Don’t mourn dying Vale-Xstrata deal 11 Mar 2008 It's hard to see how the Brazilian miner can overcome the obstacles to making a compelling offer for its UK rival. But unlike BHP Billiton's synergyled bid for Rio Tinto, this isn't a deal anyone really needs.
Xstrata minorities sidelined in $87bn Vale merger 28 Feb 2008 The Brazilian miner has offered $87bn for its UK rival. But Swiss trader Glencore, Xstrata s biggest shareholder, has balked at the terms. It s a cautionary tale of what happens to other investors when a big shareholder pursues its own agenda.
BHP faces don’t-ask-don’t-tell dilemma 14 Feb 2008 The mining giant s $150bn bid for rival Rio Tinto will destroy value if BHP s synergy targets are to be believed. But since the real spoils should be higher, BHP could arguably offer more. Snag is, talking too loudly about excess profits could backfire on both sides.
Indonesia’s brinkmanship with Newmont may backfire 14 Feb 2008 It set an unrealistic deadline for the mining giant to sell a 10% stake in a local mine. That imperils its attempt to portray itself as investmentfriendly. And with economic clouds gathering in the region, Indonesia's ultimatum might do it more harm than good.
Vale makes lacklustre pass at Xstrata 12 Feb 2008 The Brazilian miner's $76bn cashandshares comeon to its UK rival was easy to reject. Vale's stock is a depreciating currency, and government meddling makes its value uncertain. For now, neither side should be rushing to do a deal.
Rio rightly rejects BHP sweetened bid 6 Feb 2008 The UK miner has wisely rebuffed BHP Billiton's raised $150bn offer. The battle still has months to go, and there s much uncertainty over how China will play its hand. Rio can probably extract more.
China in driving seat after $14bn Rio raid 1 Feb 2008 Chinalco s audacious move, in tandem with US miner Alcoa, gives it a 9% stake in the UK miner. It s not enough to skewer rival BHP s bid yet. But it dramatically changes the rules of the game. The $270bn tieup now has a Chinese kingmaker.
Chinalco should be scrutinised like a SWF 1 Feb 2008 If the Chinese holding company behind the $14bn share raid on Rio Tinto was a sovereign wealth fund, it would top the BV SWF Risk index. It lacks transparency, takes controlling stakes in the semistrategic mining industry and is bankrolled by the Chinese government. Not good.
Lehman scores coup with biggest-ever dawn raid 1 Feb 2008 The US investment bank snaffled up a $14bn stake in Rio Tinto overnight in a swoop that involved 200 insiders without a word leaking out. After heavy investment but little apparent return so far, Lehman's lagging franchises in Europe and Asia should get a boost from the manoevre.
Vale shouldn’t rush into Xstrata deal 21 Jan 2008 The Brazilian miner may find a willing bride in its £31bn rival. But a deal at current levels could be expensive. Since BHP Billiton made its megabid for Rio Tinto, other miners are rightly scouting for options but Vale should wait for the dust to clear.
Russian oligarchs head for gold mine showdown 20 Dec 2007 With gold prices at record levels, Russian billionaires are scrambling to snap up the country's gold assets. The showdown is likely to come in March, with the auction of Siberia s giant Sukhoi field. With everyone from Abramovich to Deripaska involved, this one could be messy.
Rio’s price games alone won’t win it independence 19 Dec 2007 The mining giant is cleverly taking advantage of a quirk in the iron ore market to jack up its own value. But pouring iron into the spot market carries risks and won t defend Rio from rival BHP s unwelcome $150bn approach.
Rio put up or shut up won’t put much pressure on BHP 11 Dec 2007 Sure, the clock is now ticking on the $150bn bid battle. But given the need for antitrust approval, it is ticking slowly. And though BHP will soon have to make its lowball bid official, there's little reason to bump it up yet.
Is Xstrata on the block? 11 Dec 2007 Not exactly. The Londonlisted miner would probably be delighted if it could engineer a bidding war between Anglo American and Brazil's Vale. But it may be tricky to get both putative bidders in the ring. And it would be embarrassing if no one showed up for an auction.
Rio-BHP deal splits steel industry 6 Dec 2007 China's big steelmakers are vexed at dependency on a monopolistic iron ore producer. But others like Arcelor Mittal, Tata, Evraz and CSN have their own iron ore and are relishing the prospect of less fortunate brethren being disadvantaged.
Abramovich goes local for gold 5 Dec 2007 The Russian oligarch pays $400m for 40% of a gold mine in his home region of Chukotka, where he is the governor. This is not an altruistic investment. Like other Russian billionaires, Abramovich wants to take part in the industry s likely consolidation.
When is a takeover bid not a bid? 4 Dec 2007 When it s a preconditional proposal, of course. Under UK rules, wouldbe bidders can virtually go hostile without even making an offer. And potential bids for targets such as Rio Tinto and S&N can drag on indefinitely. Dawdling, though, could prove a foolish tactic.
Xstrata should show it knows when to sell 3 Dec 2007 The tieup of Rio Tinto and BHP could trigger a wave of mining consolidation. Xstrata and AngloAmerican are an obvious pair. But prices are pretty high. Xstrata s boss, Mick Davies, bought when the cycle was low. Now could be a good time to do the opposite.
BHP should pay for Rio’s Aussification 28 Nov 2007 BHP doesn't just want to take Rio over it wants to take it down under. There's no real harm in that. But Rio should be able to extract better terms given the huge political kudos to BHP in creating an even bigger Australian resources champion.
Rio Tinto defence focuses on value 26 Nov 2007 The mining giant has made a robust case that it's worth more than rival BHP s $150bn allshare bid suggests, while leaving the door open for a tieup. That s the right way for Rio to defend itself though in eschewing conservatism, it risks future disappointment.