Mining

Kloppers escapes Potash bid relatively unscathed

15 Nov 2010

The BHP Billiton boss has flunked his third big deal, triggering a $350 mln charge. But the logic behind the mining group's opportunistic $39 bln bid remains intact, as do the reasons for withdrawing it. By objecting to the offer, Canada has suffered the bigger embarrassment.

Protectionism remains a threat – not a reality

4 Nov 2010

Canada's rejection of the Potash bid is wrong, but not a sign of rising protectionism. Actual barriers to trade of investments haven't multiplied since the beginning of the slump. Governments have wised up to the lessons of the past, and economic populism doesn't pay.

BHP should go where it’s wanted: under the sea

4 Nov 2010

Canada's objections to the miner's $39 bln bid for Potash Corp look hard to overcome. BHP investors won't care much, as the logic for the offer was never very powerful. The group can now use the cash on higherreturn projects, where size isn't a hindrance like deepsea oil.

Blocking BHP’s Potash bid could damage Canada

1 Nov 2010

The government will decide this week whether to allow the $39 bln deal. A BHP takeover may squeeze the tax that Potash Corp pays its home province. But those costs are outweighed by the discount that Canadian companies would suffer if the country was viewed as protectionist.

Potash Corp results turn the screw on BHP

28 Oct 2010

The fertiliser group's strong Q3 numbers and bullish outlook add to the pressure on the miner to lift its $39 billion hostile bid or walk away. However, neither side has reason to show its hand until the Canadian authorities decide whether to allow the deal to go ahead.

Not much common ground in BHP’s Potash bid

27 Oct 2010

The miner's $130ashare offer for the fertiliser group offers slim returns. But Potash Corp is probably worth around $148 even without a bid. Unless BHP finds some synergies, or persuades shareholders of its bullish longterm view, its chances of success look small.

BHP should make virtue of Saskatchewan disapproval

20 Oct 2010

The miner is ready to make concessions to win support for its $39 bln bid for Potash Corp from the fertiliser giant's home province. It won't want to pay the C$3 bln Saskatchewan seeks to cover lost tax income. But BHP can use the obstacle to justify not raising its bid too far.

Big mining enters new era of risky asset deals

19 Oct 2010

Vale and ENRC surprised investors earlier this year by buying licences expropriated from rivals Rio Tinto and First Quantum. Largecap miners' willingness to sign morally dubious deals may reflect a scarcity of quality assets. These controversial transactions won't be the last.

Rio Tinto JV failure leaves Albanese exposed

18 Oct 2010

Regulators have concluded the iron tieup with rival BHP Billiton would harm competition. Judged by the market reaction, investors didn't believe the deal would happen, or that Rio was getting an even share. The saga has not done Rio boss Tom Albanese's credibility any favours.

Chile’s triumph reminds world of harsh divide

14 Oct 2010

The country is rejoicing at the miners' rescue. Technical ingenuity has prevailed over adversity. The world has seen the best of a traditionally wellrun and resourceful country. But the episode also highlights a global divide between the rich and the poor who risk life and limb.

Rio leaks speak an inconvenient truth

6 Oct 2010

It is widely accepted that Rio and BHP's plan to combine their Australian assets is unlikely to take off. But comments from the board to that effect before it actually happens are embarrassing, not least because Rio has reason to maintain the fiasco for a little bit longer.

Kazakhmys stake shuffle could hurt minorities

5 Oct 2010

The Kazakh state has seminationalised the Londonlisted miner by purchasing an 11 pct stake from chairman Vladimir Kim. It's good the $1.3 bln stake wasn't just dumped on the market. But with the government holding a 26 pct stake, politics could prevail over shareholder value.

Reserves and growth make Severstal Gold attractive

29 Sep 2010

Russian miner Severstal looks set to spin off its gold division in a London listing likely to value it at around $4 billion. The rumoured price isn't cheap. But international diversification, large reserves and growth prospects should make the issue a hit.

Moscow mayor’s troubles catch out an oligarch

23 Sep 2010

The Kremlin's battle to oust Moscow's influential mayor Yuri Luzhkov has caught an oligarch, potashandgold king Suleiman Kerimov, in the crossfire. Kerimov can probably weather the storm. But the freezing of his assets in Cyprus is a timely reminder of Russia's political risk.

BHP exposes flaws in UK corporate broking model

23 Sep 2010

Neither of the miner's corporate brokers have a mandate on its $39 bln bid for Potash Corp. Merrill was an adviser to the target; Citi is now advising a potential interloper. Clearly lowpaying broking relationships aren't always rewarded with a big ticket from the client.

China Sea skirmish a worrying sign for trade

23 Sep 2010

A territorial spat with Japan has reopened old wounds with China even reportedly blocking some key exports by way of reprisal. China's ascent will cause more frictions with trade partners over time. But for now, deep trade linkages mean both countries need to work it out.

Potash lawsuit defence risks looking desperate

22 Sep 2010

The Canadian group has asked a U.S. court to halt BHP's hostile $39 bln bid. The move may delay the AngloAustralian miner's advance and force it to come clean about its plans. But the flimsy case could undermine Potash Corp's claims to be maximising value for its shareholders.

RUSAL’s criticisms of Norilsk are half right

21 Sep 2010

The metals group controlled by Oleg Deripaska has lambasted Norilsk's governance and performance, saying they saddle the miner with a $20 bln discount. Deripaska makes an unlikely shareholder champion, but his governance criticisms are valid. Sadly the rest is less convincing.

Waiting game may favour BHP in Potash Corp battle

21 Sep 2010

The longer regulators take to approve the miner's $38.6 bln offer, the more time there is for rival suitors to emerge. But any white knight hoping to rescue the Canadian group will face similar scrutiny. BHP's onemonth head start could prove to be a tactical advantage.

Potash MBO looks a bit desperate

16 Sep 2010

Assembling a partly Chinesefinanced management buyout to trump BHP's $38.6 bln offer will be tricky. China's strategic interests conflict with those of financial buyers and a bid would face intense regulatory scrutiny. An MBO is a poor alternative to a real white knight.