Commodities

China brings a gun to its U.S. trade gunfight

4 Apr 2018

Beijing proposed duties on $50 bln of American exports hours after the U.S. said it would tax the same value of Chinese exports. Doing so may hit China’s economy, but that’s the point. The readiness to go toe-to-toe implies Trump’s trade war will be neither good nor easy to win.

Harbour closes in on $10 bln Santos at a price

3 Apr 2018

The private equity-backed outfit is offering 43 pct more for the Australian gas group than it did in August. That’s bold, even if energy prices have risen and the target is in better shape. Harbour must have re-run its spreadsheets, but Santos is wise to engage at this point.

China’s soybean trade card is difficult to play

3 Apr 2018

New tariffs target $3 billion worth of U.S. imports. But they don’t touch a big American pressure point: soybeans. This first round is a warning shot, to be sure. But retaliating against this commodity would hurt Chinese farmers and consumers, so Beijing might save it for last.

Coal clearout puts Rio on path to greener deals

28 Mar 2018

The Anglo-Australian miner has raised $4.2 bln this month getting out of coal. That implies more buybacks and fewer environmental concerns, helping lift Rio Tinto’s modest valuation. It can also focus on future growth, including investments in battery ingredients like lithium.

Market tools can slake Cape Town’s water thirst

19 Mar 2018

The South African city’s taps may not run dry this year, but low rainfall, population growth and invasive flora keep the threat alive. Poor governance adds to the risk. Tradable water rights could bypass many of those problems, and set an example for other arid regions.

China’s lithium trouble in Chile hints at more

15 Mar 2018

A government agency wants to block Tianqi Lithium's bid for a stake in $13 bln rival SQM, arguing the market is too concentrated. China seldom gets pushback in resources M&A. Beijing can expect more potholes as it tightens its grip on ingredients for electric vehicle batteries.

ArcelorMittal’s India homecoming may be scrappy

14 Mar 2018

The world’s largest steelmaker is back on the acquisition trail with a $6 bln bid for bankrupt Essar. It paves the way for the family to go back to its roots. The Mittals would face an inhospitable environment, but it's probably manageable for a company spawned by a hostile deal.

Shell investors could live with a BHP shale punt

9 Mar 2018

The Anglo-Dutch oil major may bid with Blackstone for the miner’s $10 bln U.S. shale assets, Sky says. The business would be less risky for Shell’s balance sheet than drilling for traditional oil. And private equity’s high return targets could reduce the danger of overpaying.

Viewsroom: Trump slaps tariff fear on markets

8 Mar 2018

Imposing levies on steel and aluminum has lost the president his economic adviser, ex-Goldman No. 2 Gary Cohn. That has shocked investors out of complacency. Also: Italy’s elections leave fringe parties in charge. And big deals may be back on the agenda for the mining industry.

Chile can set copper behemoth on market trajectory

8 Mar 2018

Codelco needs cash - and plenty of it. Attempting to privatise the world’s biggest copper producer would be politically toxic. Still, there is plenty Chile's incoming President Sebastian Piñera can do, starting with handing the group more control over its finances.

Oil-obsessed U.S. is drilling itself into a ditch

8 Mar 2018

Shale producers are tilting the market such that international oil drillers will scramble for some time. That’s provoking creative thinking. From Aramco to BP, large international oil firms are planning credibly for a lower-carbon world. Eventually, Americans will come up short.

Congo digs deep hole with overhaul of mining law

8 Mar 2018

The world's top cobalt producer is right to update rules written after a ruinous war. But the dramatic shift to bring in more taxes also reneges on an earlier promised 10-year "stability clause". Unpredictable swings damage an already battered image, and put investment at risk.

Revamped ENRC should set its sights low

8 Mar 2018

The colourful Kazakh miner, renamed ERG after it delisted under a cloud in 2013, is testing a recovering commodities market. A fresh IPO sounds a non-starter, but selling a stake in one of its operations could fly. If so, it would help the group trim almost $6 bln of debt.

India’s bankruptcy regime requires pragmatic touch

6 Mar 2018

Essar Steel could fetch $6 bln, with bids from groups led by ArcelorMittal and Russia's VTB. Both suitors sit awkwardly with tough rules barring defaulters from buying stressed assets. However, it is better to get good proceeds for creditors than to be purist and fail.

Trade tensions curb spirits in U.S. energy sector

5 Mar 2018

OPEC is breaking bread with U.S. shale producers at an industry confab in Houston. It’s a sign of American wildcatters’ influence on the global market. But infrastructure bottlenecks and Trump’s new tariffs threaten to prevent drillers from taking full advantage of their clout.

Trump’s incoherent strategy dooms tariff crusade

2 Mar 2018

The U.S. president defended his steel and aluminum duties, arguing trade wars are “easy to win.” But his tax cuts increase the budget deficit and the country’s reliance on foreign capital, almost guaranteeing a worsening trade balance. The conflicting tactics are self-defeating.

Battery-powered IPO should be handled with care

2 Mar 2018

Ganfeng Lithium is coming late to the electric vehicle party. The Chinese miner and battery maker wants to raise at least $1 bln in Hong Kong as competition to make power cells intensifies and prices are peaking. Investors will want to know it isn't just cashing out at the top.

Miners face a multibillion-dollar growth debate

28 Feb 2018

The big diggers have emerged from 2017 in rude health: BHP, Rio and Glencore's combined net debt is down to a third of where they ended 2013. The challenge is how to go beyond better payouts. Geology and high prices mean the next phase of growth may be unorthodox.

Chesapeake solidifies shale role as OPEC sandfly

22 Feb 2018

The shale producer pumped more crude at lower costs in the last quarter – then sold it for more money. It can partly thank oil cartel OPEC, which has helped prices edge up. The Oklahoma-based driller joins a growing list of little wildcatters that are becoming a big annoyance.

Glencore is a weather vane for mining M&A

21 Feb 2018

The Swiss commodity group’s once-swollen net debt is below cash flow, but it will only decide later this year whether to hike dividends further. That leaves CEO Ivan Glasenberg scope to look for deals. If Glencore can’t find any decent ones, its peers probably won’t either.