Gold is gaining ground in morning trade Monday, as the latest
European effort through a $146 billion package to aid Greece has
not reduced investors' concerns about the debt situation in the
euro zone. Such worries have bolstered investors' appetite for
gold, which is near its highest level for 2010.
Still, the latest proposal by the Australian government to
increase taxes on mining companies has already hurt the share price
of major companies in the country, and could keep a lid on the
yellow metal's gains.
At 0820 ET, gold is up nearly 0.2% at $1,182.90 an ounce, while
silver is up 0.5% at $18.74, and copper is down 0.5% at $332.25 a
Australian Prime Minister Kevin Rudd proposed over the weekend
to impose a 40% tax on profits of mining giants such as BHP
Billiton Ltd (
) and Rio Tinto Ltd (
) that have benefited greatly from surging demand for base metals
from India and China in particular over the past few years. The
plan is to introduce the taxes in 2010 and is expected to raise
about $8.3 billion per year. Still, the proposal has not only met
with stiff opposition from the opposition Liberal-National
coalition leader Tony Abbott, but share prices of major miners have
tumbled too on the news. BHP closed Monday nearly 3% lower, while
Rio Tinto tumbled 4.3%.
In other corporate news, Norway's Norsk Hydro ASA (
) said Sunday that it will pay $4.9 billion for Brazilian mining
group Vale SA's (
) aluminum operations. The deal is the largest international
acquisition by a Norwegian company, and will be funded in part by a
rights issue of $1.75 billion. Under the agreement, Vale will
receive $1.1 billion in cash and new shares in Hydro for a 22%
stake. Based on Friday's closing price, the deal is worth about
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