Mining companies' shares drop on China concerns

AP News
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Posted: Mar 20, 2012 12:33 PM
Mining companies' shares drop on China concerns

Shares of BHP Billiton Ltd. and other mining companies fell Tuesday after the Australian mining giant said it expects Chinese demand for iron ore to be flat through 2020.

BHP predicted that China will not consume much more iron ore in 2020 than it does now after demand increased more than fivefold between 2000 and 2012.

The forecast was disappointing because China has been a major buyer of metals and other raw materials for infrastructure projects like roads, airports, factories and housing, as its economy rapidly expanded. Iron ore is used in steelmaking.

In addition, a new report said that house prices dropped in 45 Chinese cities in February.

Both offer more evidence of China's slowing economy after the government took steps to curb inflation. Economic growth in the world's second-largest economy fell to about 9 percent in the final quarter of 2011 from the previous year's double-digit expansion. The government's growth target this year is 7.5 percent.

Concerns about future demand in China hurt mining companies, along with the broader U.S. stock markets. Prices also fell for a number of commodities, including industrial metals and oil.

In midday trading shares of BHP Billiton were down $2.66, or 3.5 percent, to $72.85. Rio Tinto fell $2.13, or 3.7 percent, to $55.02. Peabody Energy Corp. dropped $1.79, or 5.4 percent, to $31.65; Alpha Natural Resources fell 79 cents, or 4.6 percent, to $16.53; and Freeport McMoRan Copper & Gold Inc. lost 26 cents at $38.88.