Over the same period Rio has fallen from $76.40 to $72.59 and Fortescue from $4.89 to $4.73. Western Areas has led the nickel sector lower, easing from $5.25 on Tuesday to $4.87 yesterday while mineral sands miner Iluka Resources fell from $4.80 to $4.67. Morgan Stanley analysts have warned that Iluka's discounted cashflows (DCFs) could fall 37 per cent if a 40 per cent mining royalty was introduced. The impact on Fortescue's DCF, the analysts said, would be almost as severe while even the globally-spread Rio (down 20 per cent) and BHP (down 19 per cent) would suffer significant cashflow cuts. "We prefer stocks with offshore operations," Morgan Stanley said, adding that the only positive from a resource rent tax was the likelihood that sunk development costs could be recouped before miners had to start paying the new profit-based duty.