Commodities

Miner BHP brings tail risks up to the surface

20 Feb 2024

The company lost 86% of its half-year earnings, or $5.6 bln, to a writedown in its smallest business - nickel - and more provisions for a 2015 tailings dam disaster. Other parts are chugging along, but the charges are a reminder to shareholders of the industry's outsized hazards.

Nickel aid is too little, too late

19 Feb 2024

Miners of the electric vehicle battery metal will get royalty relief and help from Aussie taxpayers. It's unlikely to reverse decisions by First Quantum, IGO, and Wyloo to mothball projects after prices crashed. Developing critical minerals requires a robust long-term strategy.

Iron ore investors mine irrational exuberance

16 Jan 2024

The mineral's recent 40% jump has sent BHP, Fortescue and Rio's Aussie-listed shares towards record highs. Yet the trio's earnings are below their peak, as is the commodity, whose price is expected to fall. Absent a sudden upswing in China's economy, the rally looks overdone.

EU’s energy security drive may have gone too far

11 Jan 2024

The bloc’s pivot away from Russian pipeline gas has worked. But Europe’s fast-rising capacity to import the fossil fuel in liquid form will surpass its total gas needs by 2030. LNG infrastructure’s public and private backers have a stark choice: scale back, or risk writedowns.

Glencore’s split is yet to be copper-bottomed

6 Dec 2023

Having merged its coal assets with Canadian miner Teck’s, the $70 bln Swiss group is eyeing a spinoff. But boss Gary Nagle faces a tricky call on what to do with oil trading. And the appeal of a coal-clean metals split may hinge on whether Teck’s own separation creates value.

Slowing China still leads the race for commodities

28 Nov 2023

The world’s second-largest economy may expand by a sub-par 4% next year. But that would be 27% of global growth. And Beijing’s shift from property to greener sectors will support its appetite for copper, steel and such. Investors looking just at the big picture risk missing out.

Glencore deal is necessary detour on breakup path

14 Nov 2023

CEO Gary Nagle is buying 77% of Teck Resources’ coal arm for $6.9 bln as a prelude to a dirty-fuel spinoff. It’ll backfire if prices fall or authorities intervene. But it’s worthwhile given the reasonable valuation and chance to build a more appealing coal unit for investors.

China may finally nick some metals clout from LME

20 Sep 2023

Beijing has long been trying to erode Western dominance in the pricing of key commodities. Shanghai’s plans for a nickel contract could hurt the London venue’s benchmark status as it reels from a trading scandal. Yet building the necessary global warehouse network will take time.

Missing metals hit green economy pressure point

1 Sep 2023

Shares in copper producer Aurubis fell 15% after it said inventory wasn’t where it was supposed to be due to “criminal activity”. The commodity is vital for electric cables and batteries. With demand set to outstrip supply, key-metal fraud is a risk for the low-carbon transition.

Indian interlopers can disrupt global mining M&A

25 Aug 2023

Sajjan Jindal’s JSW Steel can afford Teck’s coal unit. A full or part bid rivalling Glencore’s $8 bln offer would secure key raw materials and reduce the risk of geopolitical supply shocks. It’s a strong motive for buyers in the fastest growing market for the alloy to do deals.

Saudi pays rich but logical price for Vale metals

28 Jul 2023

The kingdom is buying one-tenth of the $66 bln Brazilian miner’s nickel and copper arm. The $26 bln valuation on Vale’s base metals unit is steep, but cheaper than a full takeover. It also acts as a down payment on Saudi’s efforts to become an energy transition industrial hub.

Glencore deal epitomises net zero’s reduced status

27 Jul 2023

The $75 bln miner used to argue it was better to wind down its coal assets than sell them to a less responsible owner. Now CEO Gary Nagle wants to buy a rival and spin off the enlarged coal unit. Investors, distracted by energy security and fat profits, are unlikely to stop him.

Recycling fail exacerbates EU’s metals conundrum

7 Jul 2023

The bloc is likely to miss a target to double its use of recycled material by 2030. That’s especially short-sighted given the growing threat of Chinese export restrictions on critical metals. Improving Europe’s ability to mine junk would help shield key EU industries.

Bunge’s $22 bln Viterra deal is a tolerable muddle

13 Jun 2023

The US crops merchant agreed to buy its peer, half-owned by Swiss commodities giant Glencore. Grain inventories cloud the math on the combined company’s debt-load. Even so, the strategic rationale, valuation multiple and savings worth $1.8 bln more than make up for the concern.

Capital Calls: London crypto move, Stellantis SPAC

12 Jun 2023

Concise views on global finance: British Prime Minister Rishi Sunak welcomes Andreessen Horowitz’s UK office just as cryptocurrencies face a regulatory crackdown in the US; the European carmaker’s move to back a London blank-check vehicle is less hairy than it sounds.

London ash IPO comes with governance dust cloud

31 May 2023

Turkish-owned WE Soda, which makes an ingredient used for glass manufacturing, may float to cut leverage. Based on peers’ multiples, it’s worth between $6 bln and $10 bln including debt. But a big controlling shareholder, and dicey markets, mean investors may push for a discount.

Syngenta’s IPO is more relief than triumph

30 May 2023

The agritech giant’s $9 bln listing looks ripe. State players will handhold it to the bell and proceeds will help cut debt from its parent’s costly 2017 buy. Sadly, the poster child of China’s acquisitions abroad has few to inspire, and not many foreign investors are invited.

Glencore’s Bunge redux may yield Teck benefits

26 May 2023

The Swiss commodity giant could merge the agri-trader it part-owns with its $14 bln US-listed peer. A Bunge deal would be oddly timed, and Glencore has other ways to raise cash. But the bid may offer a way to spur Glencore’s share price as it mulls a new offer for Canada’s Teck.

Biden’s oil reserve plan is slippery slope

24 May 2023

America sold 180 mln barrels of oil from its strategic reserve last year when prices were high. It can top coffers now for less, but that window might not last long. Plus budget battles – and Biden’s fossil fuel agenda – making a needed fuel fill up look less likely.

Chickens alone can’t save Tyson Foods

8 May 2023

The world's second-largest meat producer known for its poultry production is struggling as inflation squeezes margins for red meats such as beef and pork. But even a surge in demand for chicken can’t inoculate Tyson from the volatility of the commodity market.