Cash calls leave issuers with unfinished business 11 Dec 2015 Lonmin and Standard Chartered’s shares have both slipped further than theory might suggest since issuing a combined $5.5 billion of new stock. That’s logical at miner Lonmin, which now has a big stock overhang. For lender StanChart, it looks like a vote of diminished confidence.
Glencore deserves credit for lessons learned 10 Dec 2015 The Swiss miner and commodities trader will cut debt even faster than it vowed in September. Planning for copper prices below current levels is wise. Chief Executive Ivan Glasenberg can’t control China’s demand for metals, but at least his balance sheet now reflects reality.
Anglo American is facing a crisis of confidence 8 Dec 2015 Collapsing commodity prices led the coal, copper and diamonds miner to suspend its dividend on Dec. 8. It’s also slashing jobs and investment. Big London-listed miners including Anglo American have lost 47 percent of their market value this year. Yet things could still get worse.
Rio Tinto capex cuts won’t stop race to the bottom 8 Dec 2015 The Anglo-Australian miner is cutting spending by $1.5 billion to save cash amid the rout in commodities. But it’s not the same as slashing production – which is what’s needed to bring metals prices back up. The current strategy should make shareholders nervous.
BHP’s Brazil disaster points to dividend cut 30 Nov 2015 The Anglo-Australian miner needs to conserve cash to pay for the Samarco dam disaster in Brazil. Forecast earnings already fall short of the $6.5 billion it paid shareholders last year. BHP would be wise to get ahead of the curve and scrap its commitment to progressive payouts.
VW’s dieselgate may be Lonmin cash call decider 19 Nov 2015 The South African platinum miner wants to raise $407 mln to fund restructuring. The 46-for-one rights issue means investors that fail to subscribe will be diluted almost out of sight. Much of the investment decision rests on demand for catalytic converters as VW cleans itself up.
Lonmin buys time but platinum is bigger problem 9 Nov 2015 A $407 mln rights issue at an eye-popping 94 pct discount will allow the South African miner to postpone a day of reckoning with its creditors. Lonmin has bought itself a reprieve, but this won’t fix the platinum price, or help it avoid another strike at its Marikana mines.
Brazil dam disaster tests BHP’s mega-mining model 6 Nov 2015 Investors ditched BHP Billiton shares after a jointly owned dam failed in Brazil. While mining is much safer than it used to be, such catastrophes are an inherent risk. A big balance sheet and diverse income streams mean it can absorb the financial consequences better than most.
Glencore getting smaller but maybe not wiser 13 Oct 2015 The embattled commodities trader is hacking back production in a bid to reduce its debts. The latest cut could be a fifth of its copper production. Companies with strong, single-minded leaders often choose to shrink rather than change after crisis hits. That leaves them at the mercy of markets.
Freeport rejig only partly solves credibility gap 6 Oct 2015 Jim Bob Moffett’s energy group is bowing to pressure from activist Carl Icahn. It’s ditching board seats and a controversial management structure and may hive off the oil and gas unit it bought in a bad 2012 deal. Like Chesapeake, though, more fundamental changes may be needed.
Glencore $2.5 bln issue shows defiance in distress 16 Sep 2015 Suspected short-sellers and hedge funds were underweighted in the Swiss trading group’s equity raising. While the wafer-thin discount means those left out aren’t much diluted, it’s a pointed reminder that there’s plenty of room for things to get personal at owner-managed companies.
Glencore model is battered but not broken 14 Sep 2015 Ivan Glasenberg’s mining creation has been wrong-footed by commodity prices, China, and shareholder worries about debt. The pressures may undermine Glencore’s premium valuation and its penchant for doing big deals. Its mix of trading and mining, however, is logical and robust.
Glencore’s giant cash call puts squeeze on rivals 7 Sep 2015 The Swiss trader’s $10 bln debt reduction plan eases balance sheet jitters by cutting net borrowings by a third. Investors get stability at the expense of their dividend. But the move offers a grim view of commodity prices that undercuts the investment case for the whole sector.
Freeport-McMoRan leaves Carl Icahn lots of targets 28 Aug 2015 Big cuts in spending and staff sent the struggling miner’s stock soaring – just before the activist revealed an 8.5 pct stake. The pre-emptive strike won’t be enough to satisfy the feisty billionaire. High debt and low commodity prices suggest he has asset sales in his crosshairs.
Miners’ dividends are a fragile commodity 25 Aug 2015 BHP Billiton has raised its payout even as prices fall. That helps win investor support for its aggressive iron ore production strategy. Yet across the sector, funding generous payouts will become tough unless supply and demand rebalance. There is little to suggest they will.
Glencore tripped up by faith in rational markets 19 Aug 2015 The commodity trader’s earnings have disappointed as copper and coal have tumbled. Anticipating the market is getting harder because both rivals’ behaviour and Chinese demand for raw materials are even more unpredictable. Glencore is thus focusing on what it can control: cash.
Rio Tinto is winning in dirty ore wars 6 Aug 2015 The Australian miner’s earnings from iron ore more than halved in the first half, yet production is booming. Low costs give Rio and big peers ammo to drive others out of the market as metal prices crater. It’s a brutal demonstration of market forces, and geological good luck.
Molycorp unearths definition of a commodity 1 Jun 2015 The rare-elements miner missed an interest payment, which could herald a descent into bankruptcy protection. Since peaking at $6 bln in 2011, Molycorp’s market value has collapsed 99 pct. It’s a classic case of investors confusing a demand surge, tight supply and real scarcity.
Rio, BHP will show market trumps Aussie politics 19 May 2015 Prime Minister Tony Abbott might want to do something about the fiscal pain caused by slumping iron ore prices. But he won’t get far. He can’t tell the big miners to abandon their “saturate and dominate” strategy. The tactics are bang in line with Australia’s free-market ethos.
Mongols and miners bow to market reality 19 May 2015 Rio Tinto and Mongolia have ended a two-year stand-off on the giant Oyu Tolgoi mine by both giving ground. The nomad state now has a fix for plummeting investment inflows. While the miner’s hand looks stronger, falling metals prices have made civility the better part of valour.