Base Metals Archives - Page 24 of 97

Ferroglobe PLC GSM reported break-even adjusted earnings in the first quarter of 2024, beating the Zacks Consensus Estimate of a loss of 2 cents. The company posted earnings per share of 5 cents in the year-ago quarter.Including one-time items, GSM reported a loss of 1 cent per share in the quarter under review against earnings of 11 cents per share in the year-ago quarter.GSM’s revenues fell 2.2% year over year to $392 million in the quarter under review, owing to lower pricing in silicon metal and silicon-based alloys, partially offset by higher volumes. The top line beat the Zacks Consensus Estimate of $343 million.Silicon metal revenues in the first quarter were $168 million, up 4.4% from the prior-year quarter. The average realized selling price was down 27.5%, while total shipments increased 44% on a year-over-year basis.Silicon-based alloy revenues in the quarter under review were $112 million, down 17.3% year over year. The average realized selling price and total shipments of silicon-based alloys decreased 20.6% and increased 4.2%, respectively, year over year.Manganese-based alloy revenues in the quarter were $66 million, up 7.7% from last year’s comparable quarter. The average realized selling price declined 19% year over year, whereas total shipments improved 33%.

Ferroglobe PLC Price, Consensus and EPS Surprise

Ferroglobe PLC price-consensus-eps-surprise-chart | Ferroglobe PLC Quote

Operational Update

Raw materials and energy consumption for production was $257 million in the first quarter of 2024 compared with $200 million in the first quarter of 2023.Operating profit was $2.6 million in the quarter, a 94.4% drop from $44.5 million in the prior-year quarter. Adjusted EBITDA was $26 million compared with $45 million in the year-ago quarter. The adjusted EBITDA margin was 6.6% in the quarter under review compared with 11.2% in the prior year’s first quarter.

Financial Position

Ferroglobe ended the first quarter of 2024 with a total cash balance of around $160 million compared with $344 million at the end of the prior-year quarter. Cash flow from operations during the quarter was $198 million, up from the $135 million reported in the comparable period last year.GSM’s gross debt declined year over year to $81 million at the end of the first quarter, the lowest gross debt in its history.

Guidance

The company expects 2024 adjusted EBITDA to be $130-$170 million, up from the previously announced $100-$170 million.

Price Performance

GSM shares have gained 25.8% over the past year compared with the industry’s 15.8% growth.

Zacks Investment Research

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Zacks Rank

Ferroglobe currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Performance of Peer Stocks

Reliance, Inc. RS posted adjusted earnings of $5.23 per share in first-quarter 2024, down from $6.43 per share in the year-ago quarter.RS recorded net sales of $3.64 billion, down 8.1% year over year. The top line lagged the Zacks Consensus Estimate of $3.73 billion.Teck Resources TECK reported first-quarter 2023 adjusted earnings per share of 56 cents, missing the Zacks Consensus Estimate of 87 cents. The bottom line marked a 58% plunge from earnings of $1.32 per share in the year-ago quarter.TECK reported net sales of $2.96 billion compared with $2.8 billion in the year-ago quarter. The top line, however, missed the Zacks Consensus Estimate of $2.99 billion.Piedmont Lithium Inc. PLL came out with a quarterly loss of 61 cents per share, wider than the Zacks Consensus Estimate of a loss of 54 cents. The company posted a loss of 47 cents in the year-ago quarter.PLL posted revenues of $13.4 million for the quarter ended March 2024, missing the Zacks Consensus Estimate of $14 million.

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(Bloomberg) — BHP Group Chief Executive Officer Mike Henry said investors must decide whether his team or the rival one at Anglo American Plc is best positioned to deliver value from their respective restructuring plans.

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Henry’s counterpart at Anglo, Duncan Wanblad, announced on Tuesday that the storied mining company will exit diamond, platinum and coal mining, as it fends off a £34 billion ($43 billion) bid from BHP. The BHP CEO said his company would remain “disciplined” in its pursuit of Anglo.

“Shareholders must decide which plan creates the greatest value, soonest,” Henry said at a mining conference in Miami. “Which team has the better track record of execution.”

Anglo has rejected two offers, saying that BHP’s condition to spin off South African assets before the takeover was unworkable. However, Anglo’s own plan to spin off its Anglo American Platinum Ltd. unit is “a pretty clear indicator that it is doable,” according to Henry, who cited previous spinoffs by both companies.

Read More: Anglo Goes for Bold Breakup Plan in Move to Fend Off BHP

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JOHANNESBURG/ LONDON (Reuters) -BHP Chief Executive Mike Henry said that Anglo American investors need to consider the merits of his company's bid for its smaller London-listed rival, seeking to drum up support for a proposal that has been rejected twice.

The CEO of the world's biggest listed mining group told investors at a metals and mining conference in Miami that Anglo shareholders must make a "determination" on the benefits of a combination of the two companies and which team they think has a better track record of executing projects and delivering returns to investors.

Anglo CEO Duncan Wanblad on Tuesday outlined plans to refocus on energy transition metal copper while spinning off or selling its less profitable coal, nickel, diamond and platinum businesses.

