Mining

BHP Billiton comes out on top in Rio deal

5 Jun 2009

For a while, the AngloAustralian miner seemed unable to profit from having a strong balance sheet in a crisis. But painfully indebted Rio Tinto has now turned to its rival for help. BHP gets what looks like the upper hand in a big joint venture at an attractive price.

Rio’s new deal gives shareholders partial victory

5 Jun 2009

The AngloAustralian miner deserves plaudits for choosing a $15bn rights issue over a pact with a Chinese stateowned firm. But to get a further $6bn, Rio has had to put its best iron ore assets into a joint venture with archrival BHP Billiton a venture it doesn t control.

Rio snub is latest Chinese setback in global M&A

5 Jun 2009

The Chinese are great at selling to foreigners, but seem to have trouble buying. Chinalco s inability to pay Rio Tinto s $19bn is the latest example. It follows bad investments in Fortis and Blackstone. The problems: naïveté, poor communication and Beijing s alltoovisible hand.

Rio Tinto right to pursue plan B

4 Jun 2009

After a sharp rise in the miner s share price, the terms of the $19bn cash injection from Chinalco clearly gave too much to the Chinese. Rio can now pursue a megarights issue. It should mine shareholders as much as possible, before turning to cashrich rival BHP Billiton.

Rio Tinto should line up mega rights issue

21 May 2009

The miner s value is up nearly 50% since a $19bn cash injection with Chinalco was agreed in February. A $12bn rights issue, plus asset sales or a dividend cut, is now clearly preferable to the deal with the Chinese group. Regulators may even hand Rio an excuse to change tack.

Chinalco’s softening on Rio deal is small progress

21 May 2009

The Chinese aluminium group is reportedly willing to rejig its $19.5bn tieup with miner Rio Tinto. This reflects the fact that Rio s shares have shot up since the deal was proposed, and shareholders are unhappy with the transaction. But the mooted concessions are unimpressive.

Rio Tinto price-cut chatter is embarrassing

8 Apr 2009

Reports the mining group offered Asian customers a 20% temporary price cut look bad just when Rio is schmoozing China for $20bn of new capital. The reality is probably more benign but it shows the minefield Rio faces in cozying up to its biggest customer.

Rio Tinto concedes Chinalco isn’t the only way

26 Mar 2009

It s reassuring that the AngloAustralian miner has a Plan B in case regulators or shareholders block its $19.5bn tieup with Chinalco. But a public discussion suggests Rio s management is privately reconsidering, especially as the Chinese put option now looks less appealing.

Rio Tinto gets chance to offer olive branch

17 Mar 2009

The AngloAustralian miner has named Jan du Plessis as its new chairman. Investors disgruntled with Rio s plans to raise capital from Chinese miner Chinalco shouldn t get too excited, as he s firmly committed to the deal. But it may be easier for du Plessis to rewrite the terms.

Rio’s Chinalco deal suits buyers’ market

9 Mar 2009

The miner s board should have raised equity when it had the chance. Rio s pact with Chinese miner Chinalco was a poor alternative. But markets have weakened for both commodities and capital. The deal doesn t look so bad. At least Rio s shareholders get a quasiput option.

Australia shouldn’t put up Chinese walls

24 Feb 2009

Chinalco s $19.5bn investment into Rio Tinto has sparked a row over Chinese ownership of prized mining assets. Australia might try to block the deal, or impose proAustralia restrictions. It should do neither. Shareholders should decide whether to sell to the Chinese.

Anglo American right to scrap dividend

20 Feb 2009

The market was stung by the miner s decision not to pay a final dividend. But this isn t the time for financial brinkmanship, and traditionally cautious Anglo isn t the company to try. It still has too much debt for comfort, but fast action may keep it from a forced rights issue.

Rio’s China deal can and should be defeated

16 Feb 2009

There are two ways to undo the $19.5bn deal, which gives Chinalco too much power over the AngloAustralian miner. One is for shareholders to commit to their own capital raising; the other is for BHP to pay up for at least some of the assets the Chinese miner is set to buy.

BHP sidelined by Rio’s £20bn cash-call

13 Feb 2009

Rio Tinto s shareholders cosy tieup with Chinalco, owned by the Chinese state, weakens the position of mining rival BHP Billiton. It will almost certainly have to abandon hopes of taking over Rio, and may find negotiation with China, its biggest customer, harder going.

Rio Tinto hasn’t justified bending the rules

13 Feb 2009

The miner has struck a $20bn deal with its biggest shareholder, a vassal of the Chinese state. Shareholders will get a vote on the transaction but can't put in their own money. Rio s arguments for sidestepping important market principles aren t compelling.

Rio Tinto’s $20bn cash boost has too many strings

12 Feb 2009

The AngloAustralian miner s twostep deal with Chinese miner Chinalco dilutes shareholders and leaves a big customer with too much influence. Rio should have shopped assets around to rivals and done a rights issue. It s not too late.

Chinalco makes good on Rio Tinto

12 Feb 2009

The stateowned Chinese group bought into the AngloAustralian miner at a high price a year ago. It overpaid then, but the holding helped Chinalco get good terms on a proposed rescue package for Rio. If the deal goes though, Chinalco will have extracted what it really wanted.

ArcelorMittal proves its mettle

11 Feb 2009

The world s largest steelmaker has halved its dividend and is aggressively cutting costs. But excluding oneoff charges, Arcelor is still making money and is on track to meet its debt reduction targets. It s an impressive performance in extremely difficult conditions.

Rio Tinto gaffe leaves board discredited

9 Feb 2009

The mining giant has lost its chairman a mere three weeks after giving him the job. It seems Rio s nonexecs didn t do their homework on Jim Leng, and didn t much like his questioning of plans to raise capital from Chinese miner Chinalco. The board needs to explain itself.

Glencore takes upper hand in Xstrata’s cash call

3 Feb 2009

The two hardnosed mining firms have thrashed out a complex deal where Xstrata can raise $6bn without its biggest shareholder putting up any cash. Both sides sport battle scars. But Glencore has just about come out on top.