Commodities

Crisis forces Australia and China closer

21 Jul 2020

Despite diplomatic tension, miners BHP and Rio are cashing in on Beijing's infrastructure stimulus. Supply disruptions in Brazil and weak global demand have left the two trading partners even more dependent on each other. Politics can’t change facts under the ground.

Gold’s enduring high gives miners room to be bold

10 Jul 2020

Bullion has breached $1,800 per ounce amid fears of a viral surge. Mine bosses’ enthusiasm to develop lower grade reserves that only make sense at exalted price levels is usually dampened by worries of a sharp snapback. An extended Covid-19 tail means more will take the chance.

Tesla kills three birds with one Congolese stone

17 Jun 2020

The electric car giant is buying 6,000 tonnes of cobalt a year from Glencore’s mines in the chaotic African state. With China corralling 69% of the metal’s production, Elon Musk gets to guarantee supplies while minimising child labour worries. It may even squeeze Western rivals.

Oil prices are stuck in a narrow tunnel

12 Jun 2020

After spiking above $40 a barrel, crude has now slumped again. Voluntary and enforced supply cuts have put a floor under the market after April’s shock falls. But the risk of a second coronavirus wave, and the difficulties of coordinating production hikes, point to a ceiling.

Norilsk Nickel hits investors when they’re down

11 Jun 2020

The miner’s biggest shareholder Vladimir Potanin wants to cap 2020 dividends at 25% of forecasts. ESG-conscious foreign investors will have blanched after it leaked 21,000 tonnes of fuel. They’ll be even less keen on cutting payouts by a lot more than the apparent cleanup costs.

Thyssenkrupp’s ‘bad bank’ needs speedy euthanasia

19 May 2020

The ailing German conglomerate is carving out loss-making units it can either sell or shut down. Such frank self-assessment is a solid step towards recovery. But with 2020 losses set to dwarf last year’s 400 mln euros, the quicker they’re put out of their misery the better.

Corona Capital: Travel companies, Oil

18 May 2020

Concise views on the pandemic’s corporate and financial fallout: Travel companies have sunnier days; oil traders have triumph of hope over experience.

New normal will demand new gold-standard portfolio

6 May 2020

Parking 60% in equities and 40% in fixed income is the traditional balanced approach. That’s off kilter if bonds are going to offer less and less income and are sometimes almost as volatile as shares. The solution may be to hold more stocks and cash, and possibly gold, too.

Oil car crash highlights Aramco investors’ airbag

6 May 2020

The Saudi crude giant’s shares have fallen less than those of western peers. Shareholders’ scope to avoid the dividend cuts now hitting oil majors is one reason why. It helps that Riyadh may be able to borrow its way out of the crisis rather than have to drain its cash cow.

Glencore mine grab would have a tiny silver lining

20 Apr 2020

Zambia may seize assets, including the commodity giant’s Mopani copper mine, to help with Chinese debt relief, the WSJ says. That would make the African state a pariah and confirm fears of debt-trap diplomacy by Beijing. At least Glencore might win some useful U.S. sympathy.

Corona Capital: Amazon, Procter & Gamble

17 Apr 2020

Concise views on the pandemic’s corporate and financial fallout: Amazon CEO Jeff Bezos pokes the French government; consumer giant P&G’s good fortune will be hard to keep.

Corona Capital: Rich vs. poor, Carnival

31 Mar 2020

Concise views on the pandemic’s corporate and financial fallout: The rich may save even more while the coronavirus rages while the poor will be further squeezed, and Carnival tries to bail out its sinking cruise business with a big sale of equity and debt.

Cheap oil will fund quasi-handouts for Indians

13 Mar 2020

A ban on foreign tourists is poised to hurt an economy already reeling from financial blowups. Luckily, cash-strapped New Delhi has a new stimulus option: passing lower crude prices on to consumers. That would be more effective than tax cuts, and relieve rising household debt.

Markets confront world economy’s viral unknowns

28 Feb 2020

The spreading coronavirus has knocked over 10% off U.S. and European bourses so far this week. The immediate question is the depth and length of any demand slump. The longer-term one is whether the crisis permanently alters global supply chains, dragging down corporate earnings.

Rio Tinto’s green pivot suffers by new comparisons

26 Feb 2020

The miner wants carbon emissions to be net zero by 2050. That’s good, but unlike BP’s recent goal it doesn’t include CO2 produced by customers. A post-virus stimulus from Beijing will be a boon to the China-dependent Rio, but could strengthen the case for greener credentials.

Glencore split could spring-clean dusty valuation

18 Feb 2020

The commodity giant’s coal operations dragged in 2019. Spinning them off into a separate entity would underline the low-carbon potential of the copper and cobalt assets left behind. That could leave billionaire CEO Ivan Glasenberg with a more valuable overall cake.

BHP’s best-laid plans may go awry for new boss

18 Feb 2020

The mining giant delivered a 39% rise in half-year profit, giving a running start to CEO Mike Henry. Since assuming the role on Jan. 1, virus-hit China has threatened iron ore demand. A strategic focus on investing in growth and returning capital to shareholders could be on hold.

Coronavirus pushes wobbly LNG market to the edge

10 Feb 2020

China’s leading liquefied natural gas importer claims the coronavirus has made fulfilling its contracts impossible. This might not pass legal muster – but the desperate measure shows just how weak Chinese demand might be. The unbalanced LNG market is in trouble.

Russia’s En+ tiptoes between sanction risks

6 Feb 2020

The metal and energy group will buy VTB’s stake in itself for $1.6 bln. Not having the sanctioned bank as a shareholder is a positive. But with a new 7% stake the En+ chairman is even more incentivised to prevent Russian tycoon Oleg Deripaska from regaining his former influence.

Anglo’s tricky fertiliser bet has political hedge

8 Jan 2020

The miner is sinking $500 mln to buy Sirius’ troubled potash project in northern England. It will need to stump up an extra $3 bln to extract the mineral, whose price is murky. At least PM Boris Johnson, keen to revive poorer UK regions, should support Anglo American’s plan.