Troy Resources Ltd. and Orocobre Ltd. (ORE), two Australian mining companies with assets in Argentina, fell after the South American country ordered oil, gas and mining companies to repatriate all future export revenue.
Troy Resources, a gold producer based in Perth, dropped 6.7 percent, the most since Sept. 23, to A$4.17 at the close of Sydney trading. Orocobre, a lithium-potassium explorer, declined 12 percent to A$1.21. Companies with resource assets in Argentina include Xstrata Plc (XTA), Rio Tinto Group and Respol YPF SA.
“At this stage we do not have clarity on exactly what these reported changes will mean in practice,” Troy Chief Executive Officer Paul Benson said in a statement to the Australian stock exchange. “The proposed changes would appear to bring mining and oil companies in line with how other industries are regulated in Argentina and would also bring it into line with how Brazil regulates its mining companies.”
President Cristina Fernandez de Kirchner, in her first move since winning re-election Oct. 23, changed a 2002 decree requiring companies such as Total SA, Petroleo Brasileiro SA (PETR4) and Pan American Energy LLC to keep at least 30 percent of their export revenue in the country.
The decision by Fernandez, who nationalized the $24 billion pension fund industry and has called for a limit on purchases of farmland by foreigners, is part of an effort to slow capital flight estimated at $3 billion per month that is draining central bank reserves.
Bruce Tobin, a spokesman for Rio in Melbourne, declined to comment on the new regulation. Rio mines borax, used in detergents and cosmetics, in northern Argentina.
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