Commodities

Revived Santos can turn from prey to predator

21 Feb 2018

Full-year results show the $9 bln Australian gas producer is on the mend, with a narrowing net loss, less debt and more cash. That vindicates last year’s rejection of an opportunistic bid. The next challenge is shifting focus to growth - which could send Santos hunting for deals.

BHP’s good news visible despite coal smudge

20 Feb 2018

Production woes and other setbacks took the shine off $4.1 bln of first-half earnings at the world's largest miner. Yet BHP still offers investors high returns on capital, a solid balance sheet and cash from likely selloffs. Plus a pushy investor is keeping management focused.

OPEC’s widened tent would still be built on sand

16 Feb 2018

Oil-exporting countries are working to expand their alliance with Russia and others longer term, the UAE oil minister says. That’s just as production numbers show U.S. drillers are set to pump more oil this year. OPEC’s tent can widen, but it will still face a production gale.

Why bank investors give a FICC about volatility

16 Feb 2018

Global fixed income trading revenue declined 11 pct last year, Coalition data shows. It’s a big reason investment banks again failed to cover their cost of capital. Market ructions will reveal whether a cyclical upturn is near – or whether banks need to accept structural decline.

Chinese gold mining IPO is a dubious prospect

13 Feb 2018

A Hong Kong listing will help pay off a $1 bln purchase in Argentina, enabling Shandong Gold to do more deals. But high-quality mines are costly and the sector’s M&A track record is poor. Buyers will need to believe the state-owned firm is unusually good at sifting for bargains.

Rio Tinto is due to unearth new growth ideas

7 Feb 2018

The $100 bln miner's latest results reveal a company cranking on all cylinders. Decade-high profitability led to nearly $10 bln in dividends and buybacks last year. Before long, though, investors may want boss Jean-Sébastien Jacques to find some other smart uses for the money.

Elliott’s fresh attack on BHP misses its target

7 Feb 2018

The activist fund has been nipping at the heels of the world's largest miner for months. Now it argues that unifying listings in London and Sydney could mean a $22 billion boost. It’s a lot of distraction and cost for an unproven gain. Simplicity is unlikely to be so lucrative.

BP’s biggest hazard is size envy

6 Feb 2018

After years of Gulf of Mexico-related strife, the UK group is recovering. With oil prices high enough to pay comfortably for investments and dividends, the energy giant may be tempted to ramp up new projects in a bid to become bigger than Shell. That would be a mistake.

Vietnam’s Thatcherism could use an extra push

2 Feb 2018

PV Power is the latest successful privatisation for Asia's fastest growing economy. Despite a broad anti-graft campaign, stake sales are going gangbusters, as is the local stock market. That makes it easy to refrain from enacting deeper reforms, but they'd help sustain momentum.

ADM bite at Bunge would be meal of many courses

22 Jan 2018

A $30 bln-plus merger of the two grain traders would boost profit in an unhelpfully oversupplied market. It would, though, also give rival Glencore, regulators and farmers a chance to push their own recipes. A single, clean takeover isn’t likely – but a few smaller ones could be.

Cobalt tax grab will send carmakers on a diversion

12 Jan 2018

The Democratic Republic of Congo, supplier of two-thirds of the world's cobalt, aims to more than double royalty charges. That's bad news for electric cars: the metal is a key battery ingredient. The move could backfire, however, by accelerating exploration of alternatives.

China is stuck in a petroleum Catch-22

11 Jan 2018

A yuan crude futures contract could finally launch in Shanghai early this year, as the world’s largest importer tries to shake up a market dominated by London and New York. A new benchmark is within reach, but clear-cut success will require the unthinkable: embracing the dollar.

Indian tycoon has golden opportunity in aluminium

10 Jan 2018

A reported $2.5 bln bid from Hindalco for U.S. aluminium producer Aleris would mark a shift in focus to growth for Kumar Mangalam Birla. The headline price is punchy. But surging demand for electric vehicles and more fuel-efficient petrol cars should be great news for the metal.

Indispensable execs demand higher disclosure

18 Dec 2017

CSX’s turnaround expert Hunter Harrison is dead months after joining the railroad. A rich signing package and $10 bln added to the firm’s market worth showed his importance. If companies and markets think and act as if leaders are irreplaceable, key-man risks must be disclosed.

Chile reinforces Latin American pro-business pivot

18 Dec 2017

Billionaire Sebastian Piñera won the copper-rich nation's presidential election with a stronger showing than expected. That will lend succor to like-minded leaders in Argentina, Brazil and Peru for whom fiscal discipline is proving a long slog and graft allegations a danger.

CSX chief’s illness puts its recovery on crutches

15 Dec 2017

The railroad hired 73-year-old Hunter Harrison in a revival effort earlier this year. Less than a year into his four-year contract, he’s on medical leave. Valuations and big pay packages pinned on aging executives call for an actuarial discount.

South African gold giant throws Lonmin a lifeline

14 Dec 2017

Gold miner Sibanye-Stillwater is buying the troubled platinum specialist for shares worth 246 mln pounds. The offer is far from generous compared with available cost savings. But Lonmin’s financial woes and inability to raise equity make a share of a larger group attractive.

Restrained Glencore M&A sets a reassuring tone

12 Dec 2017

The $70 bln commodities group sold assets and made a modest $3.4 bln of purchases in 2017. Partnerships are in vogue. Add in a portfolio geared – partly by accident – to electric vehicles, and it supports a fairly shiny valuation. Now Glencore needs to focus on meeting targets.

China’s aspiring Glencore will drill deep

7 Dec 2017

Beijing wants a seat at the oil trading table. State firms like Chinaoil are no lightweights, but private CEFC could become the first independent player to challenge the likes of Vitol. Its supply deals, political ties and financial backing make it a rival to contend with.

U.S. coal country’s best hope is gas, not coal

6 Dec 2017

The EIA says natural gas output from shale in the Appalachian region – traditionally America’s coal heartland – far outgrew other areas. Efficiency gains will further cut gas costs. Dirtier miners may lobby for Washington handouts, but the shift is already well under way.