Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
The gold price plunged by as much as $145 on Monday, the worst trading day in history and a more than 9% drop on the day.
The gold price fell to $1,355 in mid-morning – down $145 from the Friday close of $1,501 in New York – to a level last seen in January 2011.
Ever-volatile silver exaggerated gold’s drop , giving up more than 12% or $3.20 to $23.13 an ounce, heading for a close not seen since October 2010.
July platinum futures slumped 5.8% or $85.80 to $1,410 an ounce while palladium was also hard hit, down giving up 7.33% or more than $50 to trade at $658.20 an ounce.
Copper slid to lows last seen in October 2011, but losses for the metals bellwether was relatively contained. Copper was last changing hands for $3.28 a pound, a 2.2% decline from Friday’s close.
The retreat copper and precious metals led to a bloodbath for mining stocks with counters dropping across the board.
Mining’s Big 3, world number one miner BHP Billiton (LON:BHP), Brazil’s Vale (NYSE:VALE) and Rio Tinto (LON:RIO) all lost more than 6% on Monday.
Of the top diversified miners XStrata’s ADRs listed in New York traded was the top loser, down 10.3% while merger partner Glencore International (LON:GLEN) shed more than 6%, Anglo American (LON:AAL) shares moved lower 6.3% and Canada’s Teck Resources (TSX:TCK) was also one of the hardest hit giving up 9.3%.
Copper giant Freeport-McMoRan (NYSE:FCX) declined 8.6%, Southern Copper Corp (NYSE:SCCO) managed to keep losses at 7.7% while fellow South American copper producer Antofagasta (LON:ANTO) dropped just over 8%.
Not surprisingly gold producers were among the worst performers.
Barrick Gold Corp (TSX:ABX) lost 11% bringing the losses over the past trading week for the Toronto-based global number one gold miner to over 23%. Barrick’s pain began before the gold price drop on Wednesday when a court in Chile ordered a halt to work at its massive Pascua-Lama project. Barrick is worth just over $20 billion on the TSX, less than half it was worth in 2011.
Denver-based Newmont Mining Corp (NYSE:NEM) shed 6.8%, while the world’s third largest gold producer behind Newmont, AngloGold Ashanti (NYSE:AU) gave up 9.1%. The Johannesburg-based company’s ADRs listed in New York is down a 40% year to date.
Fellow South African miner Gold Fields (NYSE:GFI) traded down 7.2%. Canadian gold counter Goldcorp (TSX:G) lost 5% while peer Kinross Gold (TSX:K) – which this year overtook Goldcorp as the world fifth largest gold miner in terms of output – suffered a staggering 12% drop on the day. Toront0-based Kinross which has been plagued by production problems is down more than 42% since the start of the year.
