an loss to a profit of $US3.67 billion and hiked its full year dividend by 15 per cent. The world’s second-biggest miner’s 2013 net profit came in above expectations after reporting a net loss of $US3.03 billion the year before, weighed down by write-downs. Underlying profit rose 10 per cent to $US10.2 billion, supported by production records and the completion of five major capital projects over 2013.
Newcrest H1 profit plunges
Newcrest Mining Limited’s
(ASX:NCM) interim profit plunged in the same period gold prices snapped 12 years of annual gains. Australia’s largest listed gold mining company’s net profit fell to $40 million from $323 million the year before. First half underlying profit fell 36 per cent to $207 million. Outgoing CEO Greg Robinson says, “Newcrest has made steady progress on producing lower-cost, higher-margin ounces, while reducing costs and capital expenditure across the business”. The company has opted not to pay an interim dividend.
OZ books FY loss, MD to leave
OZ Minerals Limited
(ASX:OZL) has booked a full year net loss of $295 million and announced its CEO and Managing Director Terry Burgess will leave the company within the year. The gold and copper miner’s result was impacted by a fall in production and commodity prices which contributed to $231.9 million of asset write-downs on its Prominent Hill operations. Oz Minerals says it will now embark upon a staged succession planning process to facilitate an orderly leadership change within the next twelve months.
Sims returns to profitability in H1
Sims Metal Management Limited
(ASX:SGM) has returned to profitability in the first half of fiscal 2014. The metals recycler generated an interim net profit of $9.3 million, rebounding from a $296 million loss the year before. The company’s result was aided by improved operations in Australia, North America and the United Kingdom, higher sales volumes and lower costs, helping to offset lower underlying earnings from its electronics recycling businesses in North America and the UK.
Guidance: Iluka flags FY profit fall
Iluka Resources Limited
(ASX:ILU) says its full year profit will be stripped down by asset write-downs. The minerals sands producer expects to report a net profit of about $18 million for the 2013 calendar year, down from $363 million the year before. Iluka’s anticipated result includes a write down in value of equipment currently idle by $28 million and provisions for the rehabilitation of mines not in use of up to $13 million.
Forge calls in administrators and leaves ASX
Embattled mining services group Forge Group Limited
(ASX:FGE) has called in administrators and revealed it has been removed from the Australian Securities Exchange. The announcement came days after Forge advised its financiers have withdrawn support. The bad news began in November 2013 when Forge shares crashed more than 80 per cent after revealing a $127 million write-down and flagging a full year loss of up to $90 million.
