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Mining Winners: Rio, BHP, Cliffs

Chinese export data and bullish Aussie mining-tax news gave investors a reason to pour back into mining stocks -- at least for now.
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NEW YORK (TheStreet) -- Mining stocks raged higher Thursday along with equities in general as volatility remained the key descriptor of markets around the world.

Mineral extractors with assets in Australia paced the gainers. That's because word arrived from Down Under Thursday that Prime Minister Kevin Rudd would soon offer a compromise on the tax his government had proposed

on the so-called super profits

of Australian mines.

Mining Stocks To Watch

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The 40% tax rate had enraged mining executives, who were hunkering down for a long battle. Now, according to news reports, industry may have won an early skirmish. Apparently, the government will announce in the next few days that it will make concessions to the corporations that mine coal, most of which comes from the state of Queensland, in the country's southeast corner.

The Sydney

Morning Herald

suggests that the move is a savvy ploy by Rudd to divide and conquer: splitting off the coal miners from the rest of the extraction industries, and bringing them into the government's fold ahead of likely federal elections this year.

Shares of global juggernauts

Rio Tinto

(RTP) - Get Report

and

BHP Billiton

(BHP) - Get Report

, which both have significant assets in Australia, not to mention their headquarters, were the headline movers Thursday.

Rio's stock was trading at $47.56, up 6.3%. BHP was at $64.99, up 5.6%.

Among U.S. miners with Aussie assets, iron-ore producer

Cliffs Natural Resources

(CLF) - Get Report

stock was climbing 6% to $53.91, coal extractor

Peabody Energy

(BTU) - Get Report

was gaining 5.5% to $39.21. Canada's

Teck Resources

(TCK)

, which has limited but at least some exposure to Australia, was climbing 6.5% to $33.11.

But it wasn't just the Aussie names in the green -- shares of copper giant

TheStreet Recommends

Freeport McMoRan

(FCX) - Get Report

were rising 4.3%, and

Alcoa

(AA) - Get Report

was up 3%.The reason: Chinese export data gave many investors reason to believe that global economic growth was headed in the right direction.

Still, market players in the metals sector appeared to shrug off China import data that provided yet further evidence that monetary and fiscal officials in the Peoples Republic have successfully eased back the throttle on the country's explosive growth.

The latest evidence: copper imports by China fell 9% in May from the previous month and 6% from a year ago. Meanwhile, steel production at China's ferociously busy blast furnaces were slightly less ferocious in May. On an annualized basis, the country's steel industry, by far the largest in the world, produced 2.4% less steel in May than in April.

Bulls view this as a good thing. "Chinese economic tightening efforts appear to be having a negative impact on near-term demand for commodities," wrote Dahlman Rose analyst Anthony Rizzuto in a morning note to clients, "but we believe the initiatives are removing some of the speculative influence from the market, setting the stage for long-term growth."

Bears view it as another sign of coming global trauma. China, of course, remains the world's most voracious consumer of raw materials. Thus, with evidence mounting that the country's growth is indeed slowing, the health of economies in the U.S. and Europe, whose prospects look uncertain at best, becomes that much more important. The E.U. and North America was supposed to pick up the slack. But, the bears say, there is no there there.

At a conference of chartered financial analysts in Boston last month, ultra-bears were on the march, fearful of hyperinflation and currency debasement.

John Paulson

, gold-bug hedge-funder, was in attendance, as was

Seth Klarman

, the reclusive but esteemed founder of the Baupost Group, an investment fund that runs $22 billion.

"I'm more worried about the world, broadly, than I've ever been in my whole career," Klarman said, now famously, during his widely reported speech. Now a massive holder of cash, he added that markets could be in for a decade or more of "zero returns."

Klarman is hardly alone. Around the world, fear and loathing is rampant among money managers, analyst say. In one session in London recently, an investment pro said he was now predicting 2% GDP growth for China; probably he meant for 2011, it wasn't clear, according to someone who was in the room. It's a forecast that amounts to a worst-case scenario.

Investors of a bullish bent may interpret such extreme fear as anecdotal evidence that sentiment has sprung too far in the negative direction, and that now is the time to buy, with equity valuations having grown cheaper following the massive bull run of the last year.

But the cautious approach appears to remain the play of the moment. As one analyst said, "de-risking" has become the policy at many funds.

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.