Commodities

Barrick and Randgold wisely explore M&A riches

24 Sep 2018

The $12 bln Canadian miner led by former Goldman banker John Thornton is set to unite with its African-focused rival. A deal this big would shake up a sector long cowed by past mistakes. Given weaker prices, falling output and a geographic fit between the two, the idea has logic.

Norway power failure a rehearsal for bigger shocks

14 Sep 2018

The 114 mln euros Einar Aas lost betting on energy markets was not enough to sink the clearing house backing the trades. But the damage wreaked by one man implies deeper frailties. An increasingly volatile carbon price would make the commodities market vulnerable to a repeat.

Tianqi edges ahead in Hong Kong’s lithium race

7 Sep 2018

China’s top two producers of the battery ingredient are revving up $1 bln listings in the city. Both offer a bet on the electric car boom. But Tianqi’s quality resources give it a narrow advantage over processing giant Ganfeng, at a time when investor confidence is wobbling.

Norway’s anti-plastics push has firm foundations

6 Sep 2018

Oslo’s $1 trillion wealth fund wants its investments to flag what they’re doing on ocean pollution. As a recent spat over oil and gas holdings shows, political meddling means good intentions don’t always translate into action. That should be less of a problem this time around.

China flaunts firepower in Canadian copper deal

6 Sep 2018

Zijin Mining agreed to buy Nevsun for $1.4 bln, trumping hostile suitor Lundin. A cash bid at a 57 pct premium mostly to bet on a project in Serbia speaks to Beijing's relentless appetite for important metals, but also to scarce supply. Pockets of outbound M&A exuberance persist.

Chinese battery makers can win EV recycling race

30 Aug 2018

Metals recovered from spent car cells could be worth more than $20 bln a year within a decade. Western chemicals groups like Umicore already profit from waste. But with half of the world’s electric cars sold in the People’s Republic, locals like CATL and BYD can pull ahead.

China’s oil majors risk wasting a good trade war

27 Aug 2018

Earnings are gushing at energy giants including $210 bln PetroChina. They are benefitting from Washington’s belligerence, which has driven up crude prices and should open opportunities in Iran. The windfall, though, masks the need for extra investment, cost cuts and other reform.

Santos doubles down on independence with Quadrant

23 Aug 2018

Fresh from rejecting a $10.8 bln takeover bid, the Australian energy group is buying its Perth peer for $2.2 bln. The move tests a newly healed balance sheet, but investors value Santos equally as predator and prey. It’s a big bet on Quadrant’s new discoveries and the oil price.

Gas mega-merger hubris deflated by regulators

22 Aug 2018

Linde needs to sell more assets to close its $83 bln tie-up with Praxair. That means hurried disposals and fewer savings. The rationale for creating the world’s largest gas supplier holds, but the mess shows shareholders should apply a hefty discount to ambitious dealmaking.

Copper-bottomed BHP can now dig into bigger issues

21 Aug 2018

The $125 bln miner has tidied its portfolio and, as the latest results show, repaired its balance sheet and generated ample cash for shareholders. That gives the board and CEO Andrew Mackenzie room to consider important strategic questions about sticking with oil, gas and potash.

Rio’s Canadian opportunism amplifies cash quandary

17 Aug 2018

The $80 bln miner wants to list its 59 pct stake in Iron Ore Company of Canada, Reuters says. The timing suggests an eye on amenable markets for the operation's premium product, as China goes green. Success will benefit Rio’s cash pile, but only makes the growth debate louder.

Cautious miners leave room for new swashbucklers

17 Aug 2018

Heavyweights like BHP have retreated from promising projects in tough spots. Even daring Glencore is fretting about Congo. The result is a long list of untapped resources and few buyers outside China. An intrepid fresh player could step in - if it can access private capital.

Soybeans strain Beijing’s trade war messaging

15 Aug 2018

China is likely to buy more of the animal feed ingredient from the United States, even after tariffs. That's despite government assurances it can diversify away from more than $12 bln of annual U.S. purchases. Markets sense it coming; others might soon see through bluster too.

Antofagasta shows markets’ low bar to trade panic

14 Aug 2018

Shares in the London-listed Chilean copper miner slumped after it said U.S.-China trade tensions may hit demand for the metal. Antofagasta had a weak first half, but its guidance is unchanged. Macro jitters mean investors are unwilling to give companies the benefit of the doubt.

It’s time to take away Trump’s tariff toys

13 Aug 2018

Using steel duties to punish Turkey over a detained U.S. pastor is an abuse of the president's powers. While national security is a legitimate reason to restrict trade, doing so on a whim hurts America. Congress can be more muscular even if it's not yet prepared to rein Trump in.

Bayer’s cancer scare makes a bad deal worse

13 Aug 2018

The German group's market value fell nearly $10 bln after a court awarded $289 mln to a user of weed killer made by U.S. division Monsanto. That may overstate the likely losses, but the verdict undermines a deal that already destroyed value, and left shareholders without a say.

Glencore risks writ large in balance sheet caution

8 Aug 2018

The $60 bln commodities giant only narrowly missed first-half EBITDA forecasts, despite a slew of Congo and U.S. subpoena-related woes. Given its swashbuckling image, investors might have expected more of a splash. The fact they got deleveraging instead flags the group’s concern.

White House’s small trade deals don’t add up

7 Aug 2018

U.S. officials hailed Morocco’s opening to U.S. poultry, just as they did recent moves by Colombia on rice and Argentina on pork. But projected export gains of $35 mln are chicken feed relative to the $114 bln in American goods threatened by other countries’ retaliatory tariffs.

Oil investors are complacent on climate change

6 Aug 2018

Shareholders in the likes of Shell aren’t holding companies to account on carbon targets. A Breakingviews analysis suggests why: they may suffer only mild losses if oil majors just run down their reserves. But doing nothing may backfire if governments take more radical action.

Rio’s shareholder bonanza hints at elusive M&A

1 Aug 2018

The giant miner reported a sturdy 12 pct rise in first-half earnings, narrowly missing forecasts. It will, though, hand back $7.2 bln, including a record dividend. That suggests long-expected deals are hard to find despite shaky markets, cheaper shares and M&A noise elsewhere.