Mining shares plunge

Share prices of Australia's mining companies fell yesterday but none as sharply as Fortescue Metals.

The share prices of Australia’s mining companies fell yesterday on news that the global economic recovery would be slower than first reported, but none fell as sharply as Fortescue Metals, which plunged 9.8% to $3.67.

The reason for the steep decline was believed to be the news that Chinese State-owned company Chinalco would not be investing in the iron ore company.

Speculation that Chinalco would look to Fortescue after it was spurned from its original investment deal with Rio Tinto sent Fortescue shares soaring in recent weeks.

Fortescue’s executive director Graeme Rowley told ABC’s Lateline that the Chinalco’s interest amounted to little more than speculation.

“There was a rumour that there was to be some arrangement between Chinalco and us and that perhaps raised the shares inadvertently,” he said.

“I think Chinalco was just correcting the record.”

According to Rowley, foreign investment is something that Fortescue will continue to consider and all potential partners will be weighed up.

“I do not think any other investors, whether they be Chinese or Indian or who they might be, are ruled out,” he said.

Regardless of potential foreign investment and the proposed joint iron ore venture between Rio and BHP, Rowley believes Fortescue will be able to compete as commodity markets improve.

“What we have to do is obviously look at those (Rio-BHP) in a very business-like manner and compete with them, and we are very confident that we can do that,” he said.

“To do that we obviously must maximise our opportunity in the Chinese marketplace and grab all that we can.”

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