Iluka, Alumina to Gain on Australia Dollar Drop, Citigroup Says

Aug. 13 (Bloomberg) -- Iluka Resources Ltd., the world's largest zircon producer, and Alumina Ltd. will gain from the Australian dollar's longest losing streak in 33 years because it will cushion them from falling metal prices, Citigroup Inc. said. Every one cent decline in the local currency adds A$8 million ($6.9 million) to Iluka's profit and A$12 million to Alumina's, Citigroup analysts led by Sydney-based Clarke Wilkins said in a report dated yesterday. Fortescue Metals Group Ltd., the iron-ore producer controlled by Australia's richest man Andrew Forrest, and OZ Minerals Ltd. will also benefit, the bank said. The 12 percent decline in the Australian dollar since July 22 will help boost profits for producers, Citigroup said. Australia's dollar is the worst-performing major currency in the past month and its decline amid a 16 percent drop in an index of the six metals traded on the London Metal Exchange over the same period is overdone, according to Bank of America Corp. Gains in the Australian dollar hurt exporters whose sales are in U.S. dollars and costs in the local currency. Australia's dollar fell for a 12th day on speculation earnings from the nation's exports will drop as prices for gold, copper, and oil slump. The currency fell as low as 85.93 U.S. cents, the lowest since Jan. 22, before trading at 86.08 cents at 12:28 p.m. Sydney time.