View source for Poseidon bubble

{{Short description|Australian stock market bubble}}
{{Use Australian English|date=May 2019}}
{{Use dmy dates|date=May 2019}}
{{Infobox event
| title                    = Poseidon Bubble
| image                    = Poseidon_Bubble_Australia.gif
| image_alt                = Poseidon Bubble graph, depicting a massive price bubble between 1969 and 1970
| caption                  = A graph of nickel prices during the bubble
| duration                 = 4 months
| date                     = {{start and end dates|1969|09|01|1970|01|01}}
| location                 = [[Australia]]
| type                     = [[Stock market bubble]]
| cause                    = Discovery of nickel during a shortage
| outcome                  = 
}}
{{Infobox company
| name = Poseidon NL
| logo = 
| type = Public
| traded_as = {{ASX|POS}}
| industry = Mining
| founded = {{Start date and age|1969}}
| defunct  = {{start date and age|1991}} 
| successor = [[Normandy Mining|Normandy Resources]]
| hq_location_country = Australia
| website = 
}}
The '''Poseidon bubble''' was a [[stock market bubble]] in which the price of [[Australia]]n [[mining]] [[stock|shares]] soared in late 1969, then crashed in early 1970.  It was triggered by the discovery by '''Poseidon NL''' of the early indications of a promising [[nickel]] [[Ore#Ore deposits|deposit]] in September 1969.

In the late 1960s, [[nickel]] was in high demand due to the [[Vietnam War]],<ref>{{cite news |last1=Fernando |first1=Vincent |title=The 10 Most Ridiculous Price Bubbles In History|url=https://www.businessinsider.com/most-ridiculous-bubbles-ever-2010 |access-date=14 May 2019 |work=Business Insider |date=11 October 2010}}</ref> but there was a shortage of supply due to [[industrial action]] against the major [[Canada|Canadian]] supplier [[CVRD Inco|Inco]]. These factors pushed the price of nickel to record levels, peaking at around £7,000/ton (£113,000 in 2018 adjusted for inflation)<ref>{{cite web |title=Inflation calculator |url=https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator |website=[[Bank of England]] |access-date=14 May 2019 |location=London}}</ref> on the [[London]] market early in November 1969.<ref name=Simon>{{cite web |url = http://www.rba.gov.au/publications/confs/2003/pdf/simon.pdf |last1=Simon|first1=John |title = Three Australian Asset-price Bubbles | access-date = 14 May 2019| date = 19 March 2003 | publisher = Reserve Bank of Australia}}
</ref>  In September 1969, the mineral exploration company Poseidon NL made a major nickel discovery at [[Windarra Nickel Mine|Mount Windarra]] {{convert|22|km}} northwest of [[Laverton, Western Australia]]. In early September its shares, which had been trading at $0.80, began rising on [[insider trading]] (which was not illegal at the time). On 1 October, Poseidon announced that drilling had struck 40 metres of ore averaging 3.56% nickel and the share price immediately rose until Poseidon shares were trading at $12.30.  After that, very little further information came to light but the price continued to climb on [[speculation]]. At one point, a [[UK]] [[Stockbroker|broker]] suggested a value of up to $382 a share.<ref>{{cite news |last1=Sykes |first1=Trevor |author-link1=Trevor Sykes |title=Norm Shierlaw: Miner's punt on Poseidon paid dividends |url=https://www.smh.com.au/national/norm-shierlaw-miners-punt-on-poseidon-paid-dividends-20131002-2usmc.html |access-date=14 May 2019 |work=Sydney Morning Herald |date=3 October 2013}}</ref><ref name=Simon/>

The price of Poseidon shares quickly became too high for many investors, so some turned to stocks in other companies exploring near Windarra, and eventually other nickel mining stocks in general.  As the price of mining shares grew, new companies were listed by promoters hoping to cash in.  From October to December 1969 the [[Australian Securities Exchange|ASX]] All Mining [[stock market index|index]] rose by 44%. Mining stocks peaked in January 1970, then immediately [[stock market crash|crashed]]. Poseidon shares peaked at an intraday high of $280 in February 1970, and fell rapidly thereafter.<ref name=Simon/>

