The market capitalisation of Western Australia’s biggest mining companies has dropped to a 41 month low, a Deloitte report has found.
The capitalisation for November closed at $75 billion, $17 billion less than the previous month.
The 18% decline reflected poor market sentiment in the resource sector, falling commodity prices and a slowing growth expectation in China and the USA.
“The index is used to monitor the Western Australian market place against the rest of Australia and the world,” Deloitte’s Perth office managing partner Keith Jones told MINING DAILY.
“The stocks in the mining industry recorded the most significant decreases with a loss of 26% within the Index.
“The continued driver of this downturn is the uncertainty surrounding China’s future demand for a number of commodities.”
According to Jones, December has also seen a further fall in stock prices, however, the fall has not been as rapid as last month suggesting the industry is starting to stabilise.
“There is a lot of uncertainty in the market. The whole market has been volatile and uncertain over the last 6 to 8 months,” Jones said.
“I predict 2009 to be a volatile year that will see substantial fluctuations in the market place. Ultimately, recovery and demand will primarily driven by what happens in China.”
However, it is not all bad news for the mining companies, with a few bucking the downwards trend.
Tanami Gold NL, Bannerman Resources and Apex minerals all recorded gains.
Tanami Gold’s stocks rose 267% on the previous month.
“The key driver behind this gain was the announced intention to recommence mining at the company’s Coyote, Kookaburra and Sandpiper pits coupled with the rising demand and price of gold,” Jones said.