Commodities

Oil makes Saudi Arabia slippery sanctions target

16 October 2018

U.S. lawmakers are invoking a law used to impose Russian sanctions to demand answers about a missing journalist. There’s momentum for a similar penalty for the kingdom. But Saudi retaliation could hike oil prices - the opposite of what President Trump has been agitating for.

Chinese battery drive hits amber light in Chile

12 October 2018

To clinch a $4.1 bln stake in lithium giant SQM, China's Tianqi has agreed with antitrust officials to limit access to sensitive information. A hostile shareholder may yet thwart the deal but as Beijing's clout in the industry grows, such acquisitions will only get tougher.

Louis Dreyfus showcases downside of being private

10 October 2018

The commodity trader’s dividends are a bigger proportion of net profits than rival Cargill. The latter is demonstrating that non-listed status and success are compatible. But the short-term needs of Margarita Louis-Dreyfus jar with those of the French company that she controls.

Russia and Saudi’s oil stitch-up will unravel

4 October 2018

Moscow and Riyadh’s deal to boost crude output is the best chance of cooling red-hot prices. Yet the duo’s power is more limited than it appears. U.S. sanctions on Iran will dent the Islamic Republic’s supply faster than they can pump. Prices could still spike in the short term.

Copper caught in crossfire of trade war

4 October 2018

Escalating tensions between Washington and Beijing have helped drag down the red metal by some 14 pct since June. The price is now well below levels required to inspire mining giants to invest in new supply, even though existing pits are ageing fast and green demand is on a tear.

BHP can hide behind Unilever dual-listing mutiny

2 October 2018

Some big shareholders oppose the Dove soap maker’s plan to switch to one, Dutch, headquarters. Pushy investor Elliott has been calling for a similar corporate overhaul at the world’s largest miner. There are differences, but the campaign for simplicity just got more complicated.

Eritrea’s potash potential justifies the risk

2 October 2018

Miner Danakali is looking to add a big chunk to global potash production via a $322 million mine in the African state. Ongoing demand for fertiliser and a surprise Ethiopian peace deal underscore its interest. Investors should apply an exotic risk discount though.

U.S. fritters oil stockpile at worst time

1 October 2018

While President Trump chides OPEC, his Iran sanctions are pushing up prices. Meanwhile the government is selling down its stockpile to plug a budget hole, not calm the market. With shale producers constrained, the White House should be more strategic with its crude reserve.

African miner deals deserve state-fleece discount

1 October 2018

Democratic Republic of Congo claims Barrick’s $6.5 bln Randgold deal means it owes the government money. Two years ago, Kinshasa extracted $100 mln when Freeport sold out. Investors should be discounting their synergy estimates to reflect the risk of something similar.

Review: Shale oil exposé misses bigger picture

28 September 2018

In “Saudi America” Bethany McLean tackles the U.S. fracking industry. The author who spotted fraud at Enron accurately depicts aggressive wildcatters digging themselves to their demise. But factors that are pushing up global oil prices may yet save the industry from itself.

Thyssenkrupp gets half a breakup

27 September 2018

The German conglomerate’s shares surged on plans to split the company in two. Thyssenkrupp’s businesses are probably worth more apart than together. But the separation will take time, and one of the units will still have a stake in the other.

Barrick’s growth bet looks like a reverse takeover

24 September 2018

The Canadian miner led by former Goldman banker John Thornton has agreed a $18 bln tie-up with Randgold. But the smaller London rival seems to be in the driving seat, injecting its pugnacious boss and entrepreneurial spirit. The welcome reboot could prove a boardroom strain.

Barrick and Randgold wisely explore M&A riches

24 September 2018

The $12 bln Canadian miner led by former Goldman banker John Thornton is set to unite with its African-focused rival. A deal this big would shake up a sector long cowed by past mistakes. Given weaker prices, falling output and a geographic fit between the two, the idea has logic.

Norway power failure a rehearsal for bigger shocks

14 September 2018

The 114 mln euros Einar Aas lost betting on energy markets was not enough to sink the clearing house backing the trades. But the damage wreaked by one man implies deeper frailties. An increasingly volatile carbon price would make the commodities market vulnerable to a repeat.

Tianqi edges ahead in Hong Kong’s lithium race

7 September 2018

China’s top two producers of the battery ingredient are revving up $1 bln listings in the city. Both offer a bet on the electric car boom. But Tianqi’s quality resources give it a narrow advantage over processing giant Ganfeng, at a time when investor confidence is wobbling.

Norway’s anti-plastics push has firm foundations

6 September 2018

Oslo’s $1 trillion wealth fund wants its investments to flag what they’re doing on ocean pollution. As a recent spat over oil and gas holdings shows, political meddling means good intentions don’t always translate into action. That should be less of a problem this time around.

China flaunts firepower in Canadian copper deal

6 September 2018

Zijin Mining agreed to buy Nevsun for $1.4 bln, trumping hostile suitor Lundin. A cash bid at a 57 pct premium mostly to bet on a project in Serbia speaks to Beijing's relentless appetite for important metals, but also to scarce supply. Pockets of outbound M&A exuberance persist.

Chinese battery makers can win EV recycling race

30 August 2018

Metals recovered from spent car cells could be worth more than $20 bln a year within a decade. Western chemicals groups like Umicore already profit from waste. But with half of the world’s electric cars sold in the People’s Republic, locals like CATL and BYD can pull ahead.

China’s oil majors risk wasting a good trade war

27 August 2018

Earnings are gushing at energy giants including $210 bln PetroChina. They are benefitting from Washington’s belligerence, which has driven up crude prices and should open opportunities in Iran. The windfall, though, masks the need for extra investment, cost cuts and other reform.

Santos doubles down on independence with Quadrant

23 August 2018

Fresh from rejecting a $10.8 bln takeover bid, the Australian energy group is buying its Perth peer for $2.2 bln. The move tests a newly healed balance sheet, but investors value Santos equally as predator and prey. It’s a big bet on Quadrant’s new discoveries and the oil price.