Alcoa risks overreach in bid for new relevance 9 Mar 2015 A $1.5 bln swoop on titanium producer RTI is the U.S. aluminum giant’s latest move away from base metals towards more profitable auto and aircraft materials. Promised synergies cover the 50 pct premium on offer, but the slide in Alcoa’s shares suggests investors are skeptical.
Cheap oil highlights multifaceted resource curse 24 Feb 2015 Commodities-dependent nations got more bad news, as BHP warned on iron ore prices. To survive, many will need to turn their economies upside down. Resources prevent long-term strategies, dull the good and bad governance gap and ultimately cloud voters’ views of who’s responsible.
Freeport-McMoRan has yet to fully settle M&A tab 15 Jan 2015 The U.S. miner’s $138 mln check to resolve a lawsuit over conflicts-riddled deals sets a precedent that gives shareholders more clout. It should turn up the heat on Chairman James Moffett, whose cross-holdings factored in the case. Better governance would enhance the big payout.
Rio Tinto can dig in against Glencore 7 Oct 2014 The miner’s shares leapt after it admitted rebuffing the commodity trading giant. Yet the timing is opportunistic, as iron ore slumps, and a $160 bln merger looks suspiciously like a takeover on the cheap. So Rio’s board can justifiably demand a big premium, or no deal.
Glencore Rio takeover would be harder than Xstrata 7 Oct 2014 Ivan Glasenberg’s miner-trader is stalking $90 billion iron giant Rio Tinto. Though there’s some logic to a deal, Glencore will be loath to pay much of a premium, and the clash of cultures would be extreme. Rio is also in a better position to resist than rival Xstrata in 2012.
Mining short-termism will prolong iron ore misery 6 Oct 2014 The commodity’s price is slumping due to oversupply. Group discipline among producers could stop the rot. Instead, BHP Billiton plans to squeeze more out of existing facilities. Others may do the same. Unfortunately, offering shareholders jam today may mean harder times tomorrow.
AngloGold spinoff faces headwinds 10 Sep 2014 The bullion producer wants to carve out non-South African assets into a London listing. This could attract investors wary of problems in the group’s domestic business. But gold has lost its shine and miners have a reputation for wasting capex. It may be a tough investment story.
Glencore’s capital promises are those of a trader 20 Aug 2014 The $80 bln trader-miner is returning $1 bln of cash and has set out a framework for capital management, with wiggle room. That makes sense – miners need flexibility on M&A and capex. Glencore’s owner-manager ethos gives credibility to its broad commitment to shareholder returns.
BHP spin-off won’t appeal to commodity players 19 Aug 2014 The mining giant plans to hive off some assets into a new company. The prices of nickel and aluminium, two of its key products, are rising. Investors could use the new firm to follow the trends. But they probably won’t. There are purer plays and better-diversified producers.
Anglo may struggle to make clean platinum break 21 Jul 2014 The UK-listed miner’s South African unit wants to sell high-cost mines that account for a quarter of platinum production and half of the workforce. It’s a sensible move for Anglo, but the politics are fraught. If the buyer gets into trouble, Anglo might end up back on the hook.
Thornton unleashes Wall Street tactics on Barrick 16 Jul 2014 The gold group’s chairman has axed the CEO and handed the reins to two co-presidents. It’s similar to how Goldman Sachs operated when he was there. It also echoes Citi chair Mike O’Neill’s power play in ousting Vikram Pandit. Barrick needs a refresh, but the strategy has risks.
Glencore goes for more than a fig-leaf chairman 8 May 2014 Tony Hayward’s appointment provides an acceptable resolution to the miner’s longstanding search. He has a big incentive to reinvent himself as a corporate leader. And the list of credible candidates who would have the support of Glencore’s owner-manager Ivan Glasenberg is short.
Gold miners ominously prospect for M&A treasure 23 Apr 2014 The Newmont and Barrick talks came amid a bidding war for the Canadian Osisko. That’s one deal short of a trend. A 30 pct drop in the bullion price means those with higher-valued shares may spy a chance to nab production on the cheap. The logic behind such digging has holes.
Barrick’s empire building deserves skeptical eye 21 Apr 2014 The Canadian giant is reportedly considering a $33 bln deal with Newmont. Barrick’s outgoing chairman said “hubris” drove past deals. Ex-Goldmanite John Thornton, who takes the chair next month, faces a big hurdle in convincing shareholders this won’t be another value-destroyer.
Blythe Masters could chair Glencore 3 Apr 2014 The derivatives mastermind is leaving JPMorgan’s commodities unit after its sale to Mercuria. Her next stop could be Glencore. The trading house’s all-male board looks anachronistic. It needs a chair to keep Ivan Glasenberg in check. And her banking nous would be useful.
BHP spinoff would swap one problem for another 1 Apr 2014 The miner wants to simplify its portfolio, possibly by demerging less attractive assets. But it’s not certain this would create shareholder value, and the move could cost financial and operational synergies. BHP may be better off patiently selling down as opportunities arise.
Weir may struggle to extract a merger from Metso 1 Apr 2014 The Scottish engineer has tentatively bid for its $5 bln Finnish rival. A merger makes sense. But Metso has just shed a problem unit, has clear self-help plans, and is at a cyclical low thanks to its focus on mining. With two powerful backers, the Finns can afford to be patient.
Copper and iron ore roil China capital controls 12 Mar 2014 The fear that metal-backed Chinese financing tricks won’t work is pushing down copper and iron ore prices. The drops only encourage further sales. China’s capital controls are supposed to ward off such vicious cycles, but in this case they have probably exacerbated them.
Beautiful friendships with activists ending fast 7 Mar 2014 An uppity investor challenging laggard miner Cliffs rejected an offer of two board seats. Instead, Casablanca Capital is forging ahead with efforts to install six directors and replace the CEO. Companies have been listening more to vocal shareholders, but those times may go by.
Freeport-McMoRan shows pay votes have some bite 4 Mar 2014 The copper miner is slashing base salaries for top execs including Chairman James Moffett after shareholders opposed pay practices twice in three years. Freeport needs to do more to put governance on a sound footing. But the changes show say-on-pay isn’t a toothless tiger.