Steel

Iron ore margins anything but iron-clad

16 Feb 2012

China’s building boom and easy money should support high iron ore prices for a while. But 50 percent operating margins are an invitation to new supply and higher taxes. Investors should be uneasy about the industry’s reliance on a single, ultimately unremarkable commodity.

Anglo American risks reaping a Chilean whirlwind

4 Jan 2012

The London-listed miner may think it can win a $2 bln dispute with state-owned Codelco over a prized mine. Still, the stakes are high and the case would be heard in Chile. Defeat would be a big blow for Anglo and CEO Cynthia Carroll. But a face-saving compromise looks possible.

Stock up on gold, tinned food and shotgun shells

30 Dec 2011

OK, there’s no need to be too melodramatic. But hard times bolster the case for hard assets. When protesters fill the streets and the only cure for debt crises is printing money, it’s tempting to head for the hills. Assets offering true security fit in a suitcase.

Mooted Russian steel mega-merger lacks sizzle

13 Dec 2011

The chairman of Evraz sees merit in a tie-up with Severstal that would pair Russia’s two largest steel producers. The industry could do with more consolidation. But limited potential synergies mean investors may struggle to get excited about an Evraz-Severstal deal.

UK listing hands credit to Russia’s steely Evraz

17 Oct 2011

Another Russian minerals company is heading for the UK’s FTSE 100. Commodity worries and the involvement of Roman Abramovich means investors will approach with caution. But the company’s size, diversity and exposure to infrastructure spending tempers doubts about Evraz.

Rio Tinto takes bold step into aluminium rehab

17 Oct 2011

The miner’s $38 billion purchase of Alcan in 2007 was a financial disaster, and aluminium’s prospects still look poor. Rio is making some amends with a plan to sell off a third of the business. The strategy is sensible and now looks as good a time as ever to sell.

Brazil’s role in steel deal hints of protectionism

3 Oct 2011

Tycoon Benjamin Steinbruch has put Brasilia and rivals in a pickle by trying to take control of steelmaker Usiminas. That might give him power to up-end policies that curb imports and force Brazilians to pay excessively for steel. Unfortunately, Steinbruch’s chances are slim.

Gold miners no longer leveraged play on the metal

1 Sep 2011

The yellow metal’s price is up 29 pct in 2011, but mining shares are flat. Australia and Peru recently showed how governments grab more when prices rise; costs go up with prices, too. With mining investors also discounting price spikes, the shares aren’t shining for gold bugs.

Peabody’s $5 bln Aussie buy now looks a stretch

30 Aug 2011

Macarthur has finally succumbed to its U.S. rival and ArcelorMittal. More than a year on, Peabody has its target’s precious steel-making coal and Asian access in its grasp. But in the interim, the global growth outlook has dimmed. Demand will have to hold up to justify the price.

Russia’s Prokhorov exploits gold reserve thirst

3 Jun 2011

The oligarch wants to merge Polyus Gold, which he partly owns, with a global industry player. A tieup would boost the investor appeal of Russia's largest gold miner, in return for which it can offer access to its enormous reserves. But price is likely to be a sticking point.

Minmetals must work harder to win over Equinox

8 Apr 2011

The Chinese miner's $6.6 billion offer for Equinox looks better for the Australian copper producer than its planned bid for rival Lundin. But Equinox might be better still with no deal at all. If Minmetals wants to win out, it may need to offer 15 percent more, and quickly.

Silver high is riddled with investment doubt

8 Apr 2011

Record silver and gold prices show investors are wary of dollars and euros and have an intense fear of global inflation, which U.S. Federal Reserve moneyprinting is pumping up. The unfortunate result is that investors are not buying into safety, but a precious metal bubble.

Minmetals road-tests new China M&A model

4 Apr 2011

With a rare combination of Western management and Beijingbacked financing, the Hong Kong listed miner has launched a $6.5 bln offer for Equinox Minerals. Time is short, and Minmetals may need to sweeten its bid to succeed, but it looks to have found a winning formula.

Brazil sends bad market signal scalping Vale’s CEO

1 Apr 2011

Roger Agnelli fought the state's designs to push the $180 bln mining giant into lowreturn, if laborintensive, businesses like steel production. With President Rousseff getting rid of him, investors must prepare for a strategy that favors jobs over profit more Pemex than BHP.

Italian banks’ gold recap plan looks a non-starter

1 Mar 2011

Lenders are hoping to boost capital by revaluing their stakes in the goldrich central bank. But even if Bank of Italy boss Mario Draghi allowed such an obvious fudge, it would run afoul of new Basel rules. The ploy only draws attention to banks' pressing need for fresh equity.

Gold bears may be overlooking Asia’s gold bugs

17 Feb 2011

The yellow metal occupies a special place in the hearts of Asia's savers. With concerns about inflation mounting, gold's popularity is rising in India and China with official encouragement. That may confound growing suspicions that gold's rally has run its course.

Is this as good as it gets for big mining?

16 Feb 2011

BHP and Rio have doubled earnings over three years thanks to skyhigh metals prices, notably iron ore. They are skimming off cyclical froth with $15 bln of buybacks, while scaling back M&A to focus on capex and organic growth. It looks like they're preparing for the turn.

Coal could shine brighter than gold for investors

14 Feb 2011

Coal will never displace gold as jewelry. But it has started to outshine as an investment. While gold's steep rally is threatened by a return to normal monetary policy, surging Asian demand is pushing coal prices skyward. For those fearing higher inflation, coal may be golden.

Deripaska may not refuse new Norilsk buyout offer

14 Feb 2011

An end may be in sight for the dispute at Norilsk Nickel. The Russian miner has upped its offer to buy out the RUSAL aluminium group, offering $12.8 billion for 20 percent of Norilsk. Even RUSAL's stubborn owner Oleg Deripaska should be tempted by the generous 40 percent premium.

Unrealistic valuations help scupper Russian IPOs

10 Feb 2011

Pipe maker ChelPipe has pulled its planned London listing, after a similar move by miner KOKS. Machine builder HMS had to slash its IPO's size. Emerging market jitters didn't help. But the flops show that investors aren't moved by the unreal prices sought by Russian issuers.