Henry, meanwhile, emphasised the merits of BHP's $43 billion bid and dismissed concerns that the proposed deal would be complex to execute.

"At the end of the day, it's going to be up to shareholders. They have to look at the plans, decide which one they believe is going to create the greatest value soonest," he said.

"And they have to make a determination as to the likelihood of execution of those plans, including which team they believe is more capable and has a better track record of execution. It's that simple."

The Anglo board argues that the proposed deal undervalues the company and is difficult to execute, with BHP planning to demerge two of Anglo's South African assets prior to a takeover.

BHP chief Henry, however, says the company has sufficient experience to execute complex transactions, having divested South32 assets in South Africa.

Henry said he was disappointed with the Anglo board's continued refusal to engage, adding that BHP would have preferred to continue talking in private.

"Our strong preference was to be able to hold these discussions with Anglo in private," Henry said. "Rather unfortunately, it got leaked."

While BHP is intent on growing its copper business, it would maintain its disciplined approach to capital allocation, Henry said, adding that the copper industry remains fragmented.

"We do not take capital discipline lightly, we will remain disciplined and we have demonstrated that in previous instances," he said.

($1 = 0.7953 pounds)

(Reporting by Felix Njini and Clara DeninaEditing by David Goodman)

The mining company raised its first offer after Anglo American said it “significantly undervalues” it.

(Bloomberg) — Anglo American Plc will exit diamond, platinum and coal mining in a massive restructuring designed to fend off a £34 billion ($43 billion) bid from rival BHP Group and turn itself into a copper giant.

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Anglo’s hand was forced by BHP’s approach — which it has twice rejected — but the move also responds to pressure from shareholders to shed less profitable businesses and focus on the copper assets that are the envy of the industry. It leaves a much simpler company — and a potentially more attractive one to suitors.

The radical overhaul laid out by Anglo Chief Executive Officer Duncan Wanblad is to create a company much like the one his rival CEO Mike Henry proposed. As both men have a similar view of where value lies in Anglo’s sprawling empire, shareholders will now have to decide who they believe can best deliver.

Anglo is pinning its hopes on shareholders supporting its plan — and backing management to deliver it, rather than pushing to accept an offer from BHP. Investors see copper as the crown jewel because of its role in the energy transition and today’s move addresses what some of them were calling for. Activists Elliott Investment Management are among Anglo’s shareholders.

“There’s still a debate over whether this really offers shareholders more than BHP’s improved offer,” said Dawid Heyl, a Cape Town-based portfolio manager at Ninety One, a top shareholder. Heyl said that while it was a robust plan it would create a shrunken Anglo that “would be attractive to others as well.”

Anglo’s shares fell 2.5% to £26.38 in London trading, below the £27.53 that BHP is offering, in a sign investors see a lower chance of a successful BHP bid. Amplats, as the platinum business is known, fell as much as 10% in Johannesburg.

It’s now up to BHP to decide how to respond. Two offers have been rejected, though crucially its improved bid didn’t address one of the main obstacles: Anglo said BHP’s condition to spin off South African assets before the takeover was unworkable. Now Anglo is proposing to spin off Amplats, it could bolster BHP’s argument that it can be done.

“The outcome of Anglo’s strategic review will not have changed BHP’s plans, but they are probably actively assessing where they are now in light of this,” said Lachlan Shaw, an analyst from UBS Group AG.

Read More: What’s Anglo Worth? For Now It’s Less than the Sum of Its Parts

Anglo is now set to focus on copper mines and iron ore, its two biggest and most consistent earners and the businesses that BHP is most attracted to. Perhaps controversially, it will also stick with its Woodsmith fertilizer project in the north of England that some investors have pushed for it to quit. Still, it will dramatically cut spending there.

It will demerge or sell its De Beers diamond business, separate its Anglo American Platinum Ltd. unit and sell its coking coal mines in Australia.

The company will also either sell or shutter its relatively small nickel business in Brazil.

The move to dramatically shrink and simplify its business has been years in the making at Anglo, which has always been a hotchpotch of commodities. Yet the approach from BHP served as a catalyst for the company to speed up decisions it’s been sitting on for years.

Getting rid of Amplats and De Beers marks a turnaround from less than a decade ago when Wanblad’s predecessor planned on making them the cornerstones of the business.

Wanblad conceded today however that they are just too volatile. When they are good they are very good, but when they’re bad they drag down the entire company, hitting the returns shareholders get from the commodities they really covet such as copper. And the last year was especially tough for both.

Why BHP Is Targeting Anglo in Mining Mega Deal: QuickTake

De Beers — despite its status as a trophy asset — has looked increasingly out of place within the Anglo stable. The diamond market has become increasing volatile in recent years, whipsawing between boom and bust. The challenges posed by changing consumer habits require more and more spending on things like advertising, an area outside the comfort zone of many mining investors.

It will break the almost 100-year link between the two companies, with Anglo first becoming a major shareholder in 1926. Sovereign wealth funds have in the past expressed interest in the storied diamond producer.

