Mining

BHP moves to bear hug in $150bn Rio bid

12 Nov 2007

The AngloAustralian miner has taken the fight for rival Rio Tinto straight to shareholders, promising $26bn worth of synergies. Getting Rio's investors to back a tieup looks smart. But BHP's own shareholders could end up paying the price for too much hostility.

China could make best white knight for Rio Tinto

9 Nov 2007

A Chinese foil to BHP Billiton s $140bn bid would cause political tremors. But it has some logic. China is set to be Rio's biggest customer thanks to an insatiable appetite for iron ore. It could recapture those profits, and put some of its $1.4tr reserves to better use.

BHP Billiton tries for $350bn mining giant

8 Nov 2007

The UK listed miner s allshare offer for rival Rio Tinto was rebuffed as too stingy. But the combination makes too much industrial sense just to go away. It s a deal that would appeal to mining bulls and bears alike. The biggest challenge is to find an acceptable price.

Xstrata tries nickel again with $3bn Jubilee offer

29 Oct 2007

The AngloSwiss miner was outbid for Canada s Lionore. But it's agreed to pay a higher multiple for an Australian rival. Nickel is still appealing, despite falling 40% from its peak. That means that Xstrata could get outbid again, even with 18% of the shares locked up tight.

Mining super-cycle could be peaking

7 Aug 2007

The big miners now all believe that Asian demand will keep prices high for years and are acting accordingly. But easy money has played a big role in keeping this cycle super . Tighter credit may make the next leg of the cycle less profitable.

Alcoa better off backing off

12 Jul 2007

Though the US aluminium producer could ve squeezed more out of Alcan, Rio Tinto s $38bn bid was a knockout. The prospect of massively gearing up for middling returns was risky. It can now consider buying Norsk Hydro or selling itself.

Rio joins metal party with $38bn Alcan bid

12 Jul 2007

The Londonlisted miner is risking its reputation for canny buying by paying a 65% premium for the Canadian aluminium producer. But that s what it takes to win auctions in a hot market. The big question mark is aluminium, which has lagged almost every other commodity.

Alcan price not big barrier to White Knight

11 Jul 2007

The Canadian aluminium group is seeking a rival suitor to Alcoa. Likely partners, such as BHP or Rio Tinto, have fewer synergies. But both are flush with cash and have strategic reasons to pounce. With disposals, Alcan s assets could be bought at near replacement cost.

Alcoa shareholders’ unlikely allies: bondholders

9 May 2007

A win for one often hurts the other. But both can get mugged in deals like Alcoa s bid for Alcan. Bidders may overpay, hurting shareholders. And creditors lose when companies pile on debt. But a provision in Alcoa s bonds may have both groups hoping the predator becomes prey.

$250bn mining merger talk makes half-sense

9 May 2007

Rio Tinto s share price jumped 10% on rumours of a BHP Billiton hostile bid. Rio s denial didn't calm investors. Economies of scale create a good case for cramming the companies together. But a friendly merger makes more sense than a takeover.

Freeport’s $6bn bond deal benefits from investor angst

14 Mar 2007

For sale: The largestever junk bond deal, backing a hugely leveraged play on copper. Sound like a difficult pitch? Not when investors are lining up for debt from companies that aren t likely to snatch cash flows away by issuing big dividends.

Miners still sitting pretty

6 Mar 2007

Commodity prices have been weak for months, but they remain high enough to keep the big producers extremely profitable. Take Xstrata. The $11bn of debt it took on in 2006 would cripple the company at 2004 metal prices. But now it is gushing cash.

London miners don’t need more aluminium

15 Feb 2007

Sure, metal fever is still running high. But the likes of BHP Billiton and Rio Tinto aren t natural buyers for aluminium giant Alcoa. The company is tied into the relatively mature US market. And aluminium profits have as much to do with electricity as with mines.

Stevie Cohen chooses easy target in Freeport/Phelps

11 Dec 2006

It takes a lot to pull the hedge fund boss away from his pickled shark collection. Now he s gone public against Freeport s bid for Phelps. It s about time someone did. The deal offers Freeport shareholders little in synergies or diversification. And brings plenty of risk. It's about time someone did. The deal offers Phelps shareholders little in synergies. And brings plenty of risk.

Freeport’s $26bn Phelps deal looks destructive

20 Nov 2006

There may be strategic rationale in combining the mining companies and diversifying their thirdworld risks. But there are no cost synergies to justify a $6.4bn premium. Even if it lowers Freeport s cost of capital, investors should be sceptical.

Severstal’s low float range shows investors remain wary

30 Oct 2006

The Russian steelmaker has set its sights low. Even at the top of the range, its global offering gives it only a small premium to peers. It looks like Severstal hasn t convinced investors it deserves better. Until it sorts out its governance problems, they may remain wary.

Anglo American disappoints with new head

24 Oct 2006

She wasn t even second in command at Alcan, a much smaller and simpler company than Anglo. No wonder the shares fell on the news. Cynthia Carroll s appointment may bring a new perspective, but she has little experience with finance, deep mining or South Africa.

Record grain prices open a new battle-front for inflation

11 Oct 2006

Like oil price rises, they re driven by soaring emerging market demand and restricted supply. However, rising cost of foodstuffs have a greater impact on measured inflation.

Xstrata pleases with $5.5bn rights issue

3 Oct 2006

The miner s shares are up because the deal was smaller than expected and the $19bn Falconbridge merger is going well. Mick Davis, Xstrata s ambitious chief, seems to be winning his bet that metal prices will stay high long enough to make this deal work.

Goldcorp disappoints with $8.6bn bid for Glamis

31 Aug 2006

The deal ramps up the gold miner s reserves and resources. After the allstock merger, the new company s shares will also be more liquid. That doesn t justify a 33% premium with few synergies. This deal is yet another sign of euphoria that s sweeping Canada s mining industry.