Commodities

Review: Lessons from Wall Street’s forgotten bank

21 May 2021

Brown Brothers Harriman played a central role in American business for over a century. Zachary Karabell’s “Inside Money” traces its rise from cotton trader to kingpin of the financial elite. Though its power has ebbed, the bank’s restrained, low-risk approach remains relevant.

Crazy metal prices inflate miners’ capex conundrum

14 May 2021

Sky-high copper and iron ore values should make the likes of Rio Tinto and BHP invest in extra supply for the green energy transition. But shareholders wary of past write-downs want dividends, not risky new projects. The higher prices climb, the starker the disconnect.

Australia’s non-takeover takeover is a bit creepy

11 May 2021

Billionaire Kerry Stokes’ Seven Group lobbed in a nil-premium $6.2 bln bid for building materials maker Boral. It really just wants to up its 23% stake and perhaps claim another board seat. Such tactics may be sly investing, but they also play loose with the spirit of M&A rules.

Lithium merger flips electric-vehicle deal script

19 Apr 2021

The $3.1 bln tie-up of rivals Orocobre and Galaxy creates the fifth-largest miner of the crucial metal for battery-powered cars. The all-share deal is devoid of splashy predictions and juicy premiums. A fast-lane valuation multiple, though, drives home the strategic importance.

Rio finds gold plating for Mongolia copper mess

12 Apr 2021

The $131 bln miner and its partner Turquoise Hill have made peace over financing the troubled Oyu Tolgoi project. It’s a deft solution that tries to get most stakeholders to pitch in. Other prickly issues remain, like getting back into Ulaanbaatar’s good books. But it’s progress.

Aussies find promising mine to bury coal in

11 Mar 2021

The country’s dirtiest power plant will close early after an agreement between owner EnergyAustralia and the Victorian government. The deal will cut emissions, foster renewables and help displaced workers. It could be a blueprint for others, if the finances weren’t so opaque.

Review: The wild history of the commodities boys

26 Feb 2021

“The World for Sale” offers a virtuoso depiction of the globe’s top oil, food, and metals traders. Javier Blas and Jack Farchy tell of their startling risk appetites, spy novel antics, and geopolitical heft. Still, it’s good that their wings have been increasingly clipped.

Rio can use sunny outlook to mend leaky roof

17 Feb 2021

Jakob Stausholm’s first results benefitted from soaring iron ore prices, allowing the global miner’s new CEO to hike dividends. But he has a messy situation in Mongolia to resolve, and governance issues. Better to spend time and money fixing these than on splashy new deals.

Coal wobble flags Glencore’s green high-wire act

16 Feb 2021

The commodity giant’s EBITDA from the black stuff collapsed in 2020 to just $1.2 bln. Given his increasing climate consciousness, departing CEO Ivan Glasenberg should be happy. But it also shows the risks of a green pivot that requires coal to be used as a financing bridge.

BHP boss gets extended Chinese honeymoon

16 Feb 2021

Covid-19 infected Mike Henry’s first year as the miner’s CEO, but high iron ore prices driven by demand from the People’s Republic just paid for a record $5.1 bln dividend. They also buy him extra time to grapple with a dual listing, potash plans and Beijing’s ban on Aussie coal.

Coal India is in the pits of climate activism

16 Feb 2021

The commodity’s top pure-play miner is setting up renewable-energy units and looking for partners. It’s a hedge against coal’s decline and a modest bet on a hot field. But it has potential to boost lousy returns at the $11 bln company that’s key to the country’s power needs.

Anglo takes quick, dirty route to greener pastures

8 Feb 2021

The miner may dump its African coal unit, worth maybe $1 bln. A spinoff could add six times that sum to the $45 bln group’s value by luring eco-conscious investors. Yet it doesn’t cut global emissions, and Anglo American’s iron ore assets may soon feel the environmental heat.

Kaz Minerals minorities should quit while ahead

4 Feb 2021

The copper miner’s two biggest investors have increased their takeover bid to 3.7 bln pounds. The new offer is still not exactly a knockout, but Kaz Minerals warrants a discount given much of its value is tied up in one risky project. Minorities should take what’s on the table.

BHP’s dual-listing dilemma gets ESG nudge

3 Feb 2021

The spread between the $160 bln miner’s Aussie and UK shares is at its highest since 2011. Tax perks mean the equity Down Under should trade at a premium, but distaste for fossil fuels among British funds is helping widen the gap. It’s time to reconsider collapsing the structure.

Exxon-Chevron tie-up is right deal, tricky time

1 Feb 2021

A potential $350 bln mega-deal entices on paper with savings that could be valued as high as $20 bln. That would shore up both companies against oil’s darkening future. Exxon would need humility, though, and government a desire for a fossil fuel champion. Both are huge hurdles.

Retail silver punt brings real-world distortions

1 Feb 2021

The metal’s price leapt more than 11% to an eight-year high after online investors gave it the GameStop treatment. Unlike gold, consumption of the commodity is mainly driven by industrial usage. Volatility has potential for global consequences. It may also be harder to regulate.

Guest view: Voluntary carbon markets carry risks

21 Jan 2021

Surging demand for carbon credits is a positive sign of private sector interest in addressing climate change. But it makes no sense to scale up voluntary markets if it’s not clear what these traded commodities actually represent. Or how they will help meet global climate goals.

Russian mining IPO comes with sanctions noise

21 Jan 2021

Nord Gold is planning a $5 bln listing in London, the WSJ reports. Severstal billionaire Alexey Mordashov only has a minority stake, but his sons own most of the rest. Investors need to consider the risk that the new U.S. administration decides to take a tougher line on Moscow.

Glencore unearths copper-bottomed Zambian lifeboat

19 Jan 2021

The miner is exiting the African state by lending it $1.5 bln to buy its Mopani stake. Linking repayment to the mine’s future copper revenue cuts Glencore’s risk. Lusaka’s bulging debt pile, and its history of disastrous state ownership, gives taxpayers less reason to celebrate.

New Rio Tinto boss has Mongolian bullet to bite

18 Jan 2021

Atop Jakob Stausholm’s to-do list is sorting out the miner’s troubled $10 bln Oyu Tolgoi copper project. Satisfying Ulaanbaatar, pushy hedge funds and minority shareholders at once will be impossible. Raising equity and reworking a sticky loan structure are the least-bad options.