It was a bloodbath for Asian miners yesterday as investors forecast that slowing growth on the mainland would stop the nation gobbling up resources.
As panic selling roiled regional markets, mining stocks were among the hardest hit. In Hong Kong, mainland gold producer Zijin Mining plunged 8 per cent. Anglo-Australian mining giant BHP Billiton dropped 3 per cent and Rio Tinto tumbled 4 per cent in Sydney trading. Australian iron ore producer Fortescue Metals plummeted 9 per cent.
'Mining equities have fallen so much because there is a real risk Europe and the US will enter a recession, while there is more evidence that China's demand growth is slowing,' CLSA commodities analyst Andrew Driscoll said.
A preliminary gauge of mainland manufacturing activity has fallen this month. The preliminary HSBC China manufacturing Purchasing Managers Index slid to 49.4 from a final reading of 49.9 in August, according to results released on Thursday.
This lacklustre data also caused a fall in prices of some physical commodities, particularly base metals such as copper and tin, which are actively traded by hedge funds.
Copper, which is used in everything from wiring to roofing, fell for a sixth straight day in London to the lowest price in more than a year, hitting US$7,470 a tonne by press time. Tin and nickel also plunged.
Andrew Ferguson, chief executive of investment fund Apac Resources, predicted that mining exploration companies - those that have not yet broken ground on their projects - could struggle to get funding if the wave of pessimism swamping the resources sector did not recede.