Mining stocks climb, tax ads suspended

A ceasefire between the mining sector and federal government following Julia
Gillard's rise to power sent mining stocks higher and saw resources super profits
tax (RSPT) advertisements suspended.
Ms Gillard, who ascended to the prime ministership after Kevin Rudd declined to
contest a leadership ballot on Thursday, told her first press conference as
parliamentary leader she would throw the doors open to the mining sector.
Later in parliament, she asked the mining sector to "open their minds" and
reiterated the government's view it would be fairer for miners to pay more tax,
which they could afford.
The government would negotiate with the mining sector over the proposed RSPT, not
just consult it, Ms Gillard said.
Her comments were welcomed by mining giants BHP Billiton and Rio Tinto, the Minerals
Council of Australia, the Queensland Resources Council and the Association of Mining
and Exploration Companies Inc (AMEC), which all pledged to immediately suspend their
anti-RSPT ad campaigns.
The Western Australia's Chamber of Minerals and Energy (CME) also called a
"ceasefire" in the ad war.
CME said a planned expansion of its campaign had been suspended and existing ads
were "under urgent review" pending confirmation the government would engage in
"genuine consultation" and provide a "clean slate" for discussion parameters.
Others were more circumspect.
Gas-focused Santos Ltd said it welcomed Ms Gillard's comments, but remained
concerned about the RSPT's impact on the resources sector,
Among those who took a staunch line by calling on Ms Gillard to abandon the RSPT
altogether were Queensland mining billionaire Clive Palmer, AMEC, the Chamber of
Commerce and Industry of WA and Fortescue Metals Group Ltd chief executive Andrew
"Twiggy" Forrest.
Fortescue shares closed up 11 cents, or 2.48 per cent, at $4.54 after rising more
than four per cent in earlier trade.
Fortescue was among the most sold-off stocks when the RSPT was announced, after
saying the tax had forced it to shelve two iron ore projects worth about $17 billion
because financiers did not value a 40 per cent rebate on losses.
Rio Tinto was up $1.19, or 1.69 per cent, at $71.73 while BHP Billiton finished 51
cents, or 1.3 per cent, firmer at $39.65.
Among smaller companies, Flinders Mines Ltd was up one cent, or 12.05 per cent, at
9.3 cents and Gindalbie Metals Ltd appreciated seven cents, or 5.93 per cent, to
$1.25.
EL&C Baillieu Stockbroking director Richard Morrow said investors initially
responded positively to the new Labor leadership, but there was a small amount of
late profit taking among mining stocks.
"There was an initial knee-jerk uplift in the market in the resources sector right
at the start of play and then everyone held their breath until the new prime
minister made her first statements," Mr Morrow said.
"The noises that are coming out of that sector and both Ms Gillard and her deputy
(Wayne Swan) are very encouraging for the mining companies.
"It involves both parties with an act of good faith in cancelling their public
slanging match."
Mr Morrow said the leadership change would likely push up the Australian dollar.
Wealth Within chief analyst Dale Gillham said Mr Rudd's poor handling of the tax
proposal was "the nail in the coffin" for his leadership.
"Quite frankly Julia Gillard will have about two months to show she can do what is
right for the Australian people," Mr Gillham said.
"If Julia Gillard moves quickly to resolve the issues around the resource rent tax,
then maybe this will work positively towards putting more confidence back into our
market and we may see it finally start to gain positive momentum."