Australian mining stocks recovered ground this afternoon after tumbling early on the back of planned new profit tax hikes.Craigs Investment Partners broker Nigel Scott said the market had anticipated negative news in the sector and some of the downside co
Australian mining stocks recovered ground this afternoon after tumbling early on the back of planned new profit tax hikes.
Craigs Investment Partners broker Nigel Scott said the market had anticipated negative news in the sector and some of the downside could have already been priced in over the last week or so.
BHP, for example, had been up at $44 two weeks ago.
At 3.45pm (NZ time) BHP Billiton was down 2.6% at $39.65 having earlier been down 3.7% and Rio Tinto was down 3.2% at $69.75, having traded lower by over 5%.
Newcrest Mining and Fortescue Metals were down 2.8% and 3.3% respectively.
“Market players have probably positioned on the short side in the last couple of weeks,” Mr Scott said.
“There’s a lot of water to go under the bridge yet, with most of the material changes in the tax plan not taking effect until 2013 and an election coming up."
BHP said in a statement that the new tax would increase the total effective tax rate on profits earned from its Australian operations from 43% to about 57% from 2013.
BHP chief executive Marius Kloopers said the government had not defined all aspects of the design, implementation and application of the new tax.
"Until they are clarified we cannot be certain what the full implications for the industry will be.
"However, this significant new tax will have the effect of making investments in Australia much less attractive."
The benchmark S&P/ASX 200 index tumbled to around 4,753 in early trades, but is now back up at 4,783, down 24 points or 0.5% from its previous close.
The broader All Ordinaries index is down 28 points or 0.6% at 4,806, well off the day’s low of 4,778.3.
