5 Mining Stocks That Could Sink On Union Opposition

Jul. 19, 2012 7:36 AM ETAU, BHP, NEM, RIO, GOLD4 Comments
Cris Frangold profile picture
Cris Frangold

Mining companies often have the potential to really reward investors, but unfortunately they are also often faced with opposition and setbacks on two main fronts: The government of the country in which they are mining, and the mining unions to which their workers belong. Today, I will have a look at problems of this nature faced by Goldcorp (GG), BHP Billiton (BHP), Barrick Gold (ABX), AngloGold Ashanti (AU), and Rio Tinto (RIO) and see what impact, if any, these barriers are likely to have on the companies' stock prices.

Goldcorp is facing opposition to its success in Guatemala. The company owns a mine called Marlin mine, which produced 382,400 ounces of gold and generated $900 million in revenue last year in Guatemala. But this mine as well as any others in the country will be affected by new mining law changes that will soon be implemented. The changes to the law stem from the intention of the government to acquire as much as 40% of the stake in any new mining projects. This will stifle future investments and therefore future growth for mining companies functioning in this country. Goldcorp's 52 week range currently stands at $32.16 to $56.31 and the company is currently trading at just over $38.5. This news surely won't help Goldcorp escape the bottom end of its range. The stock is down 37% this year and the rest of 2012 doesn't seem too much brighter.

Mining companies frequently face strikes. BHP for example recently had to deal with a strike that affected it in Australia. The strike, run by the Maritime Union of Australia, caused a halt in tug boat operations, breaching a labor agreement with BHP. As a result, BHP is suing the company. Its stock price has declined by about 8.5% since the strike occurred. However, since the announcement

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Cris Frangold profile picture
I am a mid-westerner and computer science grad launching a start-up service company. I love stocks and I write when I can!

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