Anglo will also look to exit Amplats, as its platinum unit is called. The business is currently listed in South Africa, with Anglo as a majority owner. Its coking coal business, which lies adjacent to BHP’s mines, will also be sold and Anglo said it has already received approaches.

While Anglo’s new plan has similarities to the one proposed by BHP, Wanblad was keen to point out that they were not completely leaving South Africa. It will keep its Kumba iron ore subsidiary. BHP had wanted Anglo to shed the South African assets before the takeover.

“They make us do the work then off they go,” Wanblad said. “We remain in South Africa, that’s a unique difference between what we and BHP are proposing to do.”

That may have made a difference for South Africa’s government as the new plan has already received a warmer welcome than BHP’s proposal.

Read: South Africa Minister Warms to Anglo Plan After Opposing BHP Bid

Anglo will also slow spending on a $9 billion fertilizer mine in northern England that’s been a focal point for investors and analysts pushing for an overhaul.

The company — which has been spending about $1 billion a year on the giant Woodsmith mine — will cut spending to about $200 million in 2025, and plans to spend nothing on it in 2026. It will also look to bring in one or more strategic partners. Investors are worried the mine will produce a relatively obscure fertilizer product called polyhalite, and Anglo will need to create a huge new global market for it almost from scratch.

–With assistance from Mark Burton and Paul-Alain Hunt.

(Updates with details)

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(Bloomberg) — South Africa’s mines minister struck a conciliatory tone as Anglo American Plc announced plans to separate its platinum unit as part of a major shakeup following its rejection of two approaches from BHP Group.

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“It is their strategy and they must do anything that will optimize value,” Mines Minister Gwede Mantashe said by phone.

That marks a contrast with the senior official’s frostier reaction to rival BHP’s proposal, which involves spinning off both Anglo American Platinum Ltd. and Kumba Iron Ore Ltd. before acquiring the miner’s prized assets outside South Africa.

The platinum unit known as Amplats fell as much as 10% in Johannesburg trading, after Anglo unveiled its restructuring plan on Tuesday.

The upheaval in South Africa’s key mining industry comes at a difficult time for the ruling African National Congress, which risks losing its majority in elections later this month for the first time since coming to power in 1994.

Read more: Anglo To Exit Diamonds and Platinum in Bid To Fend Off BHP

Under the turnaround plan outlined Tuesday by Anglo Chief Executive Officer Duncan Wanblad, the London-listed miner will exit platinum and diamond mines in South Africa, while retaining its Kumba iron ore subsidiary and a stake in a manganese business.

Wanblad said the company would have liked to make its announcement after the South African election and that it was “completely disrespectful” to do so now. Still, he said BHP had forced his hand by making an approach.

Anglo said it will demerge its 79% stake in Amplats “in a responsible and orderly way,” separate or sell its De Beers diamond business and divest its coking coal mines in Australia. The overhaul plans have been accelerated by BHP’s £34 billion ($43 billion) takeover proposal to acquire the 107-year-old firm.

Anglo has long ties to South Africa and was built on the riches of the country’s gold mines before moving into diamonds. In recent decades, however, the company has rapidly accumulated assets overseas including the South American copper mines that are so coveted by BHP.

Read More: BHP CEO Flies to South Africa to Push $39 Billion Takeover

Mantashe had signaled his opposition to BHP’s twice-rebuffed proposal for Anglo to demerge its controlling interests in its South African platinum and iron ore units, telling Bloomberg on April 25 that he “wouldn’t support” the idea.

Amplats – the world’s largest platinum producer – “will survive” as a standalone company, said Mantashe who also chairs the ANC. “It’s leading in the platinum business.”

Shares of Amplats were down 7% as of 11:03 a.m. in Johannesburg.

Anglo’s second-biggest shareholder, South Africa’s Public Investment Corp., will continue to engage with both companies after noting both Anglo’s accelerated strategy and its rejection of BHP’s improved offer, PIC Chairman David Masondo said by email. The PIC manages the pensions of South African government workers.

“The PIC is a long-term investor and any transaction presented will be assessed to ensure value creation for our clients,” said Masondo, who is also South Africa’s deputy finance minister.

The Congress of South African Trade Unions, the country’s biggest federation of labor groups, said it welcomed Anglo’s commitment to the country.

“We need a commitment that whatever changes Anglo plans include the needs of its loyal employees,” Cosatu said in a response to queries. “Anglo’s professed commitment to South Africa is welcome.”

The labor federation has previously said it opposed BHP’s bid.

–With assistance from Thomas Biesheuvel and Antony Sguazzin.

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Anglo American (AAL.L)

Anglo American has announced a group restructuring that includes the sale of several assets to boost its portfolio, a day after rejecting a mega takeover bid from Australian rival BHP (BHP.L).

As part of the split, the miner will divest or demerge its diamond unit De Beers, spin off its platinum-metals subsidiary Anglo American Platinum, and sell its steelmaking coal assets, while exploring options for putting its nickel operation on care and maintenance before divesting it.

