SA stocks surge $6bn on mining growth

ADELAIDE ADVERTISER: BY CAMERON ENGLAND, CHIEF BUSINESS REPORTER
December 11, 2007 09:30pm

THE value of South Australia's stock exchange-listed companies has surged more than $6 billion, or 28.4 per cent, in the past year.

This outperformed the Australian Securities Exchange's key all ordinaries index, which posted an increase of 21.8 per cent over the same period. The stock surge reflects the growing importance of the mining sector to the economy, with eight of the top 10 fast movers being mining companies.

SA has experienced an unprecedented amount of spending on minerals exploration over the past financial year, a six-fold increase to $261 million over the past four years.

The SA Centre for Economic Studies last week said more money was invested in SA's mining sector last year than in manufacturing for the first time.

Chairman of three rapidly-growing resource companies, Bob Kennedy, said the mining boom was reflected in strong business confidence and a strong economy generally.

"The strength will continue as the minerals demand continues  . . . demand doesn't seem to be slowing at all," he said.

Mr Kennedy, who chairs Flinders Diamonds, Ramelius Resources and Beach Petroleum, among other companies, said every dollar spent on mining tended to have a multiplier effect of about three times.

The wider economy would benefit greatly as the mining sector continued to grow, he said.

"It's more than obvious to say there's been a major effect on housing in South Australia," Mr Kennedy said.

"It's quite obvious when you're importing people to SA the demand's going to increase.

"There's also the effect in the economy generally as these people all demand premium goods and services."

Business SA chief executive Peter Vaughan said a survey by his group showed business confidence was at record highs, despite the recent interest rate rises and was expected to remain strong.

Lead Partner of the Deloitte Energy Infrastructure and Resources Group in Adelaide, Jason Handel, said the resources sector was likely to remain strong.

"That sector, on the back of the mining boom out of Western Australia, is doing well and there's a lot of exploration activity in South Australia.

Mr Handel said as some of the companies graduated from minerals exploration to mining, their value would continue to grow.

The fastest mover in the Deloitte list was Flinders Diamonds, which increased in value by 902 per cent after it revealed it had a large iron ore target in the Pilbara region in Western Australia.

The importance of renewable or low emissions energy was reflected in two geothermal energy companies being in the top 10, while uranium exploration companies fared well also.

The company which accounted for the largest move in terms of value was oil and gas company Santos, which increased in value by $2.2 billion, during a year in which the State Government committed to removing the 15 per cent shareholding cap on the company. Adelaide also welcomed 12 new companies, with resources firms again dominating with nine new entrants.

It is not just mining companies doing well – in its growth from a humble clothesline manufacturer to a diversified company involved in everything from electronics to water tanks, Hills Industries passed the $1 billion mark in terms of value over the past year.

Clean Seas Tuna grew by 247 per cent as its quest to breed tuna in captivity progressed and cancer drug development company Bionomics more than doubled in value.

Mark Fortunatow is the chief executive of MGM Wireless – a mobile applications company and one of just two non-mining companies in the top 10.

Mr Fortunatow said he expected further growth, despite already growing the size of the business by 217 per cent over the past year.

MGM's products include a mobile phone product which reduces truancy by letting parents know by text message if their children don't show up at school.