By the time Poseidon actually started producing nickel, the price of nickel had fallen.  Also, the nickel ore was of a lower grade than originally thought and extraction costs were higher. Profits from the mine were not sufficient to keep Poseidon afloat and it went into receivership in 1974. The company was delisted from the [[Australian Securities Exchange|stock exchange]] in 1976. [[WMC Resources|Western Mining]] then took over management of the mine, operating it until 1991.  Mining ceased at Mount Windarra in 1989, and at South Windarra in 1991.<ref>{{cite web |title=Historical Timeline |url=http://poseidon-nickel.com.au/about/historical-timeline/ |publisher=Poseidon Nickel Limited |access-date=2019-12-23}}</ref> Mount Windarra produced 5.3 million tonnes of ore grading 1.5% nickel during the life of the mine.<ref>{{cite web |title=Windarra Heritage Trail |url=https://library.dbca.wa.gov.au/static/FullTextFiles/PAM09248.pdf |website=Department of Biodiversity, Conservation and Attractions Library |publisher=[[WMC Resources]] |access-date=14 May 2019}}</ref><ref name=Simon/>

In 1974, the [[Peter Rae|Rae Committee]] handed down its report on the Poseidon bubble, which documented numerous cases of improper trade practices.  It recommended a number of changes to the [[regulation]] of [[stock market]]s, which ultimately led to Australia's national companies and securities legislation.<ref>{{cite web |title=Australian Securities Markets and their Regulation: Report from the Senate Select Committee on Securities and Exchange. |url=https://www.takeovers.gov.au/content/Resources/parliamentary_reports/downloads/aust_securities_markets_vol1.pdf |website=Australian Government Takeovers Panel |publisher=Australian Government Publishing Service |access-date=14 May 2019 |location=Canberra |date=1974}}</ref>

Poseidon Limited entered receivership in September 1976, unable to meet its loan repayments but did survive its time in receivership and was relisted on the Australian stock market in December 1978.<ref>{{cite report |author=Gilbert M. Ralph |date=24 August 1994 |title=Group Historical Information: Windarra Nickel Project |url=https://nla.gov.au/nla.obj-495710171/view |publisher=[[WMC Resources]] |page= |docket= |access-date=16 March 2023 |quote= |via=National Library of Australia}}</ref><ref>{{cite report |author=Gilbert M. Ralph |date=15 March 2005 |title=Chronological History of WMC |url=https://nla.gov.au/nla.obj-495698071/view |publisher=[[WMC Resources]] |page= |docket= |access-date=16 March 2023 |quote= |via=National Library of Australia}}</ref> Poseidon eventually merged with [[Robert Champion de Crespigny]]-led [[Normandy Mining|Normandy Resources]] in 1991, with Poseidon being delisted on 8 May 1991 and the name company taking the name of Normandy Poseidon Limited.<ref>{{cite web |url=https://www.delisted.com.au/company/poseidon-limited/ |title=Poseidon Limited (Pos) |author=<!--Not stated--> |date= |website=www.delisted.com.au |publisher=Investogain Pty Limited |access-date=18 March 2023|quote=}}</ref><ref>{{cite news |url=https://www.afr.com/politics/normandy-poseidon-merger-to-go-ahead-19910408-k4cqn |title=Normandy, Poseidon Merger to go ahead |newspaper=[[The Australian Financial Review]] |author=Andrew White |date=8 April 1991 |accessdate=18 March 2023 }}</ref>

==References==
{{reflist}}

==Further reading==
* ''[[Daily News (Perth)|Weekend News]]'' Saturday January 10, 1970 - p.&nbsp;10 -''W.A. Shareholders in Poseidon'' and ''Poseidon slip $24.66 in London''
* Adamson, Graeme.(1989) ''Miners and millionaires : the first one hundred years of the people, markets and companies of the stock exchange in Perth, 1889-1989'' Perth, W.A : Australian Stock Exchange(Perth) Limited. {{ISBN|1-875262-00-8}}

{{Business in Australia}}
{{Financial bubbles}}
{{Nickel mining in Western Australia}}

{{DEFAULTSORT:Poseidon Bubble}}
[[Category:1969 in economic history]]
[[Category:1970 in economic history]]
[[Category:September 1969 in Australia]]
[[Category:October 1969 in Australia]]
[[Category:November 1969 in Australia]]
[[Category:December 1969 in Australia]]
[[Category:January 1970 in Australia]]
[[Category:Economic bubbles]]
[[Category:Economic history of Western Australia]]
[[Category:History of mining in Australia]]
[[Category:Stock market crashes]]