The reorganisation will reduce costs by $1.7bn (£1.36bn), it said.

The announcement comes a day after the London-listed miner rejected a sweetened £34bn offer from BHP, saying it continued to significantly undervalue the company and was “highly unattractive” for its shareholders.

“We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction,” chief executive Duncan Wanblad said.

Investors still believe that BHP will lift its offer again and possibly add cash before 22 May, the deadline under UK rules to return with a binding offer or walk way.

"The language in the release suggests it's not the best and final offer," Todd Warren, a portfolio manager at Tribeca Investment Partners, told Reuters.

GameStop (GME)

Shares in GameStop, the video game retailer whose popularity among pandemic-era traders helped coin the idea of a meme stock, were surging in pre-market trading after a single post by a social media account named “Roaring Kitty”.

The internet persona, whose real name is Keith Gill, posted a picture on X of a video gamer leaning forward on their chair as if to indicate he’s taking the game seriously, making his first post on the platform since 2021.

Gill is a day trader whose videos during the meme-stock bubble encouraged millions of others into the market, in turn propelling stocks such as GameStop to record heights.

The tweet was enough to drive a rally in GameStop on Monday which caused losses approaching $1bn for short sellers, according to data from S3 Partners.

With GameStop soaring 74%, short-selling hedge funds suffered a mark-to-market loss of $838m in the brick-and-mortar video game retailer, data firm S3 Partners said.

Vodafone (VOD.L)

Vodafone has reported a 2.2% rise in organic earnings for 2024, meeting market forecasts, after it returned to top-line growth in the final quarter helped by gains in the UK and Germany.

The UK-listed company revealed an 11.3% decline in underlying profits last year to €11bn (£9.5bn) and a 2.5% fall in revenue to €36.7bn (£31.5bn).

It said revenues were hit by the disposals of Vantage Towers, Vodafone Hungary and Vodafone Ghana in the prior financial year and adverse exchange rate movements.

Germany returned to growth with service revenue increasing by 0.2% for the full year and 0.6% for the fourth quarter, the company said, but adjusted core earnings dropped by 5.8% due to higher energy and other inflationary costs.

"Much more still needs to be done in the year ahead," said chief executive Margherita Della Valle.

Free cash flow fell from €2.6bn to €1.8bn. Net debt, excluding the sold segments of Spain and Italy, was broadly flat at €33.2bn.

Mark Crouch, analyst at eToro, said: "Vodafone investors may have been bracing themselves for another tumultuous earnings report this morning and while this might not have them jumping for joy, there are signs the business has turned a corner."

Greggs (GRG.L)

Greggs reported sales growth of 7.4% as the bakery chain remains on track to open between 140 and 160 new stores in 2024.

The firm reported a 7.4% rise in like-for-like sales for the first 19 weeks of 2024, with total sales in the period hitting £693m.

Greggs added that its new range of iced drinks was “performing well”, with plans to roll it out further from the current 300 shops to up to 700 in the coming months.

Since the start of the year Greggs has opened 64 stores, and closed 37 — including relocations — giving a total of 2,500 shops trading nationwide.

Novavax (NVAX)

Shares of Novavax jumped as much as 50% as Wall Street cheered a new multibillion-dollar deal with French drugmaker Sanofi (SAN.PA) that kicked off a dramatic turnaround for the struggling vaccine maker.

Novavax signed a $1.2bn licensing agreement with Sanofi that includes commercialising a combined COVID-19 and flu shot.

The pharma company reported a first-quarter 2024 loss of $1.05 cents per share while revenues in the quarter came in at $94m, below expectations of $101m. Still, the top line rose 16% on a year-over-year basis.

It recorded $11.5m of revenues from royalties and adjuvant sales to licensing partners compared with the year-ago quarter’s revenues of $1m.

Watch: This has been a tough day for short sellers in GameStop: Charlie Gasparino

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(Bloomberg) — As Anglo American Plc sets out a survival plan that echoes the vision of its suitor BHP Group, the rival mining bosses are now locked in a battle to convince shareholders they are the man for the job.

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Anglo Chief Executive Officer Duncan Wanblad and his BHP counterpart Mike Henry took center stage on Tuesday, as the personalities behind two of the world’s biggest miners came to the fore. Wanblad presented his own radical turnaround plan to investors, before Henry made his first public remarks on BHP’s bid at a conference in Miami.

“We don’t need BHP to deliver this strategy, we absolutely do not need them at all,” Wanblad said in an interview on Tuesday. “We can deliver this.”

BHP wants Anglo to spin off its two listed South African businesses producing iron ore and platinum, before the world’s biggest miner acquires the rest of its assets. Anglo would also separate its Anglo American Platinum Ltd. unit, while exiting diamond mining and selling its coal business. Both CEOs see copper as the crown jewel.

Read More: Anglo Goes for Bold Breakup Plan in Move to Fend Off BHP

Hours after Wanblad made his pitch, BHP’s Henry told the same conference that Anglo’s shareholders must choose between the two management teams.

