Nobody talks about ''decoupling'' any more. This was the notion that the ''stronger for longer'' super-cycle in resources would push through any downturn in the West as the Chinese economy would ''decouple'' from the rest.
Amid the relentless downturn and the recognition that China is slowing too, the only decoupling going on is the decoupling of shareholders from their shares.
Owen Hegarty has been forced to dump $6.2 million worth of stock in Oz Minerals after being hit with margin calls. Hegarty, who steered Oxiana from a tiny exploration play with a copper/gold prospect in Laos through to a $12 billion merger with Zinifex, conceded the sale of 10 million Oz Minerals shares last week was the upshot of margin calls.
He is not alone, merely the latest in a string of top Australian miners to be forced sellers of their own stock as the meltdown in commodity prices and confidence continues to wreak havoc on the mining sector.
Ed Eshuys, St Barbara's famous explorer and long-time Joe Gutnick associate, is another reportedly hit. Straits Resources' chief Milan Jerkovic is another.
Ironically, the former boss of Macarthur coal, Ken Talbot, who sold out to Arcelor Mittal and Korean company Posco at the top of the market for $20 a share - it's now $3.20 - is looking particularly sage, although he wore some flak at the time.
Losing glitter
Formerly the golden boy of the rampaging resources and exploration sector Hegarty has had a rough time of it this year, copping a hiding from governance groups and the media for a $10 million sweetheart pay deal arising from the merger with Zinifex.
Since then the value of Oz has been decimated by $10 billion. The stock is wallowing at a new low of 53 cents and, worse, has just been hit with a downgrade by broker UBS which reckons falling prices and a cash squeeze will make it hard for Oz to refinance $US600 million of debt due to roll in December.
The sheer pace of the plunge in commodities has hit everyone but those with short-term financing issues are especially suffering.
After reviewing the Prominent Hill capital expenditures and Century costs then marking metals prices to market, UBS found Oz's cash outflow worse than it had anticipated.
That $US600 million of debt to roll in December compares with a cash balance forecast at $A680 million. The drop in the currency does not help, indeed it does none of the miners any favours. And the exit of hedge funds who had been overweight the mining sector in the good times compounds the problems.
Across the sector, share prices are now so low it is impossible for even the top-ranking mining stocks to raise new equity without oppressive dilution.
Oz had told the market in September that its balance sheet was strong and there was no net debt. Grant Samuel had valued Oz at $3.80 to $4.40 a share in May.
OZL Price at posting:
$5.20 Sentiment: None Disclosure: Not Held
