Commodities

Philip Morris and Rio’s poker faces need some work

7 Nov 2022

The $139 bln Marlboro maker and $95 bln miner have upped buyout offers to try and clinch strategically key deals. In both cases, hedge funds and minority investors called their bluff. The lesson is that bidders can’t play hardball if everybody knows they really need a deal.

Exxon and Apple are in a similar boat

28 Oct 2022

Exxon’s quarterly profit was its largest ever, at $20 bln, and nearly as high as Apple's. But the oil giant, once the world's most valuable firm, is worth a fifth of Apple. Newfound respect for earnings, and the recognition that beliefs are fleeting, could partly close the gap.

The urgent search for the perfect inflation hedge

20 Oct 2022

Nearly every major asset class has lost money this year, leaving investors scrambling to protect their wealth from rising prices. Traditional alternatives such as gold and property also have drawbacks, writes Edward Chancellor. The best shield may be the most obvious one.

Capital Calls: Coal’s fear-then-greed trade

19 Oct 2022

Concise views on global finance: Shares of Aussie coal miners fell on production disruptions from floods, only to quickly rise as investors bet on tighter supplies and higher prices.

Abu Dhabi would be a logical owner for Gunvor

4 Oct 2022

ADNOC, the emirate’s huge oil company, is interested in the privately held commodities trader. Gunvor’s valuation involves guesswork, and it used to be owned by a target of U.S. sanctions. But the UAE could use the group’s roster of gas client relationships, and it has the cash.

Gold will keep losing its irrational luster

27 Sep 2022

A pandemic, war and high inflation should be pushing the yellow metal’s price higher. Instead, at about $1,635 an ounce, it’s worth less than it was a decade ago. Miners also are extracting it at a faster rate than population growth. Farmland, for one, has become a better hedge.

Disney’s big ESPN choice, Rio Tinto Mongolia drama

15 Sep 2022

Activist Dan Loeb backed away from his demand that the $203 bln media firm sell its sports network. In this Viewsroom podcast, Breakingviews columnists debate whether it’s the right move. And the $94 bln mining giant’s attempt to secure copper supply may need heavier machinery.

America exports natural gas, imports high price

9 Sep 2022

The commodity’s prices have historically been tied to local dynamics. But the U.S. fracking business has made America a huge exporter. Domestic costs are now at a more-than-a-decade high. With capacity constrained and demand for U.S. gas rising elsewhere, prices will remain high.

Stingy investors make for dry M&A oil patch

8 Sep 2022

Even though fossil fuel companies are the best performers in the S&P 500 Index, deals have dropped more than 10% this year. That’s partly because oil and gas companies are better suited to deals when cost-cutting is a priority. But it’s also because funding has become expensive.

Paris and Berlin’s windfall tax timidity is futile

19 Aug 2022

France and Germany oppose a raid on firms profiting from the energy crisis. Berlin could borrow more, and President Macron has pledged not to hike taxes. Yet given it won’t make investors see either country as way more business-friendly, the reluctance makes little sense.

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.