Mining

BHP spin-off won’t appeal to commodity players

19 Aug 2014

The mining giant plans to hive off some assets into a new company. The prices of nickel and aluminium, two of its key products, are rising. Investors could use the new firm to follow the trends. But they probably won’t. There are purer plays and better-diversified producers. 

Anglo may struggle to make clean platinum break

21 Jul 2014

The UK-listed miner’s South African unit wants to sell high-cost mines that account for a quarter of platinum production and half of the workforce. It’s a sensible move for Anglo, but the politics are fraught. If the buyer gets into trouble, Anglo might end up back on the hook.

Thornton unleashes Wall Street tactics on Barrick

16 Jul 2014

The gold group’s chairman has axed the CEO and handed the reins to two co-presidents. It’s similar to how Goldman Sachs operated when he was there. It also echoes Citi chair Mike O’Neill’s power play in ousting Vikram Pandit. Barrick needs a refresh, but the strategy has risks.

Glencore goes for more than a fig-leaf chairman

8 May 2014

Tony Hayward’s appointment provides an acceptable resolution to the miner’s longstanding search. He has a big incentive to reinvent himself as a corporate leader. And the list of credible candidates who would have the support of Glencore’s owner-manager Ivan Glasenberg is short.

Gold miners ominously prospect for M&A treasure

23 Apr 2014

The Newmont and Barrick talks came amid a bidding war for the Canadian Osisko. That’s one deal short of a trend. A 30 pct drop in the bullion price means those with higher-valued shares may spy a chance to nab production on the cheap. The logic behind such digging has holes.

Barrick’s empire building deserves skeptical eye

21 Apr 2014

The Canadian giant is reportedly considering a $33 bln deal with Newmont. Barrick’s outgoing chairman said “hubris” drove past deals. Ex-Goldmanite John Thornton, who takes the chair next month, faces a big hurdle in convincing shareholders this won’t be another value-destroyer.

Blythe Masters could chair Glencore

3 Apr 2014

The derivatives mastermind is leaving JPMorgan’s commodities unit after its sale to Mercuria. Her next stop could be Glencore. The trading house’s all-male board looks anachronistic. It needs a chair to keep Ivan Glasenberg in check. And her banking nous would be useful.

BHP spinoff would swap one problem for another

1 Apr 2014

The miner wants to simplify its portfolio, possibly by demerging less attractive assets. But it’s not certain this would create shareholder value, and the move could cost financial and operational synergies. BHP may be better off patiently selling down as opportunities arise.

Weir may struggle to extract a merger from Metso

1 Apr 2014

The Scottish engineer has tentatively bid for its $5 bln Finnish rival. A merger makes sense. But Metso has just shed a problem unit, has clear self-help plans, and is at a cyclical low thanks to its focus on mining. With two powerful backers, the Finns can afford to be patient. 

Copper and iron ore roil China capital controls

12 Mar 2014

The fear that metal-backed Chinese financing tricks won’t work is pushing down copper and iron ore prices. The drops only encourage further sales. China’s capital controls are supposed to ward off such vicious cycles, but in this case they have probably exacerbated them.

Beautiful friendships with activists ending fast

7 Mar 2014

An uppity investor challenging laggard miner Cliffs rejected an offer of two board seats. Instead, Casablanca Capital is forging ahead with efforts to install six directors and replace the CEO. Companies have been listening more to vocal shareholders, but those times may go by.

Freeport-McMoRan shows pay votes have some bite

4 Mar 2014

The copper miner is slashing base salaries for top execs including Chairman James Moffett after shareholders opposed pay practices twice in three years. Freeport needs to do more to put governance on a sound footing. But the changes show say-on-pay isn’t a toothless tiger.

Glencore resilience vindicates hybrid model

4 Mar 2014

The commodity trader’s revenue was flattish in 2013, despite weaker metals prices. Leverage will ease this year as capex falls and synergies from the Xstrata deal kick in. Glencore isn’t immune to falling prices but its integrated trading and mining model looks ever more attractive.

Miners are finding that disinvestment pays

20 Feb 2014

For an industry wrestling with the end of a once-in-a-lifetime demand surge, big miners aren’t faring badly. Prices are still high, and results at Rio Tinto and BHP Billiton show austerity working. Supply trends favor lower ore prices, but diggers may reap big profits for a while yet.

Miners make a tempting but risky activist target

28 Jan 2014

A hedge fund’s call to break up struggling iron ore producer Cliffs suggests U.S. mining may be a fertile sector for pushy investors, just as oil exploration has been. But long paybacks and gyrating commodity prices make even good strategic ideas tough to turn into timely profit.

Proof of potash cartel revival will be in pricing

27 Jan 2014

New Kremlin-backed owners at Russia’s Uralkali, the world’s biggest potash producer, appear open to reviving a marketing alliance with Belarus. But it’s far from a done deal. Even if the cartel returns, it’s unlikely to survive long once BHP Billiton enters the business. 

Gold’s would-be king attempts Midas deal touch

13 Jan 2014

Canada’s Goldcorp is stalking Osisko in a bid that could push it past Barrick as the world’s biggest miner of the yellow metal by market value. The C$2.6 bln price looks high, but Goldcorp is using its own richly valued shares. It’s a solid gold move against stumbling rivals.

Indonesian mineral export ban is mistimed idealism

9 Jan 2014

The mining ministry wants to delay a proposed ban on shipping raw commodities by three years. But exports of nickel and bauxite could still be blocked immediately. Nudging miners to invest in domestic processing has merit, but barring sales could widen the trade deficit.

Mongolia gives a little in investment tug-of-war

7 Oct 2013

As Rio Tinto thrashes out terms for its stalled copper project, a promise of equal treatment for foreign investors bodes well. Mongolia’s rich resources mean overseas groups will tolerate occasional bad behaviour as long as they mostly get their way. That now looks more likely.

Xstrata 2.0 is a bet that other miners are wrong

30 Sep 2013

Former Xstrata boss Mick Davis has raised $1 bln from commodity trader Noble and buyout fund TPG to build a new mining group. The idea is that the industry’s current conservatism provides opportunities. Even if that’s right, Davis won’t easily duplicate Xstrata’s high returns.