This is an extract of yesterdays artice from Bloomberg.
Australia & New Zealand
BHP, Rio Profits May Rise as Metals Gain, UBS Says (Update1)
March 23 (Bloomberg) -- BHP Billiton, the world's largest miner, Rio Tinto Group and Oxiana Ltd. may have their profit estimates increased as rising metal prices are boosted by a falling Australian dollar, UBS AG said.
Prices for metals including aluminum, copper and nickel are higher than expected due to investments by funds and strong demand, UBS AG analysts Glyn Lawcock and Jeremy McNally said in a March 22 note. A lower Australian dollar boosts miners' U.S. dollar-denominated exports in local currency terms.
Copper and zinc rose to records this year as economic growth in China fueled demand for autos, homes and appliances. The Australian dollar has dropped 2.4 percent in the past five days, the worst performing major currency tracked by Bloomberg, as investors switch into currencies of countries where interest rates are more likely to rise.
``If we were to mark to market for commodity prices and currency, all else being equal, we would see potential upgrades to 2006 earnings forecasts of up to 47 percent in the case of Oxiana,'' UBS analysts said in the note.
Oxiana, Australia's second-biggest gold miner, would have its 2006 earnings estimates raised to A$421 million ($303 million) from A$286 million, UBS said. Melbourne-based BHP Billiton could earn $12.7 billion, up 16 percent from an earlier estimate of $11 billion.
Shares of BHP Billiton rose as much as 46 cents, or 1.8 percent, to A$25.64 on the Australian Stock Exchange, and traded at A$25.59 at 11:22 a.m. Sydney time. Oxiana rose as much as 7 cents, or 3 percent, to A$2.35 and traded at A$2.33 at 11:22 a.m.
Zinc prices in London yesterday rose to a record $2,530 a metric ton, and copper rose to a record $5,186 a ton on March 21.
Rio Tinto
London-based Rio, the world's third-largest miner, could earn $7.2 billion in 2006, up 7 percent from an earlier estimate, UBS said.
Zinifex Ltd., the world's second-largest zinc producer, could earn 39 percent more profit in 2006, taking it to A$1.4 billion. Oxiana and Zinifex don't forward sell their products and therefore are able to benefit more from rising cash market prices, UBS said.
As much as $200 billion of fund money is invested in commodities, with $30 billion in base metals, Citigroup Inc. said in a Jan. 25 report.
Shares of Rio Tinto rose as much as A$1.48, or 2 percent, to A$74.47, and traded at A$74.46 at 11:15 a.m. Sydney time. Zinifex shares rose 29 cents, or 3.5 percent, to A$8.64.
OXR
oxiana limited