“Shareholders must decide which plan creates the greatest value, soonest,” Henry said “Which team has the better track record of execution.”

Henry, who has been at the helm of BHP since 2020, has had time to stamp his image on the company. In a series of sweeping reforms, he implemented the biggest shakeup at the company since its creation two decades earlier.

BHP’s $39 Billion Bid for Anglo American Was Years in the Making

But he also inherited a stronger company than Wanblad. In Australia, BHP has some of the most profitable iron ore operations and it also runs the world’s biggest copper mine. It has no exposure to commodities such as platinum and diamonds, which have caused Anglo problems as prices slumped.

Still, there have also been missteps by Henry, such as betting on nickel before the market collapsed and wading into a South African election campaign when his approach for Anglo became public.

Wanblad by contrast has faced a tougher start. While the company he inherited was riding high, buoyed by soaring commodity prices, some of Anglo’s key markets quickly soured, exposing flaws in some of the underlying businesses. That ultimately led Wanblad to launch the root-and-branch review of the business.

Both Henry and Wanblad have been at their respective companies for decades, working their way up to the top job. Canadian Henry is described by those who work with him as incredibly detail driven, making decisions based on cold logic and hard facts. South African Wanblad, like his counterpart at BHP, is described by employees as deeply analytical but with a reputation for being more personable.

The two disagreed on their respective plans for South Africa, which is turning into a key battleground. Henry said Anglo’s own plan to spin off its Amplats platinum business is “a pretty clear indicator that it is doable.”

The “key difference” between the two proposals is that BHP’s plan involves securing simultaneous regulatory approval in South Africa for a pair of demergers and the top-level transaction, Anglo’s Wanblad said in an interview.

Such an “unprecedented” undertaking would be “all potentially at the expense of Anglo shareholders,” he said.

Wanblad, who like Henry is meeting investors in Miami this week, will hope those shareholders back his vision.

“I don’t believe at all that BHP has a better management team than Anglo,” he said. “Our plan will make the company much stronger than we are today, especially at the bottom of cycles.”

Most Read from Bloomberg Businessweek

(Adds details from speech, acquisition comments)

By Divya Rajagopal

May 14 (Reuters) – Teck Resources Ltd expects to generate annual earnings before interest, depreciation, tax and amortization (EBITDA) of $3 billion if copper prices hit $5 per pound, CEO Jonathan Price said on Tuesday.

For Vancouver, Canada-based Teck, copper is the main driver of profitability after it sold its steel-making coal business to a consortium of buyers led by Swiss miner Glencore for $8.9 billion last year.

Price, speaking at the Bank of America Metals, Mining and Steels conference in Miami, gave a range of predictions for Teck's annual EBITDA at different copper prices, the lowest being $2 billion if copper trades at $4 per pound.

U.S. copper prices

on the CME hit a record peak on Tuesday, with the Comex May contract hitting a high of $5.082 a lb, fueled by robust demand in the United States and fund buying.

The red metal has been in focus after mining giant

BHP's $37 billion offer to buy out rival Anglo American. Analysts have been nudging Teck to explore acquisition options because it is flush with cash from the sale of steel-making business.

But Price said Teck is focused on executing its existing projects when asked whether the company would acquire any copper assets.

"I know there's a lot of discussion in the industry about buy versus build," Price said." And I think when people are looking at projects with capital intensities above $30,000 per ton, perhaps buying capacity makes more sense."

Several industry estimates suggest the cost of building a new copper mine today is around $44,000 per tonne.

(Reporting by Divya Rajagopal; editing by Jonathan Oatis and Leslie Adler)

By Divya Rajagopal

(Reuters) -Teck Resources Ltd expects to generate annual earnings before interest, depreciation, tax and amortization (EBITDA) of $3 billion if copper prices hit $5 per pound, CEO Jonathan Price said on Tuesday.

U.S. copper prices on the CME hit a record peak on Tuesday, with the Comex May contract hitting a high of $5.082 a lb, fueled by robust demand in the United States and fund buying.

The red metal has been in focus after mining giant BHP's $37 billion offer to buy out rival Anglo American. Analysts have been nudging Teck to explore acquisition options because it is flush with cash from the sale of steel-making business.

But Price said Teck is focused on executing its existing projects when asked whether the company would acquire any copper assets.

Several industry estimates suggest the cost of building a new copper mine today is around $44,000 per tonne.

(Reporting by Divya Rajagopal; editing by Jonathan Oatis and Leslie Adler)

Wheaton Precious Metals Corp. WPM reported adjusted earnings per share of 36 cents in first-quarter 2024, which topped the Zacks Consensus Estimate of 29 cents. The bottom line improved 56% year over year.The company generated revenues of $297 million in the reported quarter, up 38.4% on a year-over-year basis. The upside was driven by a 31% increase in Gold Equivalent Ounces (GEOs) sold. The top line surpassed the Zacks Consensus Estimate of $285 million.Wheaton’s gold production was 93,370 ounces, up from the prior-year quarter’s 73,019 ounces. Attributable silver production increased 6.7% year over year to 5,476 ounces and palladium production increased 20.5% to 4,463 ounces. The company produced 160,133 GEOs in the March-end quarter, up 18.9% from the prior-year quarter’s 134,730 GEOs.

