Commodities

Newmont’s $28 bln gold merger is an alloyed good

14 Jan 2019

The U.S. gold miner is swallowing Canada’s Goldcorp in an all-share deal. Rivals Barrick and Randgold already bulked up in a similar deal, and the 17 pct premium is slim. Yet Newmont is handing over most of the benefits, and even those might be hard to extract.

Saudi’s sunny debt offer belies gathering clouds

10 Jan 2019

Riyadh’s successful $7.5 bln bond sale suggests investors have moved on from the Khashoggi murder. Yet long-dated Saudi debt trades at an implied discount to its rating. With the kingdom too optimistic about oil prices and facing peak demand, markets won’t always be so friendly.

Congo’s post-Kabila chaos leaves miners in a hole

10 Jan 2019

Elections in the central African giant have produced a double surprise. Outgoing leader Joseph Kabila’s man lost. But so did a rival who led opinion polls and was favoured by mineral-rich regions. Unrest is likely, especially in Katanga, home to 60 percent of the world’s cobalt.

Norwegian $800 mln oil swoop succeeds if it fails

8 Jan 2019

DNO, chaired by Bijan Mossavar-Rahmani, offered a low price for Faroe Petroleum. Investors could reject the bid, but the magnate likes to control companies with minority stakes, and already owns 31 pct of the North Sea driller. Any hopes for a big bump may be disappointed.

Three key indicators to watch like a hawk in 2019

2 Jan 2019

Want to know whether there’s going to be a U.S. recession, a trade-war flare-up, or corporate implosions? You could obsess over news and social media – or skim a few proxy indicators like the price of soybeans, the Treasury yield curve, and the number of stocks in bear territory.

Financing drought cracks farmers’ loyalty to Trump

24 Dec 2018

The U.S. president’s trade war has evaporated export markets for soy beans and other crops, leaving growers struggling even more than before. Yet they’re mostly sticking by Trump. If he can’t strike a good deal, farmers’ faith will erode when credit dries up for the next harvest.

U.S. Oleg Deripaska deal tougher than it looks

20 Dec 2018

Washington’s decision to lift sanctions on En+ and allow the Russian oligarch to keep a 45 pct stake sounds lenient. Yet it looks difficult for Deripaska to sell his stake for cash or exercise decisive influence. After a messy beginning, the U.S. raid seems a qualified success.

Rio will turn big miners back into big spenders

20 Dec 2018

Despite fat cash piles, mining groups have been slow to acquire. With new projects costly and demand high, copper was already a good strategic bet even before trade war jitters caused a price slump in 2018. Expect Rio Tinto to come calling for $15 bln U.S. rival Freeport.

Glasenberg successor will run a different Glencore

13 Dec 2018

The commodities giant’s combative boss says he will retire in 3 to 5 years. It’s unclear who will replace him, even after a recent reshuffle. With a U.S. subpoena and other woes weighing heavily on the stock, Ivan Glasenberg may yet be tempted to consider a much bolder overhaul.

Miners’ digging rush is a chance to show restraint

10 Dec 2018

Exploration, which stalled as prices crumbled after 2011, is back. Speculation over Rio Tinto’s drilling in Australia’s Great Sandy Desert, for example, has sent rivals on a copper-hunting frenzy. With deals scarce, such moves make sense, so long as the diggers stay disciplined.

China moves a touch closer to EV driving seat

5 Dec 2018

Beijing has signed a new cobalt deal with Congo. The U.S. should already be antsy that its main strategic rival controls a third of what is a key component in electric vehicle batteries. Yet a scenario whereby China also acquires market leader Glencore’s share isn’t impossible.

Aussie grain bid offers shelter in climate storm

3 Dec 2018

A fund run by infrastructure veterans has bid $1.8 bln for GrainCorp, once courted by U.S. giant ADM. The 43 pct premium isn’t too generous given drought-hit shares. But extreme weather is here to stay; that’s a powerful argument for long-term, private ownership.

Saudi can pick a path through its OPEC minefield

27 Nov 2018

Riyadh must somehow please oil-producing peers who want to bolster prices and a U.S. president who wants the opposite. Crude costs will rise when Donald Trump’s temporary Iranian oil waivers expire. Saudi can appease both sides by making equally temporary reductions in output.

Trump’s Saudi amorality can make Gulf great again

26 Nov 2018

Support for Mohammed bin Salman after the murder of Jamal Khashoggi has skewered U.S. claims to moral leadership. Yet the U.S. president now has huge leverage to force Saudi’s crown prince to reverse course on Qatar, Yemen and other blunders. He would be a fool not to use it.

Tanzania’s nuts policy is so bad it’s good

22 Nov 2018

President John Magufuli is shelling out $320 mln to buy all its cashew crop at a hefty premium to help farmers. The government faces a big loss. Failure would at least expose the folly of ham-fisted state intervention, at odds with Africa’s gradual liberalisation.

Mozambique removes only part of tuna bond whiff

16 Nov 2018

The war-scarred African nation wants to restructure its defaulted obligation by linking repayments to future gas sales, giving bondholders extra security. But developing $50 bln of projects in such an exotic locale is unlikely to avoid snags. Delays could mess up creditors’ sums.

Oil forecasting goes from tough to pointless

14 Nov 2018

In recent months crude has hit $86 a barrel, fallen to $65, and is now rising again. Oil prices drive other markets, but predicting them can be a waste of time. Changing demand outlooks, Saudi turmoil and Trump are only the most volatile of a series of uncertainties.

Thyssenkrupp’s tarnished revamp is still needed

9 Nov 2018

Shares in the German industrial group plunged 10 pct after its latest profit warning. The bad news has further rattled investors already lukewarm about its planned breakup. Still, hiccups from unpicking an unwieldy conglomerate don’t make the strategy any less valid.

South African boring is once again interesting

2 Nov 2018

New rules for the Rainbow Nation’s struggling mining industry strike a decent balance. Making investors bear less of apartheid’s social legacy will stop the sector’s decline. Taking the affirmative action shackles off explorers might even create some much-needed growth.

BHP atones for past M&A sins

1 Nov 2018

The mining titan is returning all $10.4 bln from its U.S. shale sale in a dividend and buyback. A nudge from pushy investor Elliott and deal discipline led to a better use of capital than in the last cycle. Boss Andrew Mackenzie has set a higher bar for BHP’s financial balance.