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Australia’s mining sector sees worst week in over 17 months

By Mensholong Lepcha

07:55, 20 August 2021

Coal mining at an open pit
Coal mining at an open pit – Photo: Shutterstock

Australia’s mining sector on Friday closed its worst week since the onset of the coronavirus pandemic in March 2020, dragged down by a slump in shares of the world’s largest listed miner BHP Group.

The Standard & Poor's (S&P) /Australian Securities Exchange (ASX) 300 Metals & Mining index dropped over 11% this week after iron ore prices fell over 45% from record-high price reached three months ago.

BHP Group had said earlier this week: “Medium term, China’s demand for iron ore is expected to be lower than it is today as crude steel production plateaus and the scrap-to-steel ratio rises.”

BHP shares slump over 16%

ASX-listed shares of the bellwether iron-ore focused miner slumped 16% this week after making a string of announcements including a proposal to exit its FTSE 100 primary listing.

“Our initial take is that the deal would be a net positive for (London-listed) BHP plc shareholders as they typically trade at a material discount to the Australian listed shares,” Morningstar said in an analyst note.

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“Chris Beauchamp, chief markets analyst at IG, thinks the share price volatility this week in BHP shares reflects the “prospect of an ugly tussle with shareholders” over the decision,” Morningstar added.

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Gold miners limit losses

Smaller rivals Rio Tinto and Fortescue Metals have seen similar performances during the week, declining 10.9% and 8.7%, respectively.

Gold prices rose during the week following geopolitical tensions in Afghanistan and coronavirus concerns helping Aussie gold miners including Regis Resources and Northern Star Resources end the week higher.

On Friday, Australia’s benchmark S&P/ASX 200 index inched lower to end the session in the red for a fifth straight session. The benchmark index lost 2.2% during the week.

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Read more : ASX-listed BHP shares see worst day in 15 months on London FTSE exit

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