Share market takes a $30 billion nosedive as mining stocks take a hammering

THE Australian sharemarket has endured a $30 billion bloodbath, as resource stocks took a hammering in wake of BHP’s Brazilian mine disaster.

THE Australian sharemarket has endured a $30 billion bloodbath, as resource stocks took a hammering yesterday in wake of the deadly collapse of two dams at a mine in Brazil.

BHP Billiton, Rio Tinto, Telstra and the major banks dragged the local market to a hefty loss, with the benchmark ASX200 index falling 1.83 per cent to 5,119.5 points.

BHP announced that it is reviewing full-year projections for iron-ore production, after the San Marco iron ore mine disaster that killed at least three people and left 28 missing on Friday.

It is yet to reveal what caused the dams to burst in what local officials have called the worst ever environmental disaster in Brazil’s minerals-rich Minas Gerais region.

Toxic sludge engulfed surrounding farming villages, whose occupants claimed they had not been warned of the dam breach that put them in the path of destruction.

Homes lie in ruins after two dams burst and flooded the small town of Bento Rodrigues in Minas Gerais state, Brazil. Picture: Felipe Dana

The clean-up bill, potential fines and compensation to the families of those injured or killed is likely to add up to hundreds of millions of dollars.

The mine operator Samarco is jointly owned by BHP Billiton and the Brazilian mining company Vale.

BHP’s share price fell more than 5.6 per cent on the local market after falling 5.7 per cent on the UK market on Friday.

The world’s biggest miner closed at the day’s low of $21.42, well below the seven-year low it hit six weeks ago.

Telstra shares fell 1.7 per cent on Monday, while Rio Tinto lost 3.5 per cent and Woolworths lost 2.4 per cent, but CSL gained 0.2 per cent.

The All Ordinaries index was down 89.4 points, or 1.7 per cent, at 5,180.3 at the close of Monday trading.

On the ASX 24, the December share price index futures contract was 110 points lower at 5,113, with 38,713 contracts traded.

The China port price of iron ore had slumped by two per cent to $US47 a tonne overnight while the late price for gold on the London Metals Exchange was down by 1.5 per cent to $US1,088.90 an ounce.