Commodities

Nigeria votes for another four years of drift

27 Feb 2019

Re-elected President Muhammadu Buhari faces a daunting to-do list. His first term suggests most of it will stay undone. Easing the state’s grip on the currency and oil sector could revive growth. That the former general’s main rival backed such reforms means neither is likely.

Rio Tinto lays bare the mining paradox of plenty

27 Feb 2019

Including a special payout, the digger led by Jean-Sébastien Jacques returned a whopping $13.5 bln to shareholders last year. Despite Rio's ample cash, risks are rising and safety problems like Vale’s will lift costs. That should keep the industry's growth ambitions in check.

Hostile gold merger has only glimmer of appeal

25 Feb 2019

Barrick Gold's $18 bln all-share bid for U.S. rival Newmont has a shred of financial logic from putting together neighbouring mines in Nevada. That's buried, though, beneath opportunism and hubris. The slim uplift for Newmont shareholders further dulls the deal's prospects.

Barrick gamble is one part logic, two parts folly

22 Feb 2019

The gold giant is eyeing a hostile move for $19 bln rival Newmont, the Globe and Mail says. The merger has been mooted before and may yield synergies, but the buyer has just acquired Randgold and the target is buying Goldcorp. It sounds badly timed and poorly considered.

China coal curbs blow diplomatic smog Down Under

22 Feb 2019

At least one big port has put a lid on Australian imports, Reuters says. Beijing has used such tactics in the past to reduce stockpiles and support domestic prices. But denting a top export earner for Canberra will be seen as a message too, when ties are already under strain.

Agarwal’s Anglo carve-up has a new stumbling block

21 Feb 2019

The Indian tycoon’s rent of a fifth of the mining group’s shares implies he might want to lobby for a breakup. To do so he’ll need to get Anglo American’s next biggest investor, South Africa’s state pension fund, on side. That’s beginning to look less and less likely.

Glencore treads fine line between green and black

20 Feb 2019

CEO Ivan Glasenberg will keep coal output at current levels. That’s surprising for a miner which makes a third of group EBITDA from the pollutant. But given the company’s various other hard-to-solve regulatory headaches, bringing ESG investors onside is a logical proactive step.

U.S. soy farmers will suffer trade war shell shock

20 Feb 2019

Midwestern producers will place a bet on talks between Washington and Beijing, when planting begins. Even with a deal, they face stockpiles and fewer soy-eating pigs in China, after an outbreak of disease. Worse, the spat has taught their top buyer it can live without U.S. supply.

BHP sets judicious pace for big diggers

19 Feb 2019

Two fires and a runaway train smudged first-half profit at the world's largest miner. BHP cut debt to below its target and said it is eyeing $9 bln in free cash in the year to June, at current commodity prices. But CEO Andrew Mackenzie kept the tone cautious and spending flat.

Miners’ Congo optimism is post-Kabila sugar-rush

13 Feb 2019

Joseph Kabila’s exit as the African giant’s leader is generating some positive vibes. Reminders of Congo’s vast mineral potential are light relief for shareholders beaten down by government shenanigans. But they won’t help convince Kinshasa to treat the industry any better.

Aramco’s new tangent more rational than it looks

12 Feb 2019

The Saudi oil giant wants to develop oil and gas projects overseas. Like its planned purchase of SABIC, that sits uneasily with other strategic goals. But emphasising lower-carbon gas while burnishing global credentials is sensible.

Hyperactive Elliott leaves Arconic in disarray

6 Feb 2019

The parts maker has a new CEO - its fourth since Paul Singer’s hedge fund first invested in 2015. The activist pushed out ex-boss Klaus Kleinfeld, helped pick most directors and backed a failed buyout by Apollo. Its minority stake has made it a force for agitation, not stability.

Central banks’ gold fever is anything but reckless

5 Feb 2019

Their 2018 purchases of the yellow metal were the second-highest on record and up nearly three-quarters from a year ago. But this isn’t a speculative punt on prices rising. Instead, it’s a logical precaution against rival currencies and U.S. self-harm eroding dollar dominance.

Anil Agarwal’s Vedanta antics are self-defeating

1 Feb 2019

A unit of the Indian tycoon’s mining company is buying some of his personal holding in Anglo American. Minority shareholders wiped off one-fifth of the company’s value. Given any swoop by Agarwal on Anglo may require winning minorities over, it’s an odd move.

Falling prices only hurt Shell in the long term

31 Jan 2019

Despite a crude downturn in the final quarter, the UK oil major hiked output and earnings. Given prices should stay high enough for free cash flow to cover dividends, that’s sustainable. The main cloud is Shell and peers have less to invest to wean themselves off fossil fuels.

Vale’s Brazil dam damage will hurt its peers too

29 Jan 2019

A second disaster in three years has already cost the mining giant $19 bln in market value. Fines and a management overhaul will likely follow. Fresh scrutiny from stakeholders will hit an industry already grappling with high costs, slow projects and risk-averse shareholders.

Deripaska markdown will persist at En+ and Rusal

28 Jan 2019

The Russian metals groups have been freed from U.S. sanctions. Though their shares have perked up, they still trade below pre-sanctions level. Given the risk of new penalties should previous majority owner Oleg Deripaska exercise control, the valuation gap will linger.

Oleg Deripaska’s En+ deal is more sour than sweet

23 Jan 2019

The settlement that distanced the Russian oligarch from his power company has favourable aspects, the New York Times says. Certain provisions could even limit the financial hit from U.S. sanctions still in place against him. The overall outcome is, however, still pretty painful.

Size matters less than gold miners think

17 Jan 2019

Newmont's $10 bln Goldcorp purchase creates a behemoth, and the U.S. miner has talked up options from extra assets, plus steady output and dividends. But its investors are right to be sceptical. Management will have to over-deliver on synergies to secure them a good return.

Miners can close the confidence gap in 2019

16 Jan 2019

Stock markets point to a rough year for diggers, valuing each dollar of expected cash at a stubbornly hefty discount. Investors are fretting about a Chinese slowdown and don’t trust cashed-up bosses at Rio, BHP and the like to restrain themselves. The reality may be brighter.