Commodities

BHP boss makes himself tougher act to follow

20 August 2019

The miner reported a record $3.9 bln final dividend alongside its highest earnings in five years. Even as CEO Andrew Mackenzie conserves cash ahead of economic clouds and the end of his tenure, he has fulfilled shareholder return pledges. Any successor will face harder choices.

Russia’s En+ swaps one U.S. headache for another

16 August 2019

The Rusal holding company escaped punitive Washington sanctions in the first half. But Donald Trump’s trade war pummelled aluminium prices, leading to a sharp drop in EBITDA. Investors face a long wait to get anywhere near their 2017 IPO price.

Iron ore feels the pinch of Beijing’s restraint

15 August 2019

Prices of the steel ingredient have cooled, as a supply squeeze fades but a hoped-for Chinese boost to demand remains elusive. Mainland growth is lacklustre, but construction has yet to rev up in response. Stimulus this time may not mean more bridges: bad news for Rio and peers.

Aramco’s valuation dreams become quasi-reality

12 August 2019

Put the Saudi oil giant’s latest dividend on Exxon’s forecast yield, and its equity nears Crown Prince Mohammed bin Salman’s desired $2 trillion valuation. Yet Aramco’s first-half payout was unusually fat. A more realistic approach would put a lower price tag on the delayed IPO.

Fickle nickel sends out false value signal

9 August 2019

The metal is at its priciest since 2018 having surged 50% this year, more than other key battery materials. The spike, though, rests on misplaced optimism on Chinese growth, and speculation that an Indonesian ban could curtail supply. Producers like Vale can hold off celebrating.

Glencore unearths new grounds for cheap valuation

7 August 2019

The Swiss miner and trader had a bad six months, missing out on rising prices for iron ore while hit by lower ones for coal. Now it is mothballing its prized Congolese Mutanda mine. Chief Executive Ivan Glasenberg has to hope tighter supply buoys the right commodity markets.

Glencore coal split could scratch multiple itches

2 August 2019

The $42 bln giant is the largest thermal coal exporter, at a time when miners are under growing pressure to clean up. Splitting out that business would help, and can also lift a depressed valuation. It might even make sense for boss Ivan Glasenberg to lead the carve-out himself.

European oil majors’ gas lifeline could be a noose

1 August 2019

Royal Dutch Shell and Total rely on gas for future growth. That’s greener than oil, but weak second-quarter results show the drawback of their exposure. More importantly, longer pay back times than shale projects may help explain why the pair trade at a discount to U.S. peers.

Rio’s shiny profit masks a less lustrous reality

1 August 2019

The miner reported solid earnings, seasoned with a $1 bln special dividend. The detail is a bit more tarnished: iron ore operations are feeling the strain from years of cuts, and a Mongolian mine has underwhelmed. Investors love cash, but Rio also needs to invest in what it has.

Indian mogul’s ode to Anglo ends on duff note

26 July 2019

Anil Agarwal is dumping his roughly 20% stake in miner Anglo American. The complex holding structure, dubbed “poems” by creator JPMorgan, meant he only partly profited as the target’s shares soared. The bigger prize, meshing it with his Vedanta empire, also proved elusive.

Barrick CEO lets hard image slip for sensible deal

19 July 2019

Mark Bristow will, after all, pay up to buy out 36% of Acacia Mining in a transaction worth over 50% more than the gold miner’s offer in May. It’s a small victory for minority owners, whose company is under fire from Tanzania’s government. But for everyone, it beats a standoff.

Aramco gives bankers new scope for Saudo-masochism

19 July 2019

A second crack at the Saudi oil giant’s stalled $100 bln IPO could mean different bankers. Spurned advisers can comfort themselves that the listing won’t be lucrative and may never happen. The reputational and other issues that plagued the first attempt have only intensified.

Miner exits shift coal spotlight to Anglo American

16 July 2019

BHP is the latest heavyweight to consider a sale of thermal coal assets. That's sensible given weak prices, pressure from investors and a business that is barely material. Anglo's bigger exposure means a tougher choice - with few buyers, there’s a case for staying the course.

Rio sounds copper warning from Mongolian steppe

16 July 2019

The miner's flagship Oyu Tolgoi expansion will be up to 30 months late, and could cost as much as a third more than planned. It’s a fresh blow to a project that has been bruised by local politics. The latest snag is a reminder of why the red metal has become so hard to dig up.

BASF’s acid stings complacent investors

9 July 2019

The 55 bln euro chemicals group lost 6% of its market value after a trade-war profit warning. Since results are closely linked to industrial production, it’s odd that the company was valued at a historic premium while the global economy cooled. Peers’ shares will feel the burn.

Exchange-traded funds will keep gold glittering

21 June 2019

The yellow metal’s price has broken $1,400 an ounce and touched highs last seen in 2013, thanks to scope for lower U.S. interest rates and Gulf tensions. Yet holdings in the largest gold-backed ETFs are only just joining the rally. That should mean bullion keeps its shine.

Potash makes better sense for BHP than shale

20 June 2019

The miner is weighing whether to press ahead with a $20 bln Canadian project, its most significant investment in years. BHP shareholders, scarred from past blunders, are understandably wary. There may be a case, though, that potash will be more like iron ore than fracked oil.

Acacia and Barrick pay price for Newmont escapade

19 June 2019

Barrick CEO Mark Bristow won’t sweeten his offer to minority investors of the Tanzanian gold miner. A small raise could defuse the damaging stalemate. But after an expensive and failed tilt at Newmont, Bristow is under pressure to be seen to defend his shareholders’ interests.

Africa’s sweet cocoa cartel misses bigger prize

14 June 2019

Ivory Coast and Ghana have set a minimum selling price for the chocolate ingredient to try to help farmers. The pair control two-thirds of global supply, way more than OPEC does for oil. The real riches in cocoa, though, lie in processing the beans, not just growing them.

Iron ore complicates Australia’s growth challenge

12 June 2019

The rising price of the steel ingredient has yet to boost investment in mining, or wages. But it is making the local dollar more resilient to trade tensions and a rate cut. That means the economy, expanding at its slowest annual rate in a decade, is even harder to revive.