Mining

BHP’s good news visible despite coal smudge

20 Feb 2018

Production woes and other setbacks took the shine off $4.1 bln of first-half earnings at the world's largest miner. Yet BHP still offers investors high returns on capital, a solid balance sheet and cash from likely selloffs. Plus a pushy investor is keeping management focused.

Chinese gold mining IPO is a dubious prospect

13 Feb 2018

A Hong Kong listing will help pay off a $1 bln purchase in Argentina, enabling Shandong Gold to do more deals. But high-quality mines are costly and the sector’s M&A track record is poor. Buyers will need to believe the state-owned firm is unusually good at sifting for bargains.

Elliott’s fresh attack on BHP misses its target

7 Feb 2018

The activist fund has been nipping at the heels of the world's largest miner for months. Now it argues that unifying listings in London and Sydney could mean a $22 billion boost. It’s a lot of distraction and cost for an unproven gain. Simplicity is unlikely to be so lucrative.

Mega-miners will find good things in small packages

27 Dec 2017

They still depend on moving tonnes cheaply. But with green energy changing demand, big producers must increasingly think like small ones. For companies like Rio Tinto and BHP that will require a change of mindset – and in some cases, leadership.

Pushy investors on board for 2018 Pacific cruise

22 Dec 2017

Campaigns at BHP and Myer could set the stage for a pick-up in Australian shareholder activism. Sydney offers enticing targets, shareholder-friendly rules and potentially supportive institutional owners. Expect to see more governance skirmishes Down Under in the coming year.

South African gold giant throws Lonmin a lifeline

14 Dec 2017

Gold miner Sibanye-Stillwater is buying the troubled platinum specialist for shares worth 246 mln pounds. The offer is far from generous compared with available cost savings. But Lonmin’s financial woes and inability to raise equity make a share of a larger group attractive.

Restrained Glencore M&A sets a reassuring tone

12 Dec 2017

The $70 bln commodities group sold assets and made a modest $3.4 bln of purchases in 2017. Partnerships are in vogue. Add in a portfolio geared – partly by accident – to electric vehicles, and it supports a fairly shiny valuation. Now Glencore needs to focus on meeting targets.

Rio Tinto plays it safe with compromise chairman

4 Dec 2017

After a nine-month search, the $90 bln miner picked director Simon Thompson over former Xstrata boss Mick Davis to lead the board. His mining, emerging-market and buyout knowhow should prove useful. A fresh push to squeeze out cash is another sign Rio is keeping risks calculated.

Rio Tinto holds valuable card in Jakarta deal

30 Nov 2017

As Freeport-McMoRan thrashes out terms for handing over a majority stake in the Grasberg copper mine to Indonesia, Rio's production arrangement dating back to 1995 gives it an effective veto. The best way to play this ace up its sleeve would be to negotiate a graceful exit.

Rio Tinto distracted by shiny new thing

22 Nov 2017

The mining giant is mulling a stake in $15 bln lithium producer SQM. Rechargeable-battery fever has helped lift the Chilean company's valuation to a tech-like multiple. Deals will return with industry growth, but after past mistakes including Alcan, Rio is looking late again.

Rio Tinto could have high-grade chairman in Davis

14 Nov 2017

Big miners usually prefer statesman-like chairmen to dealmakers. So former Xstrata boss Mick Davis would be an odd choice at Rio, especially at this point in the commodity cycle. But he’s smart, thinks big and would keep headstrong CEO Jean-Sébastien Jacques on his toes.

Freeport-McMoRan may be canary in copper mine

13 Nov 2017

Fresh violence prompted the company to close the main route to its Papua site. For all the fervour over electric-car demand for the reddish-brown metal, the flare-up is a reminder of looming supply issues. Beyond security concerns are sticky labour contracts across the industry.

Booming metal markets test mettle of memories

2 Nov 2017

The frenzy over electric cars is helping push copper, nickel and cobalt prices to their highest in years. An expected supply squeeze is also a factor. After frolicking in London this week, global miners get a shot to prove they've learned from cycles past and can use cash wisely.

Glencore’s Hong Kong exit sends message to Aramco

31 Oct 2017

The secondary listing touted as a gateway to Chinese investors during the miner's 2011 IPO never lived up to the hype. The same goes for Coach and others, who could be forgiven for following Glencore out. It's also a good sign the Saudi oil titan can cross Hong Kong off its list.

Qantas has clear skies ahead

26 Oct 2017

The Aussie airline briefly unsettled investors by warning of stiffer competition, rising fuel costs and a few months of lower growth. But the domestic outlook is good and its market position is strong. Despite a breakneck rally, Qantas's share price is still grounded in reality.

Mistimed writedowns lesser of mining M&A evils

18 Oct 2017

Rio Tinto has been accused by the SEC of hiding the plunging value of a coal mine it bought in 2011. The charges are serious, but at least accounting procedures are fairly clear. If only there were rules that could prevent mining bosses getting carried away during M&A upswings.

Agarwal’s Anglo wager is risky way to plot breakup

21 Sep 2017

The Indian billionaire is doubling down. Paying as much as 1.5 billion pounds to raise his stake in the UK-listed miner to 20 pct may be a way of trying to force a breakup. But unpredictable commodities prices and South Africa’s volatile politics could scupper any such plans.

BHP uses commodity rally to fortify position

22 Aug 2017

The Anglo-Australian miner swung to an annual net profit of $5.9 bln. Plans to exit a troubled shale business and hold off on investing in potash chime with demands from Elliott, an activist hedge fund. The compromise, plus more focus on financial strength, looks sensible.

Glencore’s debt purge creates enviable problems

10 Aug 2017

Surging commodity prices are helping Chief Executive Ivan Glasenberg to slash debt faster than planned and restore profitability. That gives the mining giant scope to hand more money back to investors or make bigger bets on growing demand for resource-hungry electric vehicles.

Rio Tinto’s new problem: What to do with its cash

2 Aug 2017

The miner more than doubled earnings in the first half and promised to return $3 bln to shareholders in buybacks and dividends. Higher prices and asset sales helped reduce debt to its lowest level since 2010. After years of deleveraging, spare cash is an unusual dilemma for Rio.