Mining

Rothschild’s Bumi shake-up puts cart before horse

8 Jan 2013

The British financier wants to sack most of the board of Bumi, the stricken coal miner, and its new CEO. His slate of replacements is impressive but his shake-up plan looks half-baked. The first priority should be completing a proposed split with Indonesia’s Bakrie family.

Nat Rothschild’s Bumi plan still faces obstacles

11 Dec 2012

The financier said that top Bumi Plc shareholders back his plan for unwinding the disastrous mining tie-up with Indonesia’s Bakrie family. Investors cheered but the mechanics are murky and a clean break looks tricky. Even if it works, Rothschild’s reputation won’t recover fast.

Freeport deal triangle gets cozier and cozier

7 Dec 2012

The mining group’s market value has plunged $6 bln following news of its foray into energy. Yet the chairman will come out ahead. Now it seems the boss of one target, Plains Exploration, will collect $130 mln and a pay rise. Freeport’s board owes shareholders an explanation.

Freeport’s $20 bln splurge lives down to tradition

5 Dec 2012

The miner’s complex plans to buy oil explorers Plains and McMoRan swiftly erased $5 bln of value. Freeport Chairman Jim Bob Moffett also runs and partly owns McMoRan, which gets a rich 74 pct premium. The strategic and governance bravado affirm the industry’s Wild West culture.

Abramovich peace mission rewards all at Norilsk

4 Dec 2012

The oligarch is to buy 7.3 pct of the Russian nickel miner. The deal resolves a spat between shareholders Interros and Oleg Derispaka by giving the former management say and the latter dividend security. But Abramovich won’t have broked peace for nothing.

Glencore-Xstrata re-rating to start in boardroom

30 Nov 2012

With the Xstrata takeover done, the market has work to do to get to grips with “Glenstrata”. Valuing the miner-trader is tricky. The shares look cheap, but a big integration looms. A re-rating depends on the trading business proving itself and the board getting governance right.

New Glenstrata chair faces big repair job

20 Nov 2012

Xstrata chairman John Bond is going after shareholders approved Glencore’s $31 bln takeover, but snubbed the board in a complicated vote. His successor needs a forceful personality. Glencore fluffed the chance to get a strong chairman before its float. Now is the time to fix it.

Qatar dodges shareholder duty on Glenstrata

19 Nov 2012

The emirate may be confident of Glencore’s ability to retain Xstrata’s top talent. But abstaining from the vote on retention bonuses in the merger after pushing aggressively for better terms leaves a job half done and makes the sovereign fund look inconsistent at best.

"No" vote on Glenstrata pay creates little value

15 Nov 2012

Glencore’s $32 bln Xstrata offer will probably succeed now lead shareholder Qatar is backing it. A $220 mln retention plan for top staff may fail. But paying up to keep talent, while unpalatable, makes sense. The enlarged company will struggle to hold on to the savings.

Anglo needs a dealmaker CEO to unlock value

14 Nov 2012

It may be tempting to replace Cynthia Carroll with an operational obsessive who can deliver big projects. That’s one area where the outgoing boss struggled. But the miner really needs a visionary who can make tough calls, like demerging platinum and finding a buyer for the rest.

Lonmin doesn’t have to surrender to Xstrata – yet

9 Nov 2012

The big platinum miner spurned 25 pct owner Xstrata’s demand for management change in return for backing its $817 mln rights issue. It can afford to, for now: the fundraising is underwritten and Xstrata is probably loath to be diluted. But after this battle, Lonmin faces a war.

Cynthia Carroll’s departure won’t fix Anglo

26 Oct 2012

After years of sub-par returns, Anglo American and its chief exec are parting ways. Carroll’s early missteps hurt, but she did deliver needed cultural change. Her successor may gain from more industry experience, but Anglo’s largest problems are mostly out of management’s control.

Bumi should grit teeth and engage with Bakries

11 Oct 2012

The troubled acquisition vehicle has a rescue bid of sorts from its Indonesian backers. The Bakries would cancel their holding in return for a stake in coal assets they sold to Bumi last year. It’s awkward in every sense. But the Bumi board has to maximize value and should talk.

No easy fix for South Africa platinum crisis

4 Oct 2012

Striking miners want higher pay for dangerous work. But current prices are too low for the industry to pay up. Cutting production would help, but platinum mines are deep and expensive to shut. Firing workers is political dynamite. So the crisis drags on.

Xstrata is a warning on boards that give up value

2 Oct 2012

An acceptable deal with Glencore doesn’t exonerate the miner’s directors from charges they lack spine standing up for shareholders. The failure to push Glencore to the pain barrier sooner has roots in the same weakness that sanctioned excess pay for CEO Mick Davis time and again.

Xstrata reaches tidy compromise on messy deal

1 Oct 2012

The miner is right to back Glencore’s latest offer. It is getting a better premium from the commodity trader, plus board domination. Retentions for top staff make sense with Glencore’s Ivan Glasenberg running the show. The tie-up faces challenges, but shareholders should say yes.

Bumi fiasco shows danger of bad incentives in M&A

28 Sep 2012

Whatever the truth behind alleged financial irregularities at the Indonesian coal miner, Bumi’s woes raise questions about the incentives that drove Nat Rothschild and other big names in finance to migrate the emerging-market miner to London. Merge in haste, repent at leisure.

Sunshine may only be partial disinfectant for Bumi

25 Sep 2012

An investigation instigated by independent directors could see a governance revamp at the troubled UK-listed miner. But that won’t tackle the fundamental problem, the fact that Bumi’s main asset is a minority holding that now looks more like a bombed-out financial investment.

Bumi reputational damage will spread far and wide

24 Sep 2012

The mining-focused acquisition vehicle has tumbled in value amid alleged financial irregularities in its Indonesian assets. A lack of information makes the shares hard to touch right now. And whatever the final financial fallout, the affair rubs off badly on the London market.

South Africa platinum crisis not over yet

19 Sep 2012

A deal between Lonmin and its striking miners might solve an immediate problem, if it holds. But it sets up other big challenges for the company and the industry. A big wage hike will hurt already weak margins. And the response may only encourage further strikes.