Wheaton Precious Metals Corp. Price, Consensus and EPS Surprise

Wheaton Precious Metals Corp. price-consensus-eps-surprise-chart | Wheaton Precious Metals Corp. Quote

Prices

In first-quarter 2024, the average realized gold price was $2,073 per ounce. The figure was 8.9% higher than the year-ago quarter. Silver prices were $23.74 per ounce in the reported quarter, up 3.9% year over year. Palladium prices were $980 per ounce compared with $1,607 per ounce in the prior-year quarter.

Financial Position

Wheaton had $306 million of cash in hand at the end of the first quarter of 2024 compared with $547 million at the end of 2023. It reported an operating cash flow of $219 million in the first quarter of 2024 compared with $135 million in the first quarter of 2023. WPM has a $2-billion undrawn revolving credit facility.In the quarter, the company announced a quarterly dividend of 15 cents per share.

2024 Guidance

Wheaton projects attributable production between 550,000 GEOs and 620,000 GEOs for 2024. Notably, it produced 584,389 GEOs in 2023. Gold production is expected to be 325,000-370,000 ounces, suggesting a slight decline from the 374,585 produced in 2023. Silver production is projected between 18.5 and 20.5 million ounces, indicating growth from the 17.2 million ounces reported in the prior year. The production of other metals is anticipated to be 12,000-15,000 GEOs in 2024. WPM produced 12,275 GEOs of other metals in 2023.

Price Performance

WPM shares have gained 9.5% in the past year compared with the industry’s 14.3% growth.

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Zacks Rank

Wheaton currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Peer Stocks

Reliance, Inc. RS posted adjusted earnings of $5.23 per share in first-quarter 2024, down from $6.43 per share in the year-ago quarter.RS recorded net sales of $3.64 billion, down 8.1% year over year. The top line lagged the Zacks Consensus Estimate of $3.73 billion.Teck Resources TECK reported first-quarter 2023 adjusted earnings per share of 56 cents, missing the Zacks Consensus Estimate of 87 cents. The bottom line marked a 58% plunge from earnings of $1.32 per share in the year-ago quarter.TECK reported net sales of $2.96 billion compared with $2.8 billion reported in the year-ago quarter. The top line, however, missed the Zacks Consensus Estimate of $2.99 billion.Piedmont Lithium Inc. PLL came out with a quarterly loss of 61 cents per share, wider than the Zacks Consensus Estimate of a loss of 54 cents. The company posted a loss of 47 cents in the year-ago quarter.PLL posted revenues of $13.4 million for the quarter ended March 2024, missing the Zacks Consensus Estimate of $14 million.

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TSMC (TSM)

Taiwan Semiconductor Manufacturing Company’s April revenue jumped nearly 60% percent on-year, as the firm rides a wave of sustained demand for the advanced semiconductors used in artificial intelligence (AI) hardware.

The world’s largest contract chipmaker said consolidated revenues for April were approximately TWD236.02bn (£5.7bn/$7.2bn), an increase of 59.6% from April 2023. This compares with a 34.3% on-year jump in March 2024.

The company is Nvidia’s (NVDA) sole manufacturer for the most advanced training chips. TSMC also fabricates semiconductors for Apple (AAPL).

Last month, TSMC announced its newest semiconductor process, advanced packaging, and other technologies for powering the next generation of AI innovations.

"We are entering an AI-empowered world, where artificial intelligence not only runs in data centres, but PCs, mobile devices, automobiles and even the internet of things," said CEO C.C. Wei.

Novavax (NVAX)

Shares in Novavax were higher in pre-market trading as the pharmaceutical said it has signed a $1.2bn (£957m) deal with French drugmaker Sanofi (SAN.PA) to co-commercialise the company’s COVID vaccine starting next year.

Novavax will receive $500m in upfront payments as well as $700m in development, regulatory and launch milestones, according to a statement.

That total is roughly double Novavax’s current market cap of $627m.

Sanofi is also taking a minority equity stake of about 5% in Novavax. Novavax will benefit from a double-digit percentage of royalties from the sales of its Covid jab as well as any combined shot using its technology.

Novavax has had some turbulent times. Its market value boomed to more than $40bn at the height of the pandemic, propelled by investor excitement over its COVID shot. But it has since fallen by almost 99%.

Anglo American (AAL.L)

Shares in the miner were higher amid reports that rival Rio Tinto (RIO.L) had considered an offer for British miner Anglo American, which is now BHP’s (BHP.L) £31bn takeover target.

Rio “management had not ruled out making a play for part or all of the mining group and continued to study the day-to-day situation", the Australian Financial Review reported.

Anglo has turned down BHP’s proposal, saying it was opportunistic and significantly undervalued the British company. Under the UK’s takeover rules, BHP has until May 22 to make a formal offer.

