Commodities

U.S. might quite like a China deal for En+

9 Sep 2019

State firms linked to Beijing may buy Russian VTB’s stake in the energy group. Washington, which attached strict conditions to the de-sanctioning of Rusal’s parent, wouldn’t love a Russia-China sale. But it could at least help distance still-sanctioned Oleg Deripaska from En+.

Russian oil group’s cash gusher could stay capped

5 Sep 2019

Surgutneftegaz shares have surged on reports of a new subsidiary, which may unlock its $50 bln cash pile. Yet the boss of the secretive $24 bln energy company is under U.S. sanctions and it’s at risk of fresh ones. The bonanza could just remain a buffer against bad news.

New Aramco chair bears small plus and bigger minus

3 Sep 2019

The Saudi oil giant has appointed the boss of its sovereign wealth fund to head its board. Potential IPO investors might appreciate Aramco being distanced from the energy ministry. They may not be so keen that the new appointee looks even closer to the kingdom’s crown prince.

China’s oil and gas titans heed the call to spend

30 Aug 2019

President Xi Jinping called for a boost to energy security, and first-half figures suggest state giants were listening: $81 bln Sinopec, for one, nearly doubled capital expenditure. That contrasts with caution abroad. U.S. sanctions only add urgency to national service.

India’s coal-fired growth requires some shovelling

30 Aug 2019

New Delhi, trying to juice the economy, will allow 100% foreign investment in the fuel. Local demand is rising, but resource giants have had bad experiences on the ground, and big miners are pulling out of thermal coal. India will have to work hard to make its tardy policy work.

BHP boss makes himself tougher act to follow

20 Aug 2019

The miner reported a record $3.9 bln final dividend alongside its highest earnings in five years. Even as CEO Andrew Mackenzie conserves cash ahead of economic clouds and the end of his tenure, he has fulfilled shareholder return pledges. Any successor will face harder choices.

Russia’s En+ swaps one U.S. headache for another

16 Aug 2019

The Rusal holding company escaped punitive Washington sanctions in the first half. But Donald Trump’s trade war pummelled aluminium prices, leading to a sharp drop in EBITDA. Investors face a long wait to get anywhere near their 2017 IPO price.

Iron ore feels the pinch of Beijing’s restraint

15 Aug 2019

Prices of the steel ingredient have cooled, as a supply squeeze fades but a hoped-for Chinese boost to demand remains elusive. Mainland growth is lacklustre, but construction has yet to rev up in response. Stimulus this time may not mean more bridges: bad news for Rio and peers.

Aramco’s valuation dreams become quasi-reality

12 Aug 2019

Put the Saudi oil giant’s latest dividend on Exxon’s forecast yield, and its equity nears Crown Prince Mohammed bin Salman’s desired $2 trillion valuation. Yet Aramco’s first-half payout was unusually fat. A more realistic approach would put a lower price tag on the delayed IPO.

Fickle nickel sends out false value signal

9 Aug 2019

The metal is at its priciest since 2018 having surged 50% this year, more than other key battery materials. The spike, though, rests on misplaced optimism on Chinese growth, and speculation that an Indonesian ban could curtail supply. Producers like Vale can hold off celebrating.

Glencore unearths new grounds for cheap valuation

7 Aug 2019

The Swiss miner and trader had a bad six months, missing out on rising prices for iron ore while hit by lower ones for coal. Now it is mothballing its prized Congolese Mutanda mine. Chief Executive Ivan Glasenberg has to hope tighter supply buoys the right commodity markets.

Glencore coal split could scratch multiple itches

2 Aug 2019

The $42 bln giant is the largest thermal coal exporter, at a time when miners are under growing pressure to clean up. Splitting out that business would help, and can also lift a depressed valuation. It might even make sense for boss Ivan Glasenberg to lead the carve-out himself.

European oil majors’ gas lifeline could be a noose

1 Aug 2019

Royal Dutch Shell and Total rely on gas for future growth. That’s greener than oil, but weak second-quarter results show the drawback of their exposure. More importantly, longer pay back times than shale projects may help explain why the pair trade at a discount to U.S. peers.

Rio’s shiny profit masks a less lustrous reality

1 Aug 2019

The miner reported solid earnings, seasoned with a $1 bln special dividend. The detail is a bit more tarnished: iron ore operations are feeling the strain from years of cuts, and a Mongolian mine has underwhelmed. Investors love cash, but Rio also needs to invest in what it has.

Indian mogul’s ode to Anglo ends on duff note

26 Jul 2019

Anil Agarwal is dumping his roughly 20% stake in miner Anglo American. The complex holding structure, dubbed “poems” by creator JPMorgan, meant he only partly profited as the target’s shares soared. The bigger prize, meshing it with his Vedanta empire, also proved elusive.

Barrick CEO lets hard image slip for sensible deal

19 Jul 2019

Mark Bristow will, after all, pay up to buy out 36% of Acacia Mining in a transaction worth over 50% more than the gold miner’s offer in May. It’s a small victory for minority owners, whose company is under fire from Tanzania’s government. But for everyone, it beats a standoff.

Aramco gives bankers new scope for Saudo-masochism

19 Jul 2019

A second crack at the Saudi oil giant’s stalled $100 bln IPO could mean different bankers. Spurned advisers can comfort themselves that the listing won’t be lucrative and may never happen. The reputational and other issues that plagued the first attempt have only intensified.

Miner exits shift coal spotlight to Anglo American

16 Jul 2019

BHP is the latest heavyweight to consider a sale of thermal coal assets. That's sensible given weak prices, pressure from investors and a business that is barely material. Anglo's bigger exposure means a tougher choice - with few buyers, there’s a case for staying the course.

Rio sounds copper warning from Mongolian steppe

16 Jul 2019

The miner's flagship Oyu Tolgoi expansion will be up to 30 months late, and could cost as much as a third more than planned. It’s a fresh blow to a project that has been bruised by local politics. The latest snag is a reminder of why the red metal has become so hard to dig up.

BASF’s acid stings complacent investors

9 Jul 2019

The 55 bln euro chemicals group lost 6% of its market value after a trade-war profit warning. Since results are closely linked to industrial production, it’s odd that the company was valued at a historic premium while the global economy cooled. Peers’ shares will feel the burn.