Mining companies shed recent gains

TORONTO STOCK EXCHANGE

With the exception of energy and coal producers, resource stocks shed some of their recent gains over the Aug. 16-22 report period. The broad-based S&P 500 Index was down 11.95 points at 1,221.73 over the trading session, reflecting nervousness that the double-digit growth charts of some blue-chip companies aren’t sustainable under the weight of high oil prices, particularly as winter approaches.

Major gold producers gave up some of the gains made during the threat of strikes at several of South Africa’s largest gold mines. Even investor darling Goldcorp lost ground on U.S. markets, off US52 at US$17.40, now that the labour disputes are settled. Placer Dome also fell back over the trading session, off US63 at US$14.82, while rival Barrick Gold shed US80 at US$26.28. Royal Gold bucked the trend, and was ahead US24 at US$22.52 on the back of record revenue and profits from its portfolio of royalties at various gold properties in the U.S. Unlike the major gold producers, the company’s bottom line isn’t much affected by increasing energy and labour costs.

Phelps Dodge took a big hit after weeks of steady gains predicted on strong demand from China. The company’s shares fell US$6.41 to US$108.11, reflecting concerns that power shortages in China could cool the nation’s over-heated economy. Press reports suggest that power rationing in China is already curbing demand from cable and wire makers. Copper demand in India continues to be strong, but China is the engine driving copper markets. Aluminum producer Alcoa fell US88 to US$28.36, in sympathy with gold and copper companies.

The biggest value gainer was Fording Canadian Coal Trust, which jumped US$10.40 to US$114.80. The trust’s coal assets in B.C. and Alberta are poised for significant growth, thanks to strong demand for metallurgical coal in Asia.