Commodities

Rio minorities’ bet is far from copper-bottomed

15 Aug 2022

Investors who hold the 49% of Turquoise Hill Resources not owned by the mining giant have spurned a $2.7 bln offer to buy them out. True, copper prices could rebound and hike the value of their giant Mongolian copper mine. But Turquoise’s minorities may need a deal more than Rio.

Aussie energy crisis demands both carrot and stick

23 Jun 2022

Electricity trading restarted after a week-long hiatus. Canberra wants to pay generators to guarantee supply from 2025. Until then, outages will linger. A windfall tax, or the threat of one, on coal miners and gas drillers like Exxon Mobil and Santos could spark short-term fixes.

Gas tax holiday accomplishes little, costs a lot

22 Jun 2022

Joe Biden’s call to suspend U.S. federal gas taxes will shave some cents off costs at the pump. But it's regressive, works against long-term goals to reduce fossil fuel use and could even stoke inflation. That’s a high price to pay for a pre-election popularity bump.

Gold Fields shells out to beat the ageing process

31 May 2022

The Johannesburg miner is buying Canada’s Yamana in a $6.7 bln all-share deal, creating the world’s fourth-biggest bullion producer. Scant cost savings don’t justify the premium. Given his middle-aged mines, CEO Chris Griffith has little option but a target with a longer future.

Capital Calls: Airbnb, Prudential, Glencore

25 May 2022

Concise views on global finance: The $68 bln vacation-booking platform will shut its Chinese business; the insurer appoints a new CEO – finally; the commodities giant has a $10 bln reason to keep its nose clean, after a $1.5 bln settlement for corruption allegations.

India stands between world and food riots

16 May 2022

A ban on wheat exports is a messy but partial U-turn on India’s pledge to feed the world with its grains. The move protects consumers at home at the expense of farmers. Globally, it will exacerbate food security woes and shift the focus onto the country’s critical rice exports.

Aramco is the old new Apple

11 May 2022

The Saudi oil company has overtaken the tech giant as the world’s largest by market capitalization, knocking smartphone maker Apple down the charts. But judging by fellow oil majors, Aramco’s value probably isn’t much different than a decade ago – it’s just more visible.

Big Oil snubs commodity shortages

29 Apr 2022

Neither Exxon nor Chevron posted big increases to production last quarter despite surges to commodity prices caused by the conflict in Ukraine. Their decision is rational based on future prices and investor pressure. But it won’t make them friends in the court of public opinion.

How metals markets can limit future debacles

19 Apr 2022

UK regulators want answers after the London Metal Exchange voided nickel trades. A supply crunch in a wider range of metals means Europe’s key market can expect more crises. Regaining trust may require new leaders, but the LME can at least reduce the impact of future shocks.

Fertiliser makers face long wait for free lunch

11 Apr 2022

Soaring gas prices are making products of crop nutrient producers like Norway’s Yara and Austria’s Borealis unaffordable for farmers. Subsidising the companies might be the least bad way to avoid a food inflation crisis. Waiting for grains to fail will store up bigger problems.

Nickel deal upheaval is unfair but reasonable

11 Apr 2022

IGO’s $820 mln bid for miner Western Areas was derailed by KPMG, prompting the buyer to increase its offer by 15%. It’s unclear whether war in Ukraine will alter the nickel market longer-term. Even so, it’s refreshing to see an adviser ditch the usual rubber stamp.

China’s Russian energy pause looks very temporary

8 Apr 2022

Companies are holding off new oil purchases to avoid stumbling into secondary sanctions. But the Chinese are top owners of Russia’s key gas export facilities in the strategic Arctic. Beijing has a strong incentive to resist disruption to its long-term energy security plans.

Russia’s gold reserves buy Putin a few options

28 Mar 2022

The Russian leader has a $140 bln stash of the yellow metal. Using it, however, can require shell companies and middlemen. Putin’s regime may have some experience helping Venezuela turn bullion into euros. Though U.S. prosecutors will give chase, the gold trail is hard to follow.

American pigs also need pandemic readiness

28 Mar 2022

African swine fever is in the western hemisphere for the first time in 40 years. Unlike, say, in China, U.S. mainland hog farmers and bacon lovers benefit from a zero-ASF reality for now. But far more than the $23 bln of annual economic output is at stake if the virus gets in.

Energy windfall taxes are messy, unfair, and vital

23 Mar 2022

Europe can theoretically raise hundreds of billions of euros from utilities benefitting from soaring energy prices. To get near that this year, some utilities could be shaken down inefficiently or unjustly. Public anger at rising energy bills means states still have to try.

Aramco health adds spice to Saudi’s yuan dilemma

21 Mar 2022

Riyadh’s $2.3 trln oil giant is looking to hike output. If the kingdom starts to price some crude sales in yuan instead of dollars, higher Chinese exports could increase its stocks of renminbi. That could focus Saudi minds on whether to hitch its future to Beijing or Washington.

Energy market bailout is cheaper of two evils

18 Mar 2022

Europe’s gas producers and utilities want state support to offset the wild swings in commodity prices since Russia invaded Ukraine. Given this could aid big oil companies like Shell, that sounds wrong. But a market breakdown would be worse, and states can levy windfall taxes.

Hong Kong may have a buyer if it wants to dump LME

18 Mar 2022

The London Metal Exchange’s nickel-trading goofs have upset customers and damaged its good name. Owner HKEX’s vision to link western and eastern markets already faced challenges. At the right price, U.S. rival ICE might get another shot at the prize it missed out on in 2012.

Shell company digs deep for Glencore copper

18 Mar 2022

Cash and potential new equity cover only half the $1.1 bln Metals Acquisition is paying to buy an Aussie mine from the commodities giant. A raft of debt and some future revenue will plug the gap. Copper’s role in the energy transition makes the financial engineering worthwhile.

Hot war thaws formerly frozen trade routes

17 Mar 2022

Algeria shunned imports of French wheat in a diplomatic row. That has changed because of shortages after Russia invaded Ukraine. The U.S. has even talked to vilified Venezuela. Amid political hype about self-reliance, globalization still matters – even if it requires compromise.