Mining

Glencore digs deeper for huge Xstrata cost savings

10 Sep 2013

The miner-trader expects $2 bln of cost savings next year from its takeover of Xstrata - four times an initial synergy target. That goal was clearly undercooked. The new figure also reflects boss Ivan Glasenberg’s purge of former Xstrata staff and mines.

Belarus-Russia spat clears way for potash plunge

30 Aug 2013

A diplomatic row following Belarus’ arrest of a top Russian potash executive dashes chances that the former Soviet producers’ alliance can be revived. The rival North American cartel won’t survive much longer. Farmers and consumers should cheer at the prospect of lower prices. 

Big miners adjust, slowly, to austere times

20 Aug 2013

Glencore and BHP Billiton are on opposite sides of the mining spectrum. But both the trader and the low-cost producer are girding for a long, slow period with goodwill writedowns and leaner investments. The strategy is right, but shareholders will have to wait for rewards.

Eike Batista ports bailout looks best of bad bunch

15 Aug 2013

The Brazilian tycoon’s ceding control of LLX at a big discount. But at least the ports operator looks viable. Batista’s oil explorer just lost $2 bln, his mining asset’s a mess and other holdings are little more than start-ups in a weak economy. It looks downhill from here.

Rio’s asset sale woes another case of bad timing

8 Aug 2013

The miner overpaid on acquisitions in the boom years. Now that the cycle has turned, planned sales - of a Canadian iron-ore mine, the diamonds business and some duff aluminium smelters - have stalled. The delay is not a disaster, but shows how vital timing is to miners’ returns.

BHP could be long-term winner in potash

6 Aug 2013

The end of a cartel complicates BHP’s decision about building a big Canadian potash mine. It should press on. The project will make BHP the low-cost producer in a strategic industry. Weak prices might hurt for a while, but should eventually reduce a destabilising supply surplus.

Too early to cheer potash cartel’s death

30 Jul 2013

The world’s biggest potash producer, Russia’s Uralkali, has abandoned a cartel that set prices of the key fertiliser, sending the sector’s shares plunging. If the pact is truly dead, billions of people will enjoy cheaper food. But there’s a risk the split won’t last.

New Anglo American mantra: be boring

26 Jul 2013

The miner’s departed boss Cynthia Carroll was big on vision, but Mark Cutifani, her replacement, wants to improve performance asset by asset. The new strategic plan is appropriately dull. If a more disciplined Anglo makes fewer mistakes, it’ll finally be getting somewhere.

Xstrata 2.0 works if Mick Davis keeps the formula

18 Jul 2013

The entrepreneur behind Xstrata is mulling his next act. If the choice is between a new mining fund or another M&A vehicle, investors should prefer the latter. Davis the CEO has more chance of generating big returns in today’s tougher environment than Davis the fund manager.

New Bumi plan makes bad jam even worse

11 Jul 2013

Fresh proposals could see the Bakrie family bought out of the London-listed Indonesian coal miner by its chairman, Samin Tan. It’s far inferior to an earlier plan to cancel the shareholding. It would help investors, including Nat Rothschild, if Tan commits to sell down his stake.

S. African miners have few options in wage talks

11 Jul 2013

In a healthy industry, prices of goods should support the cost of decent wages. In South Africa’s mines, a toxic mix of deprivation, politics and geology creates underinvestment and angry workers. With the prices of key metals falling, it’s hard to see the dynamic changing.

Third time lucky looks a stretch for Eike Batista

1 Jul 2013

The Brazilian billionaire’s EBX group may soon crash. He bounced back from financial disaster before. But now he’s wiped out $50 bln of value in three years after borrowing oodles to expand quickly. Investors share some blame. But now they’ll surely be too wary of Batista.

Resistance to Kazakh mining stitch-up looks futile

24 Jun 2013

ENRC minority holders are in a bad place, now the Kazakhmys board has accepted the low-ball bid from oligarchs and government. Unless Kazakhmys shareholders overrule their board, any ENRC holdouts could end up with unlisted, illiquid shares. Better to admit defeat and cut losses.

Brazil’s new-look resource nationalism still hurts

19 Jun 2013

A long-awaited mining bill reflects weakening commodities prices. Instead of a windfall tax, royalties may double. The market expected worse, but a levy on mine revenue rather than profit will still make future projects less viable. The new law could dent investment – and Vale.

Glencore Xstrata gets the message on governance

12 Jun 2013

The newly merged miner has done well to hire John Mack, the former Morgan Stanley chair, and Peter Grauer, of Bloomberg, as independent directors. Both are outsiders with serious reputations and wide experience. The appointments set a high bar in the search for a new chairman.

ENRC board has reputation leverage

29 May 2013

Kazakhmys, ENRC’s 26 pct owner, may be less fussed than other minority shareholders about getting a high price out of the miner’s founding oligarchs. But Kazakhmys won’t necessarily embrace a low offer that ENRC’s independent board has snubbed. Reputational cover is valuable.

"Balance of shame" holds key to ENRC fate

20 May 2013

An independent board committee has rightly rejected a lowball bid for the miner from its three founding oligarchs and the Kazakh government. Whether a higher price can be extracted depends less on ENRC’s prospects than on how much the bidders are willing to pay to save face.

Glencore should just name Ivan Glasenberg chairman

16 May 2013

The miner’s shareholders have handed Chairman John Bond his walking papers. Best practice dictates his permanent replacement be a strong outsider. This precludes tapping Glasenberg, the miner’s CEO and biggest shareholder. But a dual mandate would better reflect corporate reality.

ENRC board needs to summon its poker skills

9 May 2013

The hapless miner’s independent directors hold a weak hand. But they shouldn’t just fold if ENRC’s dominant shareholders team up to make a low-ball bid for the company. There are risks to losing a deal. Still, there is a floor to a recommendable offer.

ENRC is problem-free, by some standards

1 May 2013

Yes, it was a mistake for the London Stock Exchange to give the governance-challenged Kazakh miner its seal of approval. But the murky dealings at Russia’s Surgutneftegas make ENRC look like a model of transparency. And a few bad apples don’t drag down the whole London market.