Mining

Rio’s caution may benefit shareholders

2 Feb 2006

That conservative call seems well placed. The mining giant's $5bn buyback and dividends show it is less bullish about the commodity cycle than its peers.

Gold at $500 no longer an inflation hedge

2 Dec 2005

Many investors hold the precious metal to protect themselves against rising inflation. However, the recent spike has driven the gold price above its longterm relationship to the inflationadjusted dollar.

Barrick digs deep with $9.5bn Placer bid

31 Oct 2005

The unsolicited deal, if consummated, would create the world s largest gold miner. But it s already producing coal dust for Barrick shareholders, and the fight has barely begun.

Anglo takes first step on road to value

26 Oct 2005

The UKlisted miner is rethinking the future of assets that currently deliver a quarter of its profits. The shift is overdue, but welcome. If Anglo American can actually live up to its potential, the initial positive share price reaction doesn t go far enough.

Inco sidelines Xstrata with Falconbridge bid

11 Oct 2005

Xstrata thought it had the Canadian miner in the bag when it bought a stake. This agreed C$13bn deal puts the Swiss miner on the back foot. Xstrata might struggle to overcome the C$350m in synergies and massive breakfee without a big rights issue.

Kazakhmys plans £2.5bn London listing

27 Sep 2005

The Kazakh copper miner is floating 26% of its shares. It is a lowcost producer, and copper is booming. But it comes with the risks of an autocratic government and a listing in London cannot take that away.

BHP Billiton goes for growth

24 Aug 2005

The Londonlisted miner plans to return less cash to shareholders this year than last, even though it has grown profits by 85%. CEO Chip Goodyear also plans to raise capital expenditure by 40% for the second year running. He seems to believe boom conditions will last.

Xstrata buys 20% of Falconbridge for C$2bn

15 Aug 2005

The Swissdomiciled miner has bought the stake from longterm seller Brascan without paying a premium. It's a cheap option over good assets. Mick Davis, Xstrata s ambitious chief executive, has learned from his failure to get WMC. Falconbridge will not escape so easily.

Only bankers win in Harmony saga

8 Aug 2005

The South African miner's giantkilling bid for Gold Fields didn't come off but it sure was expensive. Both sides made losses. Harmony's, though, are truly eyewatering. Its $90m of fees and capital losses are equivalent to 3% of its market value.

Mining cycle hasn’t peaked yet

4 Aug 2005

AngloAmerican s 43% increase in profits from operations is the latest sign of a booming industry. Coal is outperforming diamonds. Miners are scrambling to add supply. They will catch up with demand eventually, but not for at least two more years.

BHP Billiton gets WMC

3 Jun 2005

There was no last minute counterbid, so the Australian miner s shareholders rushed to accept the A$9.2bn ($6.9bn) offer. BHP paid a high price, but the mining giant can afford it. And if this metal upcycle proves strongerforlonger, the deal will look clever.

BHP Billiton makes A$9.2bn bid for WMC

8 Mar 2005

The Australian giant has outbid Xstrata by 12%, enough to get tentative approval from WMC. Xstrata has given up. BHP will regret this expensive bid unless metal prices have reached a new high plateau rather than merely being near a cyclical peak.

Xstrata turns up heat on WMC

2 Mar 2005

The UKbased miner has made its A$8.4bn hostile offer for the Australian competitor unconditional. That is daring. It is trying to force its way in at a belowmarket price. The aggressive strategy is in the Xstrata tradition, and might well work.

Hearing date dooms Harmony bid for Gold Fields

28 Feb 2005

But the $5bn allshare offer was always a stretch. Moneylosing small companies tend to find obstacles when buying profitable bigger ones. Regulatory approval will not come before midMay. But by then the offer could loose the support of Norilsk, which owns 20% of Gold Fields. Regulatory approval won't come before May. By then Norilsk, the Russian miner which owns 20% of Gold Fields, may no longer support the bid.

Iron ore price hikes likely to be short-lived

24 Feb 2005

The 71.5% hike in a benchmark iron ore contract reflects an unexpected rise in demand. But the situation is less alarming than it appears. Prices are likely to fall back next year as new capacity hits the market.

Xstrata yields to invisible pressure

2 Feb 2005

The UKlisted miner has raised its offer for WMC by 13% to A$8.4bn. The market had rejected the first bid, despite lacking any alternative. WMC shareholders are still hoping for more. But the shadowboxing is probably over. From this level, a counterbid is unlikely.

Moscow talks unlikely to end Gold Fields standoff

7 Jan 2005

The conversations cannot be easy. Gold Fields, Harmony and Norilsk all have good reasons to distrust each other. But they are all also under strong pressure to find a peaceful solution. That requires someone to abandon an entrenched position. The Harmony bid for Gold Fields is out of the money. And Norilsk must not be too happy with its ally. So it wants to talk. Gold Fields is willing to listen, because it does not like having 32% of its shares in hostile hands. But there is no obvious alternative.

Xstrata tries to crush hope for better WMC offer

10 Dec 2004

The Swissbased miner s threat to lower its A$7.6bn ($5.6bn) offer looks like bluff. But WMC shareholders may not find a better deal. The Australian miner s defence is not persuasive. And no others bidders have emerged.

Gold Fields troubled after Iamgold deal rejection

8 Dec 2004

Its strategy is discredited, and it faces two big hostile shareholders. There is no easy way forward. It could try to sell its international assets and buy out the dissidents. Or it could just tough it out, maybe with new management.

Harmony finds Gold Fields an elusive target

30 Nov 2004

The South African miner only received 10.8% of Gold Fields' shares in its early settlement offer. And they can't be voted. Gold Fields might get away with its Iamgold transaction. But even if it doesn't, Harmony's offer looks likely to fall short.