“Shares in Anglo American are up on a report that Rio Tinto also considered a bid following BHP’s rejected offer. M&A speculation is helping to keep Anglo shares supported at the moment,” Victoria Scholar, head of investment at Interactive Investor, said.

BHP and Rio have a close working relationship at Escondida and Resolution Copper. One option for Rio is to informally assist BHP’s bid for Anglo by acquiring the assets that BHP does not want, such as Anglo’s diamond business, AFR wrote.

Glencore is also studying options for a possible approach for Anglo, Reuters reported earlier in the month, a move that could spark a bidding war.

IAG (IAG.L)

The owner of airlines British Airways and Aer Lingus has said its earnings have soared in recent months thanks to higher sales and lower fuel costs.

International Airlines Group (IAG) reported an operating profit for the first three months of the year of €68m (£58.5m), up from the €9m (£7.7m) reported this time last year.

Total revenues also jumped to €6.4bn (£5.5bn), up from €5.9bn (£5.1bn) last year, while fuel costs were about 5% lower than the previous year, due to lower average prices and more efficient aircraft deliveries.

IAG said the improved profits and sales had been driven by stronger demand across its airlines, which also include Iberia and Vueling.

It also highlighted that it was continuing to see a rebound in leisure travel.

Watch: Market strategist sees dollar dip lifting non-US stocks

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South African shareholders of the mining company Anglo American have signalled they are open to a revised takeover offer from BHP, despite warnings from South African politicians and unions that a deal could be bad for the country.

Investors, which collectively own more than 15% of the London-listed mining company, told the Financial Times that they were not opposed in principle to an acquisition by its Australian rival but said an improved and less complex offer would be needed.

It comes after the ruling African National Congress has been publicly critical of BHP’s move, with its mining minister, Gwede Mantashe, saying South Africa’s experience with BHP “was not positive”.

Last month, Anglo rejected a £31bn takeover offer from the Australian company, in what would have been the biggest deal in the mining sector for a decade.

At the time, the board unanimously rejected the offer, saying it “significantly undervalued” the company and its future prospects.

As part of the BHP proposal, Anglo’s South African platinum and iron ore businesses – Amplats and Kumba – would be excluded from the deal, which the board deemed “highly unattractive”.

However, several local investors have now told the FT that they would be open to a revised offer, but stressed this would need to be at a higher price because of BHP’s desire to spin off the South African parts of the business.

Dawid Heyl, a fund manager at Ninety One, which owns 2.1% of Anglo, said a deal along the lines proposed could be struck but the price would have to be substantially higher.

He said: “It would be easier, though, if BHP were to come back with a higher and simpler offer, which removes the conditionality of getting rid of Amplats and Kumba, which would make it trickier.”

Karl Leinberger, the chief investment officer at Coronation Fund Managers, which owns 1.2% of Anglo, said that it would “definitely” consider a deal but BHP would have to pay more if it wanted to exclude the South African businesses.

This is at odds with the mining minister Mantashe, who has publicly stated that he is against the takeover.

Speaking after the rejection of the first offer last month, Mantashe said BHP’s merger with the South African miner Billiton in 2001, “never did much for South Africa”.

South Africa’s government-owned Public Investment Company is Anglo’s largest stakeholder and owns a 7% stake in the company.

The Congress of South African Trade Unions, which includes the National Union of Mineworkers, has also urged local shareholders to reject a BHP bid, saying a deal would not be in the national interest.

BHP now has until 22 May to make a formal offer for Anglo American under UK merger and acquisition rules. There is speculation that other global mining companies could also enter the race, with Rio Tinto and Glencore also reported to be eyeing up bids.

Apple (AAPL)

Apple shares climbed in pre-market trading after the iPhone maker reported fiscal second-quarter earnings that topped estimates and announced an expanded stock buyback programme.

The tech company reported revenue of $90.75bn ($72.22bn) in the first three months of 2024, down 4% from the year before but slightly ahead of consensus estimates for $90.3bn.

Sales of its flagship iPhone were down 10% from the year before to $46bn, compared with $51.3bn the previous year, and sales in China fell to $16.3bn for the quarter, against $17.8bn a year ago.

Apple reported net income of $23.64bn, or $1.53 per share, down 2% from $24.16bn, or $1.52 per share, in the year-earlier period.

CEO Tim Cook attempted to reassure investors about the state of the business in the world's second largest economy, noting that iPhone sales were actually up in mainland China.

"I maintain a great view of China in the long term," he said.

The company also announced another $110bn in share buybacks and raised its quarterly dividend by 4%.

Coinbase (COIN)

Coinbase reported better-than-expected revenue in its first-quarter earnings report, helped by an uptick in cryptocurrency trading following the launch of the first US-listed exchange traded funds (ETFs) tracking bitcoin in January.

Coinbase, the primary marketplace in the US for buying and selling digital tokens, reported net income of $1.18bn or $4.40 per share, compared to a year-ago loss of $78.9m, or 34 cents a share.

Yet the stock of the largest US cryptocurrency exchange fell by as much as 4% in pre-market trading.

