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.
Glencore resilience vindicates hybrid model 4 Mar 2014 The commodity trader’s revenue was flattish in 2013, despite weaker metals prices. Leverage will ease this year as capex falls and synergies from the Xstrata deal kick in. Glencore isn’t immune to falling prices but its integrated trading and mining model looks ever more attractive.
Miners are finding that disinvestment pays 20 Feb 2014 For an industry wrestling with the end of a once-in-a-lifetime demand surge, big miners aren’t faring badly. Prices are still high, and results at Rio Tinto and BHP Billiton show austerity working. Supply trends favor lower ore prices, but diggers may reap big profits for a while yet.
Miners make a tempting but risky activist target 28 Jan 2014 A hedge fund’s call to break up struggling iron ore producer Cliffs suggests U.S. mining may be a fertile sector for pushy investors, just as oil exploration has been. But long paybacks and gyrating commodity prices make even good strategic ideas tough to turn into timely profit.
Proof of potash cartel revival will be in pricing 27 Jan 2014 New Kremlin-backed owners at Russia’s Uralkali, the world’s biggest potash producer, appear open to reviving a marketing alliance with Belarus. But it’s far from a done deal. Even if the cartel returns, it’s unlikely to survive long once BHP Billiton enters the business.
Gold’s would-be king attempts Midas deal touch 13 Jan 2014 Canada’s Goldcorp is stalking Osisko in a bid that could push it past Barrick as the world’s biggest miner of the yellow metal by market value. The C$2.6 bln price looks high, but Goldcorp is using its own richly valued shares. It’s a solid gold move against stumbling rivals.
Indonesian mineral export ban is mistimed idealism 9 Jan 2014 The mining ministry wants to delay a proposed ban on shipping raw commodities by three years. But exports of nickel and bauxite could still be blocked immediately. Nudging miners to invest in domestic processing has merit, but barring sales could widen the trade deficit.
Mongolia gives a little in investment tug-of-war 7 Oct 2013 As Rio Tinto thrashes out terms for its stalled copper project, a promise of equal treatment for foreign investors bodes well. Mongolia’s rich resources mean overseas groups will tolerate occasional bad behaviour as long as they mostly get their way. That now looks more likely.
Xstrata 2.0 is a bet that other miners are wrong 30 Sep 2013 Former Xstrata boss Mick Davis has raised $1 bln from commodity trader Noble and buyout fund TPG to build a new mining group. The idea is that the industry’s current conservatism provides opportunities. Even if that’s right, Davis won’t easily duplicate Xstrata’s high returns.
Glencore digs deeper for huge Xstrata cost savings 10 Sep 2013 The miner-trader expects $2 bln of cost savings next year from its takeover of Xstrata - four times an initial synergy target. That goal was clearly undercooked. The new figure also reflects boss Ivan Glasenberg’s purge of former Xstrata staff and mines.
Belarus-Russia spat clears way for potash plunge 30 Aug 2013 A diplomatic row following Belarus’ arrest of a top Russian potash executive dashes chances that the former Soviet producers’ alliance can be revived. The rival North American cartel won’t survive much longer. Farmers and consumers should cheer at the prospect of lower prices.
Big miners adjust, slowly, to austere times 20 Aug 2013 Glencore and BHP Billiton are on opposite sides of the mining spectrum. But both the trader and the low-cost producer are girding for a long, slow period with goodwill writedowns and leaner investments. The strategy is right, but shareholders will have to wait for rewards.
Eike Batista ports bailout looks best of bad bunch 15 Aug 2013 The Brazilian tycoon’s ceding control of LLX at a big discount. But at least the ports operator looks viable. Batista’s oil explorer just lost $2 bln, his mining asset’s a mess and other holdings are little more than start-ups in a weak economy. It looks downhill from here.
Rio’s asset sale woes another case of bad timing 8 Aug 2013 The miner overpaid on acquisitions in the boom years. Now that the cycle has turned, planned sales - of a Canadian iron-ore mine, the diamonds business and some duff aluminium smelters - have stalled. The delay is not a disaster, but shows how vital timing is to miners’ returns.
BHP could be long-term winner in potash 6 Aug 2013 The end of a cartel complicates BHP’s decision about building a big Canadian potash mine. It should press on. The project will make BHP the low-cost producer in a strategic industry. Weak prices might hurt for a while, but should eventually reduce a destabilising supply surplus.
Too early to cheer potash cartel’s death 30 Jul 2013 The world’s biggest potash producer, Russia’s Uralkali, has abandoned a cartel that set prices of the key fertiliser, sending the sector’s shares plunging. If the pact is truly dead, billions of people will enjoy cheaper food. But there’s a risk the split won’t last.
New Anglo American mantra: be boring 26 Jul 2013 The miner’s departed boss Cynthia Carroll was big on vision, but Mark Cutifani, her replacement, wants to improve performance asset by asset. The new strategic plan is appropriately dull. If a more disciplined Anglo makes fewer mistakes, it’ll finally be getting somewhere.
Xstrata 2.0 works if Mick Davis keeps the formula 18 Jul 2013 The entrepreneur behind Xstrata is mulling his next act. If the choice is between a new mining fund or another M&A vehicle, investors should prefer the latter. Davis the CEO has more chance of generating big returns in today’s tougher environment than Davis the fund manager.
New Bumi plan makes bad jam even worse 11 Jul 2013 Fresh proposals could see the Bakrie family bought out of the London-listed Indonesian coal miner by its chairman, Samin Tan. It’s far inferior to an earlier plan to cancel the shareholding. It would help investors, including Nat Rothschild, if Tan commits to sell down his stake.
S. African miners have few options in wage talks 11 Jul 2013 In a healthy industry, prices of goods should support the cost of decent wages. In South Africa’s mines, a toxic mix of deprivation, politics and geology creates underinvestment and angry workers. With the prices of key metals falling, it’s hard to see the dynamic changing.