Mining

Big London gold IPO presents valuation puzzle

24 Feb 2010

Barrick Gold has not set the price for the float of a quarter of its African business. It could be worth 2 bln pounds, if valued like Londonlisted Petropavlovsk, which mines gold in Russia. Or 7 bln pounds, if FTSE 100 Randgold is the model. Expect something in the middle.

Anglo American’s withheld divi shows confidence

19 Feb 2010

With rivals reviving payouts, Anglo is the only big UK miner with no dividend. The stance seems bold after a hostile approach recently put Anglo on the defensive. But saving cash will help the credit rating, and good operational progress means Anglo can afford to think long term.

Xstrata dividend signals health – and maturity

8 Feb 2010

The return of a payout at the miner is a vote that commodity prices won't tumble again soon. Will boss Mick Davis also go back to his acquisitive ways? Maybe not. With Anglo American raising capital at its subsidiaries, Xstrata's most coveted target could be moving out of reach.

Missing IPO discount leads to RUSAL flop

27 Jan 2010

The Russian aluminium giant's 11 percent drop in early Hong Kong trading is embarrassing. RUSAL was priced last Thursday, before the latest fall in the Chinese market. But RUSAL investors should have demanded a lower price to protect against exactly this sort of hiccup.

RUSAL pricing a triumph of hope over worries

22 Jan 2010

The Russian aluminium producer will debut at a premium valuation to its main Chinese rival. Investors were willing to overlook substantial legal, political and financial concerns. Perceived ties with China probably helped, as did the abundant liquidity in the Chinese market.

Iron ore pricing could hurt China’s pride and cash

13 Jan 2010

The People's Republic is the world's largest importer of iron ore, but may have to let Japan set the benchmark price. That would show that the Chinese effort to strongarm the miners has been an abysmal failure. And China could end up paying more than it needed to for its iron.

Retail ban for RUSAL would be risky solution

17 Dec 2009

Hong Kong's financial regulator may bar retail investors from RUSAL's forthcoming IPO. The unorthodox proposal highlights the risks the aluminium group poses to both investors and the exchange. If it goes ahead, Hong Kong must make doubly sure these risks are fully disclosed.

RUSAL IPO: VEB hurdle not a big one

7 Dec 2009

RUSAL's Hong Kong IPO will be postponed until next year after the exchange's listing committee sought clarification over how a $4.5 billion loan to VEB bank would repaid. But if that's the only obstacle, it shouldn't be too problematic given VEB's evident support for RUSAL.

Rio investors should push BHP for better terms

4 Dec 2009

Rio Tinto was in a tight spot when it agreed a 5050 iron ore venture with rival BHP Billiton despite having a larger chunk of assets. The Rio board won't do anything. So if shareholders want a better deal, they'll have to turn on the pressure.

Hochtief pulls IPO as investors stay cautious

4 Dec 2009

The German building group may have had unrealistic aspirations for the market value of a 49% share of its concessions unit. But if the equity markets were anything like frothy, the 1 bln euro deal would have gone ahead. The European market isn't ready for a rush of new issues.

RUSAL should face Hong Kong scrutiny

4 Dec 2009

The Russian aluminium giant's plans to list in Hong Kong could still come unstuck if the exchange doesn't give it the green light. The exchange risks damage to its own reputation if it fails to ask hard questions about the legal risks facing RUSAL's investors. Here are two.

RUSAL deal won’t end Russian debt woes

2 Dec 2009

The aluminium group has agreed to restructure $7.4 billion in foreign debt, paving the way for an IPO. That will be a relief to western lenders and controlling shareholder Oleg Deripaska. But foreign banks may struggle to reach similar deals with other Russian borrowers.

Lonmin valuation leaves little margin for error

16 Nov 2009

Investors have cheered CEO Ian Farmer, who took charge of the troubled platinum miner over a year ago amidst takeover interest from rival Xstrata. Fullyear results were greeted by a 9% share price rise. But a turnaround is now baked into Lonmin's valuation.

Xstrata’s deal-making prowess takes a scrape

15 Oct 2009

First Vale, then Lonmin, now Anglo American. Xstrata s dealjunkie CEO Mick Davis is wracking up a list of failed mining transactions. Withdrawing the weak approach for Anglo may be sensible, and the game for Lonmin isn t over yet. But Davis reputation is becoming less fearsome.

Rusal and Chinalco could be friends, if politics allow

8 Oct 2009

The oligarchs behind the Russian aluminium miner have to sell shares in an IPO to pay debts, and Rusal s cashrich Chinese rival might want to buy. If markets ruled, China s capital and ambition would match up well with Russia s resources. But politicians are fickle chaperones.

Xstrata faces tough choice with Anglo bid deadline

2 Oct 2009

The Swiss miner has until October 20 to make a formal offer for its South African peer. With Anglo having won investor support for rebuffing Xstrata s informal nilpremium approach, its suitor is expected to withdraw. But things aren t that simple. Xstrata has reasons to bid.

BP discovers minor giant

2 Sep 2009

The oil major called a newly discovered field in the Gulf of Mexico a giant , which could hold more than 3bn barrels of oil. For both BP and the US, it s a lot better than digging dry wells, but this field isn t likely to be big enough to move the needle for either.

China can fracture iron ore oligopoly

27 Aug 2009

Vale, BHP and Rio control twothirds of the international trade, but the world isn t scarce of iron ore. China, the biggest importer, seems determined to diversify its future supply by investing in big projects. It is ready to spend enough to get what it wants, eventually.

Rio Tinto’s Albanese survives

20 Aug 2009

After a tumultuous six months, the position of the miner s chief executive architect of the illfated deal with the Chinese looks secure. Rio has reined in its debt and is meeting operational targets. But Albanese will have to work to overcome the legacy of past mistakes.

Xstrata can live without Anglo American

19 Aug 2009

The Swiss miner s push for a merger with its South African rival inevitably raises questions about its standalone prospects. A deal does have merit. But Xstrata is nicely exposed to economic recovery as it is. The question is whether that s enough to keep management interested.