Mining

Aluminium mega-merger has much to recommend it

30 Aug 2006

A combination of Rusal, Sual and Glencore s alumina assets makes economic and political sense and would help two oligarchs. International expansion plans could be accelerated. A London IPO, bringing full global respectability, is a plausible aspiration.

BHP Billiton takes middle road on investment

23 Aug 2006

The miner isn t going for splashy acquisitions, unlike Xstrata or CVRD. But it isn t handing back as much cash as Anglo American. Given its size and culture, this looks like a sensible approach, especially when the path of future commodity prices is so uncertain.

Anglo American takeover doesn’t quite stack up

22 Aug 2006

Rivals are rumoured to be eying the giant miner. There is a case for hidden value, but it s not what it used to be. The stock is up and management is moving. Still, in a bull market nothing should be considered impossible.

Russian aluminium merger aims at global dominance

22 Aug 2006

A £10bn merger between Rusal and Sual wouldn t just be the world s largest aluminium maker, leapfrogging Alcan and Alcoa. It would aim for a London listing to get currency for even more deals. But it would first need clean governance and finances.

Mining companies struggle to keep on top

21 Aug 2006

But governments are a far bigger threat to shareholders than unions. High metal prices could make government greedier. Everyone wants a share of the industry s abundant cash flow. The workers at the giant Escondida copper mine are the latest to try.

When will oil re-tell the sugar story?

18 Aug 2006

The price of the sweet stuff has fallen by a third since April. New supply has more than matched rising demand, scaring off speculators. Hydrocarbons will follow carbohydrates, but not right away. For sugar, planting to market only takes a year. The oil cycle is much longer. The price of the sweet stuff is down almost 40% since February. New supply has more than matched rising demand, scaring off speculators.

Teck drops bid for Canadian miner

17 Aug 2006

Investors seemed happy to let the zinc miner chase its nickelproducing Inco as long as Phelps Dodge was the only other bidder. But CVRD s cash offer threw a spanner in the works. Teck s shareholders weren t willing to back a bidding war against a much larger rival. Investors seemed happy to let the zinc miner chase nickelproducer Inco as long as Phelps Dodge was the only other bidder.

Mining M&A manna for arb funds

14 Aug 2006

Betting on mergers hasn t been a lucrative strategy for hedge funds of late. The multiparty fight for Canadian miners should give a boost. The battle has caused wild gyrations in the bidders share prices. The bad news is this profitable play seems to be drawing to a close.

Anglo American pleases with $5bn cash return

4 Aug 2006

The miner is returning almost all of the extra profits from exceptionally high metal prices. That s more sensible than paying up for assets. But Anglo still hasn t finished its restructuring. That will have to wait for a new chief executive, expected in 2007.

Miners locked in feeding frenzy

2 Aug 2006

Phelps Dodge is reportedly considering raising its cash offer for Canada s Inco, in an attempt to see off Teck Cominco. Yet Phelps earlier bid could not be justified on costsavings. Putting more cash in the deal would destroy shareholder value further.

Phelps Dodge could turn from white knight to target

31 Jul 2006

The US copper miner s double bid for two Canadian nickel miners always looked ambitious. Last week it lost the race for Falconbridge. Now rival Teck Cominco has topped its bid for Inco. With a Mexican miner reportedly stalking, Phelps is looking more like a target.

Second battle looms for Inco

28 Jul 2006

The Canadian miner withdrew gracefully from the battle for Falconbridge after investors rejected its bid. Now Inco faces another battle cementing a contentious merger with Phelps Dodge while facing a potential new hostile bid from Teck Cominco.

Why firms should be wary of hedging

27 Jul 2006

It s tough being the loser in a zerosum game. Ask Phelps Dodge. The US miner has had to take a $1.1bn charge on a copper hedging programme. For a producer like Phelps, it s only lost profits not cash losses. But there s a serious lesson: risk reduction is a risky business.

Phelps’ Inco bid looks worse without Falconbridge

26 Jul 2006

The US copper firm's double whammy bid for the nickel miners needed the synergies between the two Canadians to make the numbers work. But Xstrata now looks set to win Falconbridge. That leaves Phelps' Incoonly offer underwater.

Xstrata goes all out in pursuit of Falconbridge

19 Jul 2006

The UKlisted miner has added another 7% to last week s already enhanced bid. It s also willing to take under 50% of the shares. It's making full use of loyal backers. The new bid could be enough to stymie rival PhelpsInco, if their shareholders don t give up first.

Xstrata persists in $16bn Falconbridge pursuit

11 Jul 2006

The UKlisted miner has increased its cash bid for the Canadian counterpart by 12%. That is 10% more than the value of the rival Inco offer. The story isn t over yet, though. Inco and its new partner Phelps Dodge could fight back. But risks of victory rise with the bids.

Phelps Dodge’s $40bn Inco pounce looks risky

26 Jun 2006

On paper, acting as the white knight for Inco and Falconbridge adds up. The present value of synergies is some $1bn above the premiums. But the risks are legion: execution, financial and competitive. No wonder Phelps shareholders are panicking.

Xstrata’s $15bn Falconbridge bid looks canny

17 May 2006

The Canadian target is tied up in a three way battle with Inco and Teck Cominco. Shareholders might jump at the allcash bid from Xstrata. Whether victory will prove sweet for Xstrata s own shareholders is another question. It could work out, if prices don t fall too fast.

Price fall best cure for resource nationalism

13 Apr 2006

Even though Latin American countries are talking about nationalising mineral resources, international mining companies aren't panicking. Distribution of resources revenue is always a hot issue in a boom. But in the end, governments need the expertise of international business.

Gold Fields might be smart to buy £3.8bn Lonmin

20 Feb 2006

The South African gold miner is in a strategic box, with a portfolio of highcost mines. Lonmin would help it diversify into platinum. That might be good news for Gold Fields shareholders. But its also why Lonmin investors should be wary of its advances.