FTSE driven down by Australian mining tax

UK listed miners suffer as Julia Gillard, the Australian prime minister promising a 30% tax on mining profits, wins political support.

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on Sep 07, 2010 at 11:46

Australia’s prime minister Julia Gillard has won enough support to form a government, but her political victory has had a knock-on effect on the UK's commodity-heavy FTSE 100 which dropped 1% to 5385 on Tuesday morning.

One of Gillard’s proposed policies is a 30% tax on mining profits. Her victory saw the FTSE 100’s heavyweight miners drop, with Rio Tinto down 2.15% to £34.34 and BHP Billiton down 1.3% at £18.95.

The hardest hit miner was Xstrata, down 2.66% at £10.60. However profit-taking was also likely to have played a part in the price falls after a strong week for commodities firms.

Companies in the financial sector have seen largest falls in share prices this morning with hedge fund manager Man Group the worst hit. It’s shares were down 4.59% at 225p. Barclays was the next hardest hit, down 3.4% to 312p.This morning the bank announced the appointment of Bob Diamond as its chief executive, replacing John Varley.

The top gainer was engineering firm Invensys. Its shares were up 4.15% to 261p, boosted by speculation of a possible bid from the Swiss industrial conglomerate ABB. The firm is a likely to fall out of the FTSE 100 when the index is reshuffled this week.

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4 comments so far. Why not have your say?

What happened to all the experts who should have forseen that a party standing for election on a ticket of taxing mining profits might just keep their word?

Financial experts often = majic mushrooms and the backsides of large elephants!

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"What happened to all the experts who should have forseen that a party standing for election on a ticket of taxing mining profits might just keep their word?"

It surprised me. though I'm not an expert. But I thought Julia Gillard got it after she and the other sharks knifed their leader in the back on the back of a large PR offensive by BHP.

I seem to remember talk of the tax being off, or at least substantially reduced.

Obviously I was wrong. So I'm surprised.

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It's a 30% tax; but what will that do for Australia's mining industry that does much for the economy? 30% reduction in mining output?

Well, it will do much to foster disinterest in mining in that country, and rightly so.

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Karen Jemmett

Sep 09, 2010 at 21:24

Yeah, but aren't they dependent upon gold mining profits? What with Fosters being up for sale, where else is their GDP going to come from? Still, even at 30% tax, the likes of Rio will hardly be piss poor, I suppose...

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