BHP, Rio downgraded as conditions weaken

Investment bank and equity researcher UBS has downgraded its earnings-per-share forecasts for global miners BHP Billiton and Rio Tinto, citing a deteriorating backdrop for commodity markets, according to the Australian Financial Review.

The revised forecast comes just before Rio reports its second-quarter production Tuesday and BHP reports its fourth-quarter production.

UBS cut its earnings- per-share forecasts for BHP and Rio by 2% to 3% in 2013-14. While it has maintained a “buy” recommendation on both stocks, it named BHP as its preferred diversified play.

UBS Australia Equities managing director and head of resources research Glyn Lawcock said macro-economic conditions had weakened. China’s property market is failing to recover and there was potential for lower Chinese copper restocking as credit growth slowed.

Mines warn tax change will expose them to debt

Mining giants have launched a rear-guard action against tax changes to stop foreign multinationals from loading up their Australian subsidiaries with debt, which they warn will undermine their ability to bankroll projects here, according to The Australian.

In a new submission to Treasury, the Minerals Council of Australia warns that the changes to the “thin capitalisation” and debt deduction rules – announced in the budget – involved no consultation and would make it harder for capital-intensive industries like mining to fund their investments.

African mines to underpin Paladin

Paladin Energy has backed itself to deliver continued improvements from its suite of African uranium mines as it looks to turn around its mixed record of recent years, according to The Australian.

Shares in the miner rallied yesterday on the back of its latest quarterly production report, with the company delivering total output within guidance and flagging an increase in output during the new financial year.