Mining heavyweights BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) have been absolutely hammered by the market today.
BHP Billiton, which remains Australia's biggest miner despite its recent demerger of South32 Ltd (ASX: S32), has shed a massive 4.4% of its price to trade at just $25.19, wiping roughly $3.7 billion of shareholder value. Meanwhile, Rio Tinto, which is Australia's second largest miner, tumbled 5.9% to just $51.39.
Indeed, the pair have acted as one of the primary reasons behind the market's bloodbath today, with the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) down 1.8% as at the time of writing. It hit a fresh seven-month low shortly after 2pm, Sydney time.
As is the case with most miners, BHP Billiton and Rio Tinto are both heavily reliant on sales made to China for their ongoing success. China's economic slowdown over the last few years has certainly eaten away at their profits, although they've made do thus far with heavy cost-cutting operations and efficiency improvements.
In the latest blow to the sector however, China has devalued its currency in a bid to make its products less expensive in global markets with the hope of supporting its languishing export sector. The problem is, depreciation of the currency will make imports considerably more expensive, including those from Australia such as iron ore, coal and copper, as just a few examples.
BHP Billiton and Rio Tinto aren't the only ones suffering as a result of the action with Fortescue Metals Group Limited (ASX: FMG) also trading 6.2% lower at $1.825, while South32 has fallen 2.9% to a record low of just $1.67.
China's currency devaluation is simply the latest of a string of setbacks for the mining sector. With commodity prices widely expected to come under even more pressure over the coming months – and perhaps even years – investors would be wise to avoid the miners altogether, for now.