Commodities

Rio can use sunny outlook to mend leaky roof

17 February 2021

Jakob Stausholm’s first results benefitted from soaring iron ore prices, allowing the global miner’s new CEO to hike dividends. But he has a messy situation in Mongolia to resolve, and governance issues. Better to spend time and money fixing these than on splashy new deals.

Coal wobble flags Glencore’s green high-wire act

16 February 2021

The commodity giant’s EBITDA from the black stuff collapsed in 2020 to just $1.2 bln. Given his increasing climate consciousness, departing CEO Ivan Glasenberg should be happy. But it also shows the risks of a green pivot that requires coal to be used as a financing bridge.

BHP boss gets extended Chinese honeymoon

16 February 2021

Covid-19 infected Mike Henry’s first year as the miner’s CEO, but high iron ore prices driven by demand from the People’s Republic just paid for a record $5.1 bln dividend. They also buy him extra time to grapple with a dual listing, potash plans and Beijing’s ban on Aussie coal.

Coal India is in the pits of climate activism

16 February 2021

The commodity’s top pure-play miner is setting up renewable-energy units and looking for partners. It’s a hedge against coal’s decline and a modest bet on a hot field. But it has potential to boost lousy returns at the $11 bln company that’s key to the country’s power needs.

Anglo takes quick, dirty route to greener pastures

8 February 2021

The miner may dump its African coal unit, worth maybe $1 bln. A spinoff could add six times that sum to the $45 bln group’s value by luring eco-conscious investors. Yet it doesn’t cut global emissions, and Anglo American’s iron ore assets may soon feel the environmental heat.

Kaz Minerals minorities should quit while ahead

4 February 2021

The copper miner’s two biggest investors have increased their takeover bid to 3.7 bln pounds. The new offer is still not exactly a knockout, but Kaz Minerals warrants a discount given much of its value is tied up in one risky project. Minorities should take what’s on the table.

BHP’s dual-listing dilemma gets ESG nudge

3 February 2021

The spread between the $160 bln miner’s Aussie and UK shares is at its highest since 2011. Tax perks mean the equity Down Under should trade at a premium, but distaste for fossil fuels among British funds is helping widen the gap. It’s time to reconsider collapsing the structure.

Exxon-Chevron tie-up is right deal, tricky time

1 February 2021

A potential $350 bln mega-deal entices on paper with savings that could be valued as high as $20 bln. That would shore up both companies against oil’s darkening future. Exxon would need humility, though, and government a desire for a fossil fuel champion. Both are huge hurdles.

Retail silver punt brings real-world distortions

1 February 2021

The metal’s price leapt more than 11% to an eight-year high after online investors gave it the GameStop treatment. Unlike gold, consumption of the commodity is mainly driven by industrial usage. Volatility has potential for global consequences. It may also be harder to regulate.

Guest view: Voluntary carbon markets carry risks

21 January 2021

Surging demand for carbon credits is a positive sign of private sector interest in addressing climate change. But it makes no sense to scale up voluntary markets if it’s not clear what these traded commodities actually represent. Or how they will help meet global climate goals.

Russian mining IPO comes with sanctions noise

21 January 2021

Nord Gold is planning a $5 bln listing in London, the WSJ reports. Severstal billionaire Alexey Mordashov only has a minority stake, but his sons own most of the rest. Investors need to consider the risk that the new U.S. administration decides to take a tougher line on Moscow.

Glencore unearths copper-bottomed Zambian lifeboat

19 January 2021

The miner is exiting the African state by lending it $1.5 bln to buy its Mopani stake. Linking repayment to the mine’s future copper revenue cuts Glencore’s risk. Lusaka’s bulging debt pile, and its history of disastrous state ownership, gives taxpayers less reason to celebrate.

New Rio Tinto boss has Mongolian bullet to bite

18 January 2021

Atop Jakob Stausholm’s to-do list is sorting out the miner’s troubled $10 bln Oyu Tolgoi copper project. Satisfying Ulaanbaatar, pushy hedge funds and minority shareholders at once will be impossible. Raising equity and reworking a sticky loan structure are the least-bad options.

Russia’s wheat tax scrapes bottom of policy barrel

22 December 2020

Fiscal conservatism and administrative issues make it tricky for Moscow to support citizens via European-style furloughs. Its Plan B, a levy on wheat exports, is supposed to limit domestic food price inflation. But in doing so it will probably undermine a key Russian industry.

Rusal’s Deripaska discount makes partial return

21 December 2020

The aluminium group’s Hong Kong shares fell after a Bloomberg article claimed former controlling shareholder Oleg Deripaska still exerts influence. Rusal and holding company En+ deny that he does. So far, investors are not taking fright like they did in April 2018.

Ominous iron ore seam opens in Aussie trade row

18 December 2020

Chinese state buyers are griping about how the steel ingredient is priced as officials Down Under debate an export tax. Beijing already has targeted wine and other imports. The idea that miners BHP and Rio might get dragged into the spat can no longer be discounted.

Rio’s new CEO reflects its lack of wiggle room

17 December 2020

Finance director Jakob Stausholm is the surprise choice to lead the $126 bln miner. Rio’s self-imposed difficulties in Mongolia and Australia meant an outsider might have been preferable. But given Rio may feel the need to soon replace its chairman, continuity is also important.

Rio Tinto’s CEO search just got even harder

10 December 2020

A scathing government report over the Australian miner’s destruction of Aboriginal sites calls for sweeping changes. It portends a long slog to repair the $120 bln company’s reputation. Corporate governance and climate issues add to the daunting challenges concerning growth.

Hitachi unit buyout requires steely resolve

8 December 2020

KKR and Bain are among the suitors for the Japanese conglomerate’s $6 bln metals business. The company has fallen on especially hard times during the pandemic. It will take a big recovery and then some to generate a healthy return on the deal. A carve-up may even be in order.

Glasenberg-less Glencore is surprise green champ

4 December 2020

Gary Nagle is the miner’s new CEO. The South African inherits a different firm to the one compatriot Ivan Glasenberg led. Running down coal mines to hit zero CO2 emissions by 2050 and boosting copper and cobalt pitches Glencore as an unlikely centrepiece of the green transition.