Commodities

Miners’ Congo optimism is post-Kabila sugar-rush

13 February 2019

Joseph Kabila’s exit as the African giant’s leader is generating some positive vibes. Reminders of Congo’s vast mineral potential are light relief for shareholders beaten down by government shenanigans. But they won’t help convince Kinshasa to treat the industry any better.

Aramco’s new tangent more rational than it looks

12 February 2019

The Saudi oil giant wants to develop oil and gas projects overseas. Like its planned purchase of SABIC, that sits uneasily with other strategic goals. But emphasising lower-carbon gas while burnishing global credentials is sensible.

Hyperactive Elliott leaves Arconic in disarray

6 February 2019

The parts maker has a new CEO - its fourth since Paul Singer’s hedge fund first invested in 2015. The activist pushed out ex-boss Klaus Kleinfeld, helped pick most directors and backed a failed buyout by Apollo. Its minority stake has made it a force for agitation, not stability.

Central banks’ gold fever is anything but reckless

5 February 2019

Their 2018 purchases of the yellow metal were the second-highest on record and up nearly three-quarters from a year ago. But this isn’t a speculative punt on prices rising. Instead, it’s a logical precaution against rival currencies and U.S. self-harm eroding dollar dominance.

Anil Agarwal’s Vedanta antics are self-defeating

1 February 2019

A unit of the Indian tycoon’s mining company is buying some of his personal holding in Anglo American. Minority shareholders wiped off one-fifth of the company’s value. Given any swoop by Agarwal on Anglo may require winning minorities over, it’s an odd move.

Falling prices only hurt Shell in the long term

31 January 2019

Despite a crude downturn in the final quarter, the UK oil major hiked output and earnings. Given prices should stay high enough for free cash flow to cover dividends, that’s sustainable. The main cloud is Shell and peers have less to invest to wean themselves off fossil fuels.

Vale’s Brazil dam damage will hurt its peers too

29 January 2019

A second disaster in three years has already cost the mining giant $19 bln in market value. Fines and a management overhaul will likely follow. Fresh scrutiny from stakeholders will hit an industry already grappling with high costs, slow projects and risk-averse shareholders.

Deripaska markdown will persist at En+ and Rusal

28 January 2019

The Russian metals groups have been freed from U.S. sanctions. Though their shares have perked up, they still trade below pre-sanctions level. Given the risk of new penalties should previous majority owner Oleg Deripaska exercise control, the valuation gap will linger.

Oleg Deripaska’s En+ deal is more sour than sweet

23 January 2019

The settlement that distanced the Russian oligarch from his power company has favourable aspects, the New York Times says. Certain provisions could even limit the financial hit from U.S. sanctions still in place against him. The overall outcome is, however, still pretty painful.

Size matters less than gold miners think

17 January 2019

Newmont's $10 bln Goldcorp purchase creates a behemoth, and the U.S. miner has talked up options from extra assets, plus steady output and dividends. But its investors are right to be sceptical. Management will have to over-deliver on synergies to secure them a good return.

Miners can close the confidence gap in 2019

16 January 2019

Stock markets point to a rough year for diggers, valuing each dollar of expected cash at a stubbornly hefty discount. Investors are fretting about a Chinese slowdown and don’t trust cashed-up bosses at Rio, BHP and the like to restrain themselves. The reality may be brighter.

Newmont’s $28 bln gold merger is an alloyed good

14 January 2019

The U.S. gold miner is swallowing Canada’s Goldcorp in an all-share deal. Rivals Barrick and Randgold already bulked up in a similar deal, and the 17 pct premium is slim. Yet Newmont is handing over most of the benefits, and even those might be hard to extract.

Saudi’s sunny debt offer belies gathering clouds

10 January 2019

Riyadh’s successful $7.5 bln bond sale suggests investors have moved on from the Khashoggi murder. Yet long-dated Saudi debt trades at an implied discount to its rating. With the kingdom too optimistic about oil prices and facing peak demand, markets won’t always be so friendly.

Congo’s post-Kabila chaos leaves miners in a hole

10 January 2019

Elections in the central African giant have produced a double surprise. Outgoing leader Joseph Kabila’s man lost. But so did a rival who led opinion polls and was favoured by mineral-rich regions. Unrest is likely, especially in Katanga, home to 60 percent of the world’s cobalt.

Norwegian $800 mln oil swoop succeeds if it fails

8 January 2019

DNO, chaired by Bijan Mossavar-Rahmani, offered a low price for Faroe Petroleum. Investors could reject the bid, but the magnate likes to control companies with minority stakes, and already owns 31 pct of the North Sea driller. Any hopes for a big bump may be disappointed.

Three key indicators to watch like a hawk in 2019

2 January 2019

Want to know whether there’s going to be a U.S. recession, a trade-war flare-up, or corporate implosions? You could obsess over news and social media – or skim a few proxy indicators like the price of soybeans, the Treasury yield curve, and the number of stocks in bear territory.

Financing drought cracks farmers’ loyalty to Trump

24 December 2018

The U.S. president’s trade war has evaporated export markets for soy beans and other crops, leaving growers struggling even more than before. Yet they’re mostly sticking by Trump. If he can’t strike a good deal, farmers’ faith will erode when credit dries up for the next harvest.

U.S. Oleg Deripaska deal tougher than it looks

20 December 2018

Washington’s decision to lift sanctions on En+ and allow the Russian oligarch to keep a 45 pct stake sounds lenient. Yet it looks difficult for Deripaska to sell his stake for cash or exercise decisive influence. After a messy beginning, the U.S. raid seems a qualified success.

Rio will turn big miners back into big spenders

20 December 2018

Despite fat cash piles, mining groups have been slow to acquire. With new projects costly and demand high, copper was already a good strategic bet even before trade war jitters caused a price slump in 2018. Expect Rio Tinto to come calling for $15 bln U.S. rival Freeport.

Glasenberg successor will run a different Glencore

13 December 2018

The commodities giant’s combative boss says he will retire in 3 to 5 years. It’s unclear who will replace him, even after a recent reshuffle. With a U.S. subpoena and other woes weighing heavily on the stock, Ivan Glasenberg may yet be tempted to consider a much bolder overhaul.