Commodities

Aussie gold miners make deal wishes come true

6 October 2020

Northern Star is acquiring smaller rival Saracen for $4.1 bln. They’ll share a heap of promised synergies without a premium to pay for using a structure touted by an industry shareholder group. The buyer’s track record also should mitigate some typical merger concerns.

Copper bulls may bust through China shop

5 October 2020

The metal’s price has jumped around 40% since March, hitting multiyear highs. Increased Chinese demand, tight supply and a weaker dollar played a part. Higher inventories could bring a reversal. But with a boom in renewable-energy infrastructure, optimists have the right idea.

Corona Capital: Kraft Heinz, U.S. poverty

15 September 2020

Concise views on the pandemic’s corporate and financial fallout: The food giant is boosting advertising outlays, even as it continues cutting costs; and the poverty rate in the United States hit a low at the end of 2019, according to new data, only to run into a Covid reversal.

Rio Tinto rebellion sets new ESG bar

11 September 2020

CEO J-S Jacques and two deputies will step down after an outcry over the miner's destruction of Aboriginal heritage sites. Aussie shareholders led a charge that may inspire other socially conscious investors. Bosses and boards hiding behind strong returns have been given notice.

Rio Tinto board can choose CEO – at expense of ESG

10 September 2020

Many shareholders want harsher punishments for the mining giant’s destruction of Aboriginal heritage sites. Robust returns are one reason to stop short of axing boss Jean-Sebastien Jacques. If he stays, though, Rio’s responsible investing credentials will be deeply discounted.

De Beers’ rocks are in an increasingly hard place

3 September 2020

Even before Covid-19, the Anglo American-owned diamond giant’s lunch was being eaten by Russia’s Alrosa and cheaper man-made stones. De Beers still has access to Botswana’s high-quality gems. But lockdowns are blunting the edge its quirky sales method has enabled.

Corona Capital: Davos delay, Political TV ratings

26 August 2020

Concise views on the pandemic’s corporate and financial fallout: The World Economic Forum’s annual winter meeting becomes a summer gathering; and in the U.S., the Democrats’ online spectacle leads TV ratings over the Republicans’ more traditional convention.

Fashion can bear the costs of virtue cotton

25 August 2020

Most of China’s crop comes from the persecuted Uighurs’ home region. Forced labour may taint some of that, but clothes makers do not yet trace their complex supply chains back to the farms. Scrutiny from politicians and investors means careful sourcing makes financial sense.

Mali’s gold miners are used to political upheaval

20 August 2020

President Keita quit after soldiers seized him at gunpoint. His exit from the helm of a hollowed-out Saharan state changes little for foreign firms like Resolute Mining. But with no clear government and Islamists controlling half its territory, Mali is a geopolitical problem.

Glencore’s Glasenberg shows odd dividend caution

6 August 2020

The gunslinging boss of the big miner-trader is holstering this year’s $2.6 bln dividend. The company blames coronavirus uncertainty, but Glencore’s cash flow is holding up and metal prices are mostly recovering. The South African may be bracing for a hefty U.S. corruption fine.

China’s economic recovery looks squiggle-shaped

30 July 2020

Budweiser, KFC and Rio Tinto point to reviving sales in beer, fried chicken and steel. Industrial profit is up too. But the rebound is unevenly distributed across sectors and regions, and employers are still shedding jobs. As pent-up demand is sated, the optimism might fade.

Crisis forces Australia and China closer

21 July 2020

Despite diplomatic tension, miners BHP and Rio are cashing in on Beijing's infrastructure stimulus. Supply disruptions in Brazil and weak global demand have left the two trading partners even more dependent on each other. Politics can’t change facts under the ground.

Gold’s enduring high gives miners room to be bold

10 July 2020

Bullion has breached $1,800 per ounce amid fears of a viral surge. Mine bosses’ enthusiasm to develop lower grade reserves that only make sense at exalted price levels is usually dampened by worries of a sharp snapback. An extended Covid-19 tail means more will take the chance.

Tesla kills three birds with one Congolese stone

17 June 2020

The electric car giant is buying 6,000 tonnes of cobalt a year from Glencore’s mines in the chaotic African state. With China corralling 69% of the metal’s production, Elon Musk gets to guarantee supplies while minimising child labour worries. It may even squeeze Western rivals.

Oil prices are stuck in a narrow tunnel

12 June 2020

After spiking above $40 a barrel, crude has now slumped again. Voluntary and enforced supply cuts have put a floor under the market after April’s shock falls. But the risk of a second coronavirus wave, and the difficulties of coordinating production hikes, point to a ceiling.

Norilsk Nickel hits investors when they’re down

11 June 2020

The miner’s biggest shareholder Vladimir Potanin wants to cap 2020 dividends at 25% of forecasts. ESG-conscious foreign investors will have blanched after it leaked 21,000 tonnes of fuel. They’ll be even less keen on cutting payouts by a lot more than the apparent cleanup costs.

Thyssenkrupp’s ‘bad bank’ needs speedy euthanasia

19 May 2020

The ailing German conglomerate is carving out loss-making units it can either sell or shut down. Such frank self-assessment is a solid step towards recovery. But with 2020 losses set to dwarf last year’s 400 mln euros, the quicker they’re put out of their misery the better.

Corona Capital: Travel companies, Oil

18 May 2020

Concise views on the pandemic’s corporate and financial fallout: Travel companies have sunnier days; oil traders have triumph of hope over experience.

New normal will demand new gold-standard portfolio

6 May 2020

Parking 60% in equities and 40% in fixed income is the traditional balanced approach. That’s off kilter if bonds are going to offer less and less income and are sometimes almost as volatile as shares. The solution may be to hold more stocks and cash, and possibly gold, too.

Oil car crash highlights Aramco investors’ airbag

6 May 2020

The Saudi crude giant’s shares have fallen less than those of western peers. Shareholders’ scope to avoid the dividend cuts now hitting oil majors is one reason why. It helps that Riyadh may be able to borrow its way out of the crisis rather than have to drain its cash cow.