Rio Tinto’s best is not yet good enough 3 Aug 2016 The Anglo-Australian miner has slashed debt but can't take its eye off the ball after posting its worst earnings in 12 years. No wonder Rio is trading at a discount to peers. New boss Jean-Sebastien Jacques is paying out dividends, but has his work cut out to win over investors.
Caterpillar gets harsh M&A lesson in Japanese 25 Jul 2016 The earth-moving giant made a badly timed push into mining with the near $9 bln takeover of Bucyrus in 2011. Now Japanese rival Komatsu has snared counterpart Joy Global for less than half that. Komatsu's longer-term view gives its dealmaking more chance of unearthing treasure.
India prizes fiscal prudence over corporate debt 23 Jun 2016 A share buyback by a state-owned miner and an auction of telecom spectrum suggests companies may have to borrow to help the government meet its deficit targets. New Delhi seems intent to meet its pledge to raise $23 billion for the state coffers - even if it upsets India Inc.
Bankers can learn from miners about culture change 15 Jun 2016 Rio Tinto, BHP and their peers have spent years improving their safety records. The finance industry can learn a thing or two from the way that miners have tried to clean up their act. Not least is the ambition to attain higher standards than absolutely required by the law.
Rio Tinto goes Genghis on the copper market 6 May 2016 By expanding its $5.3 bln Oyu Tolgoi mine in Mongolia, the miner hopes to ride an upswing in demand. Under-investment in new mines and declining quality could see the market in deficit by 2020. But there’s a risk that copper goes the way of iron ore, into a damaging supply war.
Prize diamond sales mask a less sparkly mid-market 6 May 2016 Three whopper gems will be auctioned by Sotheby’s and Christie’s, with one set to fetch $70 million. These hefty price tags give the diamond trade a misleading lustre. Slowing Chinese purchases and a supply glut mean the outlook for more mundane stones is far less dazzling.
BHP’s $44 bln Brazil lawsuit shows dangers of JVs 4 May 2016 Miners use joint ventures to get places they otherwise couldn’t. But sharing risk can go very wrong. Brazil wants to hit BHP Billiton and Vale with a huge claim for the Samarco mining disaster. It’s a bill neither can afford for a partnership neither really controlled.
Australian central bank comes to miners’ aid 3 May 2016 Cutting interest rates to an all-time low of 1.75 percent will weaken the currency and help stave off deflation. Reversing the Aussie dollar’s recent rise will help make miners Down Under more competitive. That offsets the risk of further heating up the country’s housing market.
Anglo American is winning race to cut debt pile 28 Apr 2016 The $1.5 bln the miner will raise from selling its Brazilian phosphate and niobium units is better than might have been expected. A multiple of 10 times EBITDA proves the company can still get a good price even in a downturn. Anglo is slowly but steadily sharpening its focus.
Anglo American’s pay mess is self-inflicted wound 22 Apr 2016 Over two-fifths of the mining group’s investors rejected Mark Cutifani’s pay in a non-binding vote. Anglo should be in investors’ good books: its CEO’s turnaround is working. But by offering a pay package that hedged the risk of it failing, the group shot itself in the foot.
Canada buys its way into Glencore’s sweet spot 6 Apr 2016 The Canada Pension Plan is to buy a 40 pct stake in the Swiss trader’s agricultural business. The financial returns, at first glance, look pedestrian. But the Canucks get access to Glencore’s wheeler-dealing skills, without having to share in its $26 bln group debt pile.
Rio Tinto new boss can end foolish price war 17 Mar 2016 Outgoing chief Sam Walsh cut costs and investment to leave the miner admirably lean. But he also boosted production, pushing down iron prices in the belief that rivals would go to the wall. They didn’t. His successor has a chance to copy the first strategy and ditch the second.
Iron ore rally is triumph of hope over reality 8 Mar 2016 Prices for the steel-making commodity may have rebounded. Imports into China increased last month and a new railway building spree could boost demand. But miners still can’t accurately forecast demand and haven’t learned their lesson on supply.
BHP admits dividend pledges and mining don’t mix 23 Feb 2016 The world’s largest miner slashed its interim dividend 74 pct and followed rival Rio in scrapping a “progressive” policy. About time. Promising payouts will only ever go up is daft in such a cyclical sector. Consistency matters less than safeguarding the balance sheet.
Unusual truce holds water in Aussie ports fracas 23 Feb 2016 Rival bidders Brookfield and Qube are mulling a joint $6.5 bln breakup of Asciano, the rail and container-terminals operator. It’s rare for M&A adversaries to make peace. But an armistice would sidestep competition and funding problems while ensuring no-one is left empty-handed.
Brazilian dam deal sped by mutual self-interest 17 Feb 2016 Dilma Rousseff is close to extracting $5 bln from Samarco Mineração for November’s busted river barrier that killed 17. The embattled Brazilian president needs a victory of sorts. Mine owners BHP and Vale can’t afford to have iron ore stuck in the ground. Tough times focus minds.
Rio Tinto maims but doesn’t kill a sacred cow 11 Feb 2016 The miner has scrapped its cherished progressive dividend policy as it warned of a tougher year ahead for global miners. It’s a smart move that gives Rio room to manoeuvre should prices dip again. But it isn’t changing its strategy of pumping out more iron ore into a downturn.
Sweeter Cairn bid is Vedanta’s least bad option 25 Jan 2016 Anil Agarwal’s Vedanta Resources is edging towards loan covenant limits. Bondholders are losing faith in the mining tycoon’s ability to tap buried cash and repay $8 bln of debt. The stress may force Agarwal to sweeten a deal to merge subsidiaries and simplify the group structure.
Chancellor: Best cure for low oil is low prices 21 Jan 2016 Having invested heavily, both mining and energy firms are struggling with oversupply and weak prices. New mining production from BHP and others will continue to weigh on commodities for years. But oil investment cuts set the stage for the next bull market in the black stuff.
BHP Billiton plays catch-up with $7 bln shale hit 15 Jan 2016 Plunging energy prices forced the miner to write down its U.S. oil and gas assets again. The non-cash charge is large but just brings BHP’s balance sheet closer to the outside world’s estimation. A bigger step would be to follow the market’s lead once more and slash the dividend.