Commodities

Wanted: Exxon-like activism at top Aussie polluter

23 Sep 2021

AGL’s investors have warned the $2.6 bln energy giant to up its game on climate change. Poor strategy, including a bungled coal spinoff, has halved its market value in 2021. An activist-led shakeup of its underwhelming board, as at the U.S. driller, would bring needed change.

Big miners are steeled against falling iron ore

21 Sep 2021

The mineral’s price has collapsed in two months, bucking inflationary trends. Rising supply, China’s cooling economy and changing consumer spending habits portend a further decline. Capital discipline and diversification will cushion the blow for BHP, Rio and Fortescue.

Greenwashing hostility crashes friendly gas deal

15 Sep 2021

Santos boss Kevin Gallagher argues his $6 bln Oil Search acquisition will help fund a clean energy transition. A world-first lawsuit, however, threatens the credibility of his net-zero plan. A court loss would punch a hole in the strategy and drag fellow polluters into the dock.

Guinea coup is win for Australia and Brazil

6 Sep 2021

Soldiers have deposed the West African nation’s president, Alpha Condé. Besides disruption to bauxite exports, the upheaval may upend development of the Simandou mine’s 8.6 billion tonnes of iron ore deposits, capable of adding 10% to global output. Rival diggers will be smiling.

Capital Calls: Salmon, M&S, Sydney airport, BHP

20 Aug 2021

Concise views on global finance: SalMar places $1.3 bln order for Norway Royal Salmon; the UK retailer’s improving fortunes may ward off predators; the Australian firm provides scant evidence for rejection of a $16 bln takeover bid; Santiago dings the Aussie miner over water use.

Viewsroom: China’s Afghanistan question

19 Aug 2021

Beijing was able to expand its influence in central Asia while America and its allies held back the Taliban. The Islamic fundamentalists’ return to power presents China with new challenges – and opportunities. Plus: CEO Mike Henry shakes up mining giant BHP.

Woodside deal replaces one dilemma with another

19 Aug 2021

Buying BHP’s oil and gas unit solves two problems: growth and cash flow. A 10% fall in Woodside’s shares, however, suggests missing details on valuation, well closure costs and climate risk are worrisome. And yet voting against the transaction could leave the company worse off.

BHP’s Brexit should fare better than Unilever’s

18 Aug 2021

The $170 bln miner’s decision to collapse its dual-listed structure will require UK investors to swap their shares for foreign ones. When the Anglo-Dutch consumer group tried that in 2018, investors kicked up a fuss. The value proposition of BHP’s gambit looks more enticing.

BHP boss goes a seismic three for three

17 Aug 2021

After paying a record dividend on the back of soaring iron ore, Mike Henry is boldly remaking the $178 bln miner. He’s selling oil and gas, charging into potash and collapsing the dual-listed structure. Even with fresh questions on capital use, a valuation uplift looks warranted.

Chinese car battery giant reaps crackdown dividend

17 Aug 2021

CATL is raising $9 bln through a private placement, as jittery investors rotate funds into sectors insulated from policy risk. Able to easily raise cash at frothy valuations and plough it into overseas expansion, CATL could give rivals LG Chem and Panasonic an electric shock.

BHP climate parcel pass would oil buyer’s regret

16 Aug 2021

The miner is in talks to sell its petroleum unit to Woodside for a mooted $15 bln. It’s a decent price for the seller, and cost cuts would make it stack up for the bidder. But there’s a big risk these assets are sharply devalued on carbon concerns sooner rather than later.

Jakarta’s battery drive is on a bumpy road

11 Aug 2021

Hyundai and LG are among those investing to make electric vehicle batteries in Indonesia. The nickel producer is limiting exports as it claws up the resource value chain but its long timeline to electrification means technologies may be disrupted before there is enough demand.

Glencore can live with a faster coal phase-out

5 Aug 2021

The commodity giant is enjoying soaring prices of everything from copper to coal. New plans to help Asian states shutter coal earlier are a potential cloud. But they could also lead to price-boosting supply deficits, and anyway, Glencore’s metals will fuel the green transition.

Aussie takeover refuseniks toss hitchhiker’s guide

4 Aug 2021

Sydney Airport, Iress and Altium all spurned bids with a 42% premium, the famed sci-fi number that answers the ultimate question of life. Playing hard to get, as target Spark has done, is part of the M&A game. Hubris, however, has a way of leading to remorse in the deal universe.

Capital Calls: Aussie oil deal, Fund services M&A

2 Aug 2021

Concise views on global finance: Santos’ improved and agreed offer for Oil Search comes at a discount to its rejected first attempt; Sanne’s dealmaking poker face looks set to be vindicated.

Rio Tinto CEO picks cash shower over kitchen sink

28 Jul 2021

Jakob Stausholm is spraying the miner’s shareholders with a hardy $9.1 bln in dividends after his first six months in the job. There’s also plenty to splash out on projects like Serbian lithium. Despite the mopping up required in ESG and beyond, the financial plumbing is sound.

Aussie oil deal drills into some messy territory

21 Jul 2021

Embattled Oil Search rejected a $6.5 bln offer from rival Santos. A merger would help clear up the target’s poor governance and improve the bidder’s balance sheet. And yet a takeover looks a financial stretch for Santos and could devolve into a value-destructive bidding war.

Climate bad bank concept has ideal test case

29 Jun 2021

Rising prices may help BHP offload more fossilised assets. A better option for mining boss Mike Henry would be to shovel them into a bad bank of sorts, using cashflows to cut carbon while winding down the units. That would help win over ESG investors and set a replicable example.

UAE takes relaxed view of Deripaska sanctions risk

24 Jun 2021

Mubadala has bought 2.6% of En+ from the Russian oligarch’s ex-wife. The $243 bln Abu Dhabi fund is banking on the green strategy of the aluminium and energy group, which has taken steps to curb Oleg Deripaska’s influence. Still, the UAE is taking a punt that these controls work.

China’s commodities boom poses policy conundrum

25 May 2021

The government is trying to forcibly cap a fierce rally of key industrial ingredients like steel and coal. President Xi Jinping’s push to reduce overcapacity and cut emissions has companies slashing output, while property and exports keep driving demand. Something has to give.