Net income rose to $1.17bn, the highest mark in nine quarters, while net revenue rose by 115% when compared to the year-ago period.

Consumer transaction revenue doubled from the previous quarter, reaching $935.2m, and volume was up over 93%, to $56bn.

Anglo American (AAL.L)

Anglo American has jumped 3% after Reuters reported that Glencore (GLEN.L) was considering an approach for the 107-year old miner, a move that could spark a bidding war.

Glencore has had internal preliminary discussions and those may not lead to the company making an approach to Anglo, Reuters said Thursday. A Glencore spokesperson told Reuters the company doesn’t comment on rumour or speculation.

Anglo American is already the subject of bid interest from larger peer BHP Group Ltd.

Last Friday, Anglo American ‘unanimously’ rejected an ‘opportunistic’ offer from BHP on grounds that it ‘significantly undervalues’ the London-based miner.

Diageo (DGE.L)

Guinness owner Diageo has poached the finance boss of the world’s largest Coca-Cola bottler as it seeks to recover from a drop in sales and profits.

Lavanya Chandrashekar, who joined the Guinness and Johnnie Walker maker as finance chief of its North America business in 2018, will be replaced by Nik Jhangiani, CFO at Coca-Cola’s largest bottler, Coca-Cola Europacific Partners (CCEP).

Shares have fallen by around 15% over the past six months after Diageo issued a profit warning due to a substantial slowdown in sales in the Latin America and the Caribbean.

“Diageo’s weak share price performance has, in part, reflected questions around financial communication and some perceived mis-steps from senior management, so we think this will be moderately well received,” said RBC Capital analyst James Edwardes Jones.

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The FTSE 100 (^FTSE) and European stocks closed higher on Friday amid hopes that the cooldown in the US labour market will embolden the US Federal Reserve to begin cutting interest rates.

London’s blue-chip share index was propelled to a new all-time peak of 8,248.73 amid hopes that the cooldown in the US labour market will embolden the US Federal Reserve to begin cutting interest rates. It closed 0.4% higher at 8,206 points.
Germany's DAX (^GDAXI) rose 0.5% and the CAC (^FCHI) in Paris also finished 0.5% higher.
The pan-European STOXX 600 (^STOXX) gained 0.4%.
Apple (AAPL) reported better-than-anticipated earnings and revenue, though iPhone sales fell about 10% year over year.
Across the pond, the Dow Jones Industrial Average (^DJI) jumped 1%, while the S&P 500 (^GSPC) rose 1.1%. The tech-heavy Nasdaq Composite (^IXIC) increased roughly 1.8%.
The pound (GBPUSD=X) was higher against the dollar at 1.2558.

Follow along for live updates throughout the day:

LIVE COVERAGE IS OVER15 updates

FeaturedFri, May 3, 2024 at 4:45 AM EDTPedro GoncalvesUK pulling out of recession as services sector growth hits 11-month high
Activity in the UK’s services sector rose at the fastest rate nearly a year in April, as spending was boosted by improved consumer and business confidence, according to new data.

The S&P Global UK services PMI survey scored 55.0 in April, up from 53.1 in March, and above estimates from economists.

It was also the fastest rate of business activity growth since May last year.

Any reading above 50 indicates that the services sector is growing, while anything below that implies it is shrinking.

Tim Moore, economics director at S&P Global, said:

The latest survey results are consistent with the UK economy growing at a quarterly rate of 0.4% and therefore pulling further out of last year’s shallow recession. Relief at a turnaround in the economic outlook was commonly cited as a factor supporting sales pipelines in April. However, there were also reports that clients remained somewhat risk averse and under pressure from elevated inflation.

Fri, May 3, 2024 at 11:29 AM EDTPedro Goncalves
That is all we have time for today but do follow our US blog for the latest moving markets across the pond.

Hope you’ll join us again Tuesday as we bring you the latest stock news.

Thanks,

PHG
Fri, May 3, 2024 at 10:31 AM EDTPedro Goncalves Traders bet on faster interest rate cuts as US job growth slows
Richard Flynn, managing director at Charles Schwab UK, said: “In recent months, it has become clear that the Fed is happy to move slowly in the cutting part of the rate cycle, but unwanted and unexpected weakness in the economy, as we are seeing today, may cause a shift in this approach.

“A dive in the labour market may be what it takes to push the Fed from a stroll to a sprint.”
Fri, May 3, 2024 at 9:57 AM EDTPedro GoncalvesUS stock markets surge at the open
US stocks surged on Friday, as upbeat earnings from Apple (AAPL) lifted spirits and a weaker-than-expected jobs report revived bets that the Federal Reserve could cut interest rates sooner than thought.

The April jobs report painted a picture of a cooling US labor market, as employers added 175,000 jobs and the unemployment rate unexpectedly jumped to 3.9%. Economists had expected an addition of 240,000 jobs.

The report pushed up bets on a sooner-than-expected rate cut from the Fed.

The Dow Jones Industrial Average (^DJI) jumped 1.5%, or more than 500 points, while the S&P 500 (^GSPC) rose 1.