Commodities

Buffett digs sweetest well in U.S. shale patch

30 Apr 2019

Berkshire Hathaway is putting up $10 billion to help Occidental fund its $38 billion bid for Anadarko. It’s a vote of confidence in Oxy’s unsolicited offer. As usual, though, the best deal will go to Warren Buffett himself, who can still win even if other shareholders lose.

Chinese pork producer goes hog-wild for trade deal

30 Apr 2019

WH Group’s quarterly profit declined by a fifth, even as its shares have surged 50 pct this year. That suggests investors are partly counting on a U.S.-China pact to lift sales amid a bout of African swine fever. It’s a heady dose of optimism for talks that have been so erratic.

Occidental gives Anadarko an ill-judged bear hug

24 Apr 2019

Its $38 bln cash-and-stock offer trumps bigger rival Chevron’s bid for the U.S. oil producer, is a two-thirds premium and in theory helps both sides. Yet Occidental’s shares are less attractive and its debt would jump. Chevron only need sweeten its offer a bit to regain its edge.

Aramco sale would grease Mukesh Ambani’s tidy-up

18 Apr 2019

The Saudi oil giant is eyeing a stake in the energy assets of the tycoon’s $127 bln Reliance Industries. That would aid Aramco’s strategic ambitions. It would also mean India’s biggest listed group could keep expanding its consumer-to-oil businesses without adding too much debt.

Chevron doubles down with $33 bln Anadarko swoop

12 Apr 2019

The $239 bln U.S. oil giant is buying its domestic peer in a cash-and-shares deal. Hefty synergies more than cover the offered premium. As rivals try to become greener, Chevron is sticking to what it knows by buying big in global oil’s key growth area.

Africa uprisings carry stark oil-addiction warning

12 Apr 2019

Veteran leaders in Algeria and Sudan have been unseated. Rising unemployment, inflation and weak growth are the immediate reasons why, but a broader common theme is too heavy a reliance on crude extraction. That’s not a problem limited to Africa.

Zambia case puts corporate ethics guff on notice

11 Apr 2019

Britain’s Supreme Court says Vedanta can be sued in London for pollution offences in the African state. Multinationals have tended to trumpet corporate social responsibility at head office, while ignoring sins at subsidiary level. Whatever the case’s outcome, that will change.

Aramco frenzy is wrong measure of Saudi renewal

10 Apr 2019

Frantic demand for the oil giant’s $12 bln bond issue might be interpreted as a sign of support for the desert kingdom’s efforts to diversify its economy. Yet securing long-term investment is harder than selling securities. And only some of the buying reflects genuine enthusiasm.

Overpriced Aramco debt still has a Saudi discount

10 Apr 2019

Strong demand for the oil giant’s first bond allowed it to raise $12 billion at lower rates than expected. Borrowing costs are still higher than Western oil peers. But it makes little sense for investors to view the bonds as less risky than Saudi’s tarnished government.

Oligarchs take U.S. sanctions risk in their stride

8 Apr 2019

The Russian owners of Evraz recently cut their stake below 50 pct, which offsets potential heat over their Kremlin links. That doesn’t mean fellow metal groups like Severstal need to follow suit. Still, Oleg Deripaska’s recent travails imply little cause for complacency.

Canola exposes Beijing’s blunt diplomatic tools

4 Apr 2019

Officials are scrutinising Canadian exporters of the stuff on quality concerns. China’s status as a giant trader is one of its few real geopolitical levers. But using health and safety for political ends also hampers watchdogs doing much-needed work to improve standards at home.

Iron ore surge masks Vale risks

3 Apr 2019

A fatal dam accident in January wiped almost $21 bln off the Brazilian company’s value. It has since clawed back most of that sum, thanks in part to a jump in the mineral’s price. Given the long-term cost of Vale’s second accident in three years, the recovery looks premature.

Aramco flashes its cash but also its independence

1 Apr 2019

The Saudi oil giant’s debut bond prospectus shows $111 bln of net income in 2018. Yet Aramco will only pay half the $69 bln needed to acquire Riyadh’s SABIC stake upfront. Potential debt and equity investors will be heartened that there is an implied limit to government meddling.

Swine fever tests China’s transparency credentials

29 Mar 2019

Grains trader Cargill is the latest company to cite outbreaks of the highly contagious hog disease as a drag on business. It’s likely to fuel fears that the world's biggest pork producer may be under-reporting the issue. The taint adds to Beijing's fast-spreading problem.

Saudi’s $69 bln asset rejig starts banker payback

27 Mar 2019

Aramco is buying a 70 pct stake in chemical group SABIC from the kingdom’s sovereign wealth fund. The reshuffle is mostly an internal affair but the oil giant will issue bonds to pay for it. That gives banks who have spent years courting the company some return for their efforts.

John Paulson gives Newmont late but valid advice

22 Mar 2019

The gold miner’s $10 billion Goldcorp offer terms aren’t good enough for the hedge fund manager, who owns a 2.7 percent stake. He has a point – recent gold deals haven’t featured premiums. But his campaign might have gained more traction had he started earlier.

China’s majors fill up on gas at the right time

22 Mar 2019

PetroChina’s losses on gas imports swelled to nearly $4 bln in 2018, thanks to low domestic rates. Yet China’s oil giants are preparing to buy more LNG from U.S. firms. That aids the trade cause. More importantly, it may help lock in supply before a forecast shortfall.

Norway’s mega-fund fluffs move away from crude

8 Mar 2019

Oslo’s $1 trillion wealth fund will ditch oil exploration stocks, but stay invested in groups that also do refining. As a big producer Norway needs to tread carefully. But accepting the risk of subpar returns could have been a way to show greater climate change leadership.

Gold miners bury a good deal under two shiny ones

4 Mar 2019

Newmont has rejected an $18 bln stock offer from Barrick, saying shareholders fare better in its agreed purchase of Goldcorp. But Barrick’s arguments – and bigger benefits for Newmont’s owners – hinge on the two joining forces in Nevada. Neither merger is required for that.

Vale can keep pages from departing CEO’s playbook

4 Mar 2019

Fábio Schvartsman has stepped down weeks after a fatal dam collapse. Waiting for prosecutors to push the issue is bad form. Safety and governance will have to become bigger priorities for the $65 bln Brazilian miner, but many strategic and operational ideas are worth preserving.