Mining companies take most of the global heat

BHP BILLITON and Glencore drove declines among global mining and energy companies as commodity prices plunged on raised concern of a sharp slowdown in China.

BHP, the world’s biggest miner, closed near a sevenyear-low in Sydney, while Glencore slumped to a record low and PetroChina dropped to a six-year low in Hong Kong. Gold producers bucked the trend, notching gains on strength in the price of the metal.

Copper and oil prices hit six-year lows amid concern over the weakest growth for 25 years in China, the biggest consumer of metals to energy.

Glencore chief executive Ivan Glasenberg said on Wednesday that the world’s leading commodity trader was wrong-footed by the sharp slowdown in China.

“Everyone knows about oversupply, the biggest thing that’s hitting right now is the concern about China,” IG market analyst Angus Nicholson said in Melbourne.

The copper price decline was another driver, he said.

Copper closed below $5 000 (R64 462) a ton on Wednesday for the first time since July 2009 and oil yesterday extended its decline from the lowest close in six years.

The Bloomberg World Mining index of 79 producers declined as much as 0.5 percent to the lowest since 2009.

In contrast, gold producers surged as investors sought a safe haven, according to Gavin Wendt, a Sydney-based senior resource analyst at Mine Life.

The metal rose to the highest level in a month as prospects dimmed for a US interest rate increase in September, boosting gold’s allure.

“The gold price performance has been rather encouraging by comparison to other metals,” Wendt said. “The fact that it’s put in a steady performance is important, particularly in the context of how other commodities have performed.”

Bullion for immediate delivery has fallen 3.8 percent this year as copper has slumped 20 percent and nickel by 31 percent.

Newcrest Mining, Australia’s biggest gold producer, rose as much as 6.9 percent in Sydney, the most since December, while Zhongjin Gold, the listed unit of China’s largest gold mining firm, surged as much as 8.7 percent in Shanghai, even after posting an 82 percent drop in first-half profit late on Wednesday. – Bloomberg