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Australian Market Report of July 2, 2010

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Published on Jul 1, 2010

The Australian market has reacted strongly to Prime Minister Julia Gillard's announcement on mining tax changes. Resources sector rose significantly in early trade. Under the new tax arrangement, the federal government would limit the new regime to cover iron ore, coal, oil and gas projects. The rate of tax of 30 per cent will be applied in MRRT, rather than the original 40 per cent proposed. Today the S&P/ASX200 index was up 0.95 per cent shortly after the market opened.

Company News

Mining giants BHP Billiton (ASX:BHP), Rio Tinto (ASX:RIO) and Xstrata (LON:XTA) said in a joint statement today that they are encouraged by Australian Government's proposal to replace the Resource Super Profit Tax with a Mineral Resource Rent Tax (MRRT). After constructive discussions, the proposed new tax will apply only to iron ore and coal resources from 1 July 2012. The companies said they agree that the new tax proposal represents very significant progress towards a minerals taxation regime that satisfies the industry's core principle.

Electrical and whitegoods retailer Clive Peeters Ltd, which is in voluntary administration, has agreed to sell stock and plant equipment and other items to Harvey Norman Holdings Ltd (ASX:HVN) for A$55 million. Under the term of the sale, Harvey Norman has agreed to provide continued employment to the vast majority of the employees of Clive Peeters and Rick Hart stores.

Toro Energy Ltd (ASX:TOE) says it is commencing its first round of offtake agreement negotiations with international buyers for uranium oxide product from its Wiluna project in Western Australia, which is expected to see a maiden production from early 2013. The company is in talks with uranium marketers and energy utilities in both Japan and the United States. Talks will follow immediately with potential customers in Europe, Korea and China, Toro said.

Independent grocery and liquor wholesaler Metcash Limited (ASX:MTS) has agreed to buy the Franklins chain of supermarkets for A$215 million. Metcash has entered into an agreement with Pick n Pay Retailers of South Africa to acquire the shares of Interfrank Group Holdings, the company which owns the Franklins business. The Franklins chain of supermarkets is in NSW and totals 85 stores. The acquisition is expected to add more than A$500 million per annum of wholesale sales to Metcash's business. The transaction is subject to approval by the competition regulator and will be funded from Metcash's existing bank facilities.

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