Commodities

Eni needs slimming, not dismemberment

15 Jan 2010

Activist investor Knight Vinke wants the Italian oil and gas group to be broken in two. That goes too far. But its less radical proposal spinning off a majority stake in Eni's regulated transport business could please regulators and other investors.

Glencore cash-call raises awkward Xstrata question

23 Dec 2009

When Xstrata raised $6 bln in January, Glencore, the miner's top shareholder, couldn't afford to subscribe. So it sold Xstrata a mine, with the option to buy it back a year later. Now the commodity trader is raising capital, have Xstrata's other shareholders been used as a bank?

Retail ban for RUSAL would be risky solution

17 Dec 2009

Hong Kong's financial regulator may bar retail investors from RUSAL's forthcoming IPO. The unorthodox proposal highlights the risks the aluminium group poses to both investors and the exchange. If it goes ahead, Hong Kong must make doubly sure these risks are fully disclosed.

Exxon’s $31 bln gas deal looks well timed

14 Dec 2009

The oil giant ticks many boxes with XTO. It gains a potentially lucrative foothold in US gas and gets a needed boost to energy reserves. The longterm bet strikes as gas recovers from historical lows. Plus, Exxon need only issue 10 pct more shares. All in, the deal seems smart.

Record gold price isn’t only about insecurity

2 Dec 2009

Sure, the huge uncertainties in financial markets help. But hedge funds, retail investors, retirement funds and even central banks are rediscovering the yellow metal. If gold is regaining its lost status as a key portfolio component, that should up to a point support prices.

Russian support wouldn’t help Rusal IPO much

19 Nov 2009

A Russian lender chaired by Vladimir Putin may take a stake in Rusal when the metals giant floats. With Rusal owing E4.5bn to the state bank, this would amount to a partial debtforequity swap. But Kremlin involvement could also make the IPO a tougher sell.

Not everyone can do a Canon

17 Nov 2009

The Japanese group is offering a juicy 70% premium for the Dutch Océ. That makes bids for Cadbury and Dragon Oil look paltry. But merger arbs shouldn t get their hopes up. Canon has good reasons to be generous. Others needn t and won t rush to follow its example.

Gold price could go much higher

16 Nov 2009

Cheap money strengthens the case for gold, and reduces the cost of holding it. Gold miners won t slow the rally. A jump in hedge fund or central bank interest would swamp annual production, worth $88bn and falling. The 20% increase since August could be only the beginning.

Rusal’s $7bn debt restructuring goes to the wire

11 Nov 2009

The world's largest aluminium producer must clinch a deal with western creditors before it can pursue a crucial listing in Hong Kong and Paris by the year end. Failure could leave owner Oleg Deripaska having to buy out minority investors which the tycoon cannot afford to do.

EU should heed Putin’s call for help on Ukraine

3 Nov 2009

The Russian president is meddling in Ukrainian politics by hinting that a new gas row is looming, and that Europe should help Kiev pay its bills. But he has a point. The EU hasn t done enough to assert its influence and help Ukraine sort out its industrial and political mess.

French government zigs and zags on EDF strategy

30 Oct 2009

Ten months after backing the French energy group s US strategy including a $4.5bn bid for Constellation nuclear assets the state is to support new CEO Henri Proglio s plans to exit America. France has been a terrible custodian. What better case for EDF s full privatisation?

Rivals try gaining on Exxon’s prowess with costs

29 Oct 2009

The Texan major has long been the model for efficiency in the industry and still enjoys a sizeable lead. But Shell, BP and others are hoping to narrow the gap with more credible restructuring plans and stronger discipline on expenses. They have a way to go yet.

Proglio’s plans for EDF shouldn’t include Veolia

28 Oct 2009

The incoming chairman and chief executive of EDF says he doesn't want to merge the French electricity group with Veolia, the environment services company he currently heads. But he still wants EDF to become Veolia's dominant shareholder. This is a bad idea.

BP shows worst may be over for Big Oil

27 Oct 2009

The 47% drop in the oil giant s Q3 earnings was less than feared, thanks to impressive cost control. BP is promising further efficiency gains by the yearend. Longterm strategic issues persist. But for now, BP is reaping the benefits of past investments and a stronger oil price.

China fails to disrupt Rio Tinto

14 Oct 2009

Record Chinese imports are driving record production at the miner. Despite pressure for a price cut, the Chinese are effectively paying Rio and its peers the benchmark price. Detaining Rio s chief negotiator hasn t had much effect. China may have to rethink its strategy.

Russia will struggle to keep all its gas promises

14 Oct 2009

Putin is eager to sign megadeals both with China and Europe. That sounds like good politics and sound economics. But Russian production is stagnating and new fields are beyond the reach of domestic technology. It s hard to see how he can deliver without major help from the West.

Pandit avoids fight over Phibro

9 Oct 2009

The Citi boss could have made a case for keeping the commodities trading unit not least its consistent profitability over the years. But the brouhaha of a bank propped up by the government paying $100m bonuses was too overwhelming. Hiving Phibro off was the right call.

Gold flies on multiple engines

6 Oct 2009

A new record price above $1,040 an ounce for the yellow metal reflects a multitude of factors: loose money, inflation fears, dollar weakness and conspiracy theories, to name a few. The gold bugs have been right so far, but there is still paranoia built into their case.

Chinese rivalry for oil assets has silver lining

29 Sep 2009

Iraq, Argentina, and now possibly Nigeria. Chinese energy groups are seeking mega oil assets in risky places. They may look like an increasing competitive threat to Western oil groups. But their interest is not all bad news for the majors. The Chinese could also be good partners.

Rusal may covet China for more than money

18 Sep 2009

Oleg Deripaska s aluminium group is looking to raise $23bn in a Hong Kong IPO to cut debt and let minority shareholders out. Eastern investors love commodities and have plenty of cash. And they re likely to be comfortable with the quirks that may feature in the float.