Commodities

Reserves and growth make Severstal Gold attractive

29 Sep 2010

Russian miner Severstal looks set to spin off its gold division in a London listing likely to value it at around $4 billion. The rumoured price isn't cheap. But international diversification, large reserves and growth prospects should make the issue a hit.

Louis Dreyfus merger looks odd for Olam

24 Sep 2010

A deal could be worth $15 bln and would create the world's third largest agricultural commodities trader. Big may be better in trading, and the tieup could advance the French group's strategic ambitions. But a combo may dilute the attractions of nimble Singaporeanbased Olam.

China’s rare earths grip shows free trade limits

21 Sep 2010

PRC producers dominate the market, and a sharp cut in export quotas has sent prices soaring. That s a blow to hightech industrial users of the metals elsewhere and a reminder that the assumptions that make globalization beneficial can easily be thrown off.

AngloGold rightly bows to gold bug holders

15 Sep 2010

The gold miner is diluting shareholders to remove the last of its hedges. Hedging protects operations in down markets for the metal. But most investors are betting on the gold price and hedging as well as muddying financial results deprives them of the exposure.

BHP takeover would upset cozy potash market

25 Aug 2010

Potash Corp's size means its production can affect fertilizer prices. If BHP succeeds with its $39 bln takeover bid, it promises to run Potash mines at full capacity. That probably would help farmers, at least in the short term, and hurt highcost producers like K+S and Intrepid.

Potash CEO’s big payday won’t decide the deal

25 Aug 2010

A $500 mln check would normally sway the minds of most mortals. But Potash CEO Bill Doyle has sat on larger sums before and held tight. With his golden parachute just 6 pct of the payoff, he has no obvious incentive to shortchange shareholders with a quick flip of the firm.

Mining deals show M&A funding market is open again

18 Aug 2010

Banks have lent acquisitive miners more than $50 bln in the past week. With bond markets healthy, lenders may be expecting much of this to be quickly refinanced. Nevertheless, the ready supply of funding for big, risky deals shows the appetite for M&A lending is back.

Potash defense may include Chinese wildcard

18 Aug 2010

The Canadian fertilizer group is willing to sell but only at a price well above BHP's $39 bln offer. Getting an auction going is its best bet. Obvious players are hamstrung and short of time, but there are other options and the company s allure could draw out surprise bidders.

BHP’s diversification case is far from compelling

18 Aug 2010

The miner has the financial firepower to raise its $39 billion bid for Potash Corp. It may also make some improvements to the world s largest fertiliser group. But the deal won t substantially alter the shape of BHP s business just make it look more like a commodities index.

BHP puts itself in focus with $39 bln Potash bid

17 Aug 2010

The mining giant's measly allcash offer for the world s largest fertiliser group was firmly rebuffed. Though the commodity is hot, Potash Corp s size makes a bidding war unlikely. Even so, BHP needs to prove a deal is a better use of its cash than returning it to shareholders.

Potash dynamics suggest more upheaval to come

17 Aug 2010

BHP s huge $39 bln offer for Potash Corp highlights a trend. Demand for potash fell off a cliff in 2009. But it will more than recover as growing prosperity leads people to eat more foods that need fertilizer. High barriers to entry favor acquisitions over digging new mines.

QE2 may not be so harmful for the greenback

11 Aug 2010

The first rule of currency trading is there are no rules. Even so, the dollar s rise after the Fed s return to easing seems counterintuitive. Yet with banks reluctant to lend, few believe Fed actions will boost the money supply while global slowdown fears could favor the dollar.

$7.1 bln gold deal takes double leap of faith

3 Aug 2010

Miner Kinross is buying Red Back Mining, hinting its target's Mauritanian mine contains more gold than thought. To justify the price, both that and the gold bugs' broader narrative need to play out. With Kinross shares off 5 percent, even some enthusiasts see that as a stretch.

BP’s $7 bln Apache deal ticks the right boxes

21 Jul 2010

The UK oil major's disposal programme is off to a good start with the sale of assorted noncore assets to U.S. peer Apache. True, this will have an impact on growth. But BP has proved it can get decent prices despite being a hurried seller, taking some pressure off further sales.

Goldman and BP suffer costly reputational hangover

16 Jul 2010

The Wall Street bank seems to have got off lightly with its $550 mln SEC settlement, while the UK oil major has stopped oil flowing into the Gulf. But both companies' market capitalisations have lost more than the quantifiable cost of each episode. The missing link? Reputation.

Russian-Kazakh gold spat doesn’t look pretty

13 Jul 2010

A plan by Russian oligarchs to turn Polyus Gold into a Londonlisted goliath has hit trouble in Kazakhstan. It's all part of a battle with former owners of KazakhGold, whom the Russians accuse of massive fraud. But no one in this game of subterfuge looks totally unblemished.

BP can avert cash crunch

17 Jun 2010

The dividend suspension and staggered $20 bln escrow fund help clarify how the UK oil major will pay for the Macondo oil spill. Even on supergloomy assumptions, with heavy upfront costs and a bill approaching $60 bln, BP looks an unlikely candidate for a liquidity squeeze.

Hayward testimony is potential accident for BP

17 Jun 2010

Coming after the chairman's small people slip, the appearance of BP's gaffeprone CEO before Congress means another nailbiting day for investors. Congressman Waxman wants to show BP cut corners in its leaking Gulf well. Hayward will struggle to find a persuasive response.

China could be next superpower in Afghanistan

14 Jun 2010

A putative $1 trn in mineral wealth looks tough for U.S. groups to exploit. But neighboring China needs resources and has the muscle to enforce any rights its companies may take up. After Russia and America, a Chinese invasion commercial if not military could be next.

BP M&A fraught with political risk

14 Jun 2010

The UK oil major is 40 pct smaller than it was in April and is now hated in the United States. Predators from all over the world China, Russia, the Middle East and America may be interested in swooping. But almost all combinations have political problems.