Mining

Whitehaven should give Tinkler cautious welcome

17 Jul 2012

Nathan Tinkler sold assets to the Australian coal producer months ago. Now he’s turning the tables, offering a 50 pct premium for Whitehaven itself. There is some logic to the move. But Whitehaven needs to be sure he can deliver before giving its approval.

Ousted Vale CEO returns unshackled by the state

13 Jul 2012

Roger Agnelli was deposed from the Brazilian mining giant last year after resisting President Dilma Rousseff’s meddling. Partnered with billionaire banker André Esteves, Agnelli is back to invest in iron ore and metals. It’s a chance to show he can outperform Brasilia.

Mining investors at a critical juncture

13 Jul 2012

Commodity bulls are pinning hopes on more aggressive Chinese stimulus. There’s good reason to expect it. But Beijing may struggle to revive the building boom that has fed the super-cycle. If so, it’s hard to see a reversal of the mining sector’s recent underperformance.

Brazil’s richest man overpromises, underdelivers

28 Jun 2012

Billionaire Eike Batista is swiftly falling from favor. His flagship oil company OGX lost 25 pct of its value Wednesday after massively cutting output expectations. Batista is a savvy salesman and wheeler-dealer but his failed promises are building up rapidly. Investors beware.

Xstrata pay compromise saves face but little else

27 Jun 2012

Mick Davis’s tweaked “retention” package may be enough of a sop to put pay on the back burner as the miner tries to save its Glencore merger. But it makes a muddle of incentives. Tying awards to previously unseen cost-cutting potential poses dangers. It’s still a poor scheme.

Glencore-Xstrata deal looks hard to rescue

27 Jun 2012

Qatar’s call for much sweeter merger terms is a big obstacle. Xstrata’s 10 pct shareholder can’t easily retreat from its public demand. And Glencore can’t justify a sizeable raise to its own investors. If the Qataris hold firm, the deal may have to be parked for another day.

Glenstrata wobble another blow for M&A bankers

27 Jun 2012

Global deal-making is already down a quarter on 2011. Now the year’s biggest tie-up, Glencore-Xstrata, is in doubt. Nine banks advising on mining’s most obvious merger always looked rich. In a slow year, they can ill afford to lose $130 million of fees.

Xstrata price fears no reason to vote for "Glenstrata"

21 Jun 2012

The miner’s shares could fall sharply if investors vote no on the Glencore merger. But that’s a red herring. Technical factors would be a big driver. A combined Glenstrata would also be vulnerable to a correction. And for a standalone Xstrata, life would go on.

Xstrata shareholders should say no

18 Jun 2012

The $45 mln three-year retention package to keep CEO Mick Davis at a merged Glencore-Xstrata is an insurance policy against the damage the company would suffer if he quit. But the premium is excessive. Investors should take a stand, even if that means losing the deal.

Miners can live with a not-so-super cycle

22 May 2012

Cooling demand in China, the world’s most important swing customer for metals like copper and iron ore, suggests the decade-long materials boom may be fading into a more humdrum cycle. That’s a challenge for the top miners. But it doesn’t necessarily herald value destruction.

Tempting mining valuations aren’t hard to resist

16 May 2012

The big miners were flirting with decade-low valuations even before the sector took an outsize hit in the recent sell-off. But that won’t necessarily lure bargain hunters. With margins already fat, Chinese demand weakening and costs rising, there’s no compelling equity story.

Resource industry needs better schmoozers

9 May 2012

Recent asset grabs show rich world companies need a better way to deal with resource nationalism. Grabby governments aren’t going away, but companies can minimise their risks. Recruiting more political talent to the top management teams would be a good way to start.

Space mining plan more than just sci-fi fantasy

24 Apr 2012

A U.S. company’s plan to scour asteroids for precious metals sounds bonkers. Its success depends on huge technical leaps and stratospheric prices. But even if the project never returns a single rock to Earth, the innovations it spawns could reward its billionaire backers.

Qatar plays merger-maker at Glencore-Xstrata

12 Apr 2012

The Gulf state has been a successful arbitrageur in the past. Its 5 pct stake in Xstrata is under water following the recent equity market sell-off. But Qatar could provide extra leverage to help the miner extract a sweeter offer from suitor Glencore.

China’s grip on rare earths market looks fragile

12 Apr 2012

High rare earth prices won’t last forever. Beijing’s drive to shut dirty smelters may support prices near term. But miners elsewhere will be better placed as Chinese producers are held to higher standards. As new mines come online, greater competition should bring prices down.

Diamonds are simply too small for Rio and BHP

27 Mar 2012

While Anglo America has just dropped $5.1 bln bulking up in diamonds, Rio Tinto and BHP Billiton are running for the exits. The industry is just too small for the biggest miners, despite solid fundamentals. That clears the way for niche players or even private-equity firms.

Asset grab a new twist in platinum’s tale of woe

15 Mar 2012

Impala Platinum’s cave-in over control of a Zimbabwe mine is bad news for an already-struggling industry. Labour strife, deadly mines and spiralling costs make it hard for producers to earn reasonable returns on the white metal, despite high prices and an effective oligopoly.

TCI’s Indian activism looks low risk, high reward

14 Mar 2012

The hedge fund is threatening to sue directors of state-backed Coal India, saying they are supine to government meddling. It’s a long shot. But TCI has little to lose and even partial success could pay off. New Delhi won’t like it – although it could be the biggest beneficiary.

China has much to gain from rare earths fight

13 Mar 2012

A new WTO case against China may put Beijing on the defensive. But China’s global dominance puts it in a strong position to resist pressure. Besides, the backdoor trade protectionism plays well at home, as does the effort to make rare earth mining less environmentally damaging.

No winners in Vale’s tax clash with Brasilia

9 Mar 2012

The Brazilian mining giant is embroiled in an escalating legal row over back taxes. The new CEO is looking more like his own man than a state functionary. But investors are right to focus more on Brasilia’s growing temptation to extract that pound of flesh.