Mining

Indonesia’s mining asset-grab overplays its hand

8 Mar 2012

A decree forcing foreign miners to cut their stakes in projects below 50 percent shows worrying disregard for overseas capital. Indonesia’s finances are robust, but ongoing fuel supply issues, caused by a lack of energy investment, show it can’t afford to play too rough.

Glencore shouldn’t overplay its hand with Xstrata

5 Mar 2012

The commodity trader’s CEO, Ivan Glasenberg, has said the deal’s terms are fair and questioned why he should pay a higher premium for miner Xstrata. It’s easy to see why he is acting like he holds all the cards. But in reality, his poker face isn’t that convincing.

Vedanta restructuring may need a rejig

28 Feb 2012

The India-focused FTSE 100 mining group is simplifying itself. There are sound commercial gains to be made in the process, but doubts linger about whether the assets are being transferred at equitable values. To get the deal done, Indian investors may need a bit more of the pie.

Iron ore margins anything but iron-clad

16 Feb 2012

China’s building boom and easy money should support high iron ore prices for a while. But 50 percent operating margins are an invitation to new supply and higher taxes. Investors should be uneasy about the industry’s reliance on a single, ultimately unremarkable commodity.

Why the league-table bonanza at Glencore-Xstrata?

14 Feb 2012

Seven banks is a pretty full roster for a long-awaited, friendly, all-share merger. Fortunately there are still some other banks out there that can write unconflicted research or advise interlopers. But if more advisers means a bigger bill for fees, investors won’t be chuffed.

Glencore-Xstrata gatecrashers in short supply

10 Feb 2012

A merger backlash could put Xstrata in play. Vale tried to buy it in 2008. And Xstrata’s copper business could tempt Rio or BHP to launch a breakup bid. But such moves look unlikely. Xstrata investors shouldn’t expect outside help in pushing Glencore to sweeten its offer.

Rio Tinto is brave to open dividend gusher

9 Feb 2012

The miner’s 34 pct dividend hike is the latest sop to investors after the disastrous Alcan deal of 2007. Rio can afford it for now. But with capex and cost pressures increasing, Rio needs the super-cycle to continue. Sticking with share buybacks would have maintained flexibility.

BHP Billiton dip exposes super-cycle challenge

8 Feb 2012

Figures from the world’s biggest miner suggest the commodity super-cycle is entering a more subdued phase. Rising labour costs and less intense demand for raw materials in China, along with slow global growth, mean the sector’s days of super-normal profitability may be numbered.

Glenstrata deal needs rejig

7 Feb 2012

Some Xstrata investors say they will vote no to the mining merger with Glencore. But a deal may still be possible if both sides can agree a proper board and a sweeter premium for Xstrata. There’s a big incentive to talk: given the mess, neither can go back to the status quo.

Don’t bet against Glenstrata antitrust roadblock

7 Feb 2012

Many customers see Glencore and Xstrata as one, even before their all-share merger. But that won’t stop regulators everywhere poking into Glencore’s secretive business. Market share in copper and zinc isn’t the only concern: bigger miners exert pressure on governments too.

Xstrata holders right to fret over Mick’s rewards

6 Feb 2012

CEO Mick Davis’s contract promises millions from any takeover, even if he doesn’t hold out for the best price. True, Davis’s existing shares help align his interests with outside shareholders’. But investors should still examine any Glencore deal closely.

Glenstrata board faces huge credibility challenge

3 Feb 2012

A look at the business mix of a merged miner-trader suggests Xstrata’s Mick Davis would be CEO with Glencore counterpart Ivan Glasenberg as deputy. Whatever the two decide, investors will take some convincing that the pair will still be snuggled up come Valentine’s Day 2013.

Glenstrata is sideshow to mining’s epic challenges

3 Feb 2012

A merger of already closely tied Glencore and Xstrata would slightly change the balance of large and mid-sized operators. But however much scale the Western miners amass, they can do little about the really big issues: the super-cycle, the shift to Asia and resource nationalism.

Glencore-Xstrata would be big, and perhaps better

2 Feb 2012

There’s industrial logic to a tie-up: Glencore’s production assets would move Xstrata to mining’s top league; Xstrata’s would give Glencore’s trading arm an edge. But the cultural combination is risky. If Glencore didn’t already own 34 pct of Xstrata, a deal would be less likely.

Glencore can’t afford to overpay for Xstrata

2 Feb 2012

The commodity trader is closing in on an all-share tie-up with its mining sister worth nearly $90 bln. Glencore could reap about $5 bln of synergies. But an immediate rise in Xstrata stock has already transferred much of this value to outside shareholders.

Anglo American risks reaping a Chilean whirlwind

4 Jan 2012

The London-listed miner may think it can win a $2 bln dispute with state-owned Codelco over a prized mine. Still, the stakes are high and the case would be heard in Chile. Defeat would be a big blow for Anglo and CEO Cynthia Carroll. But a face-saving compromise looks possible.

De Beers buyout adds polish to Anglo American

4 Nov 2011

The miner is paying the Oppenheimer family a reasonable $5.1 bln to take majority control of De Beers, the world’s top diamond producer. It’s another step to a streamlined Anglo, making it look like a more straightforward takeover target.

India’s quest for foreign coal looks here to stay

3 Nov 2011

The country has the world’s fourth largest coal reserves, but environmental restrictions result in a struggle to keep up with demand. Indian firms have already spent $10 bln this year on mines overseas. Though imports are pricier, the domestic alternatives don’t look much better.

Russian delay adds to Polyus UK listing concerns

28 Oct 2011

A regulatory delay to the gold miner’s London listing may have political motives. The timing is suggestive, coming after public outbursts by owner Mikhail Prokhorov. The setback underlines risks that make it unwise for London to waive its rules for Russian companies.

Rio Tinto takes bold step into aluminium rehab

17 Oct 2011

The miner’s $38 billion purchase of Alcan in 2007 was a financial disaster, and aluminium’s prospects still look poor. Rio is making some amends with a plan to sell off a third of the business. The strategy is sensible and now looks as good a time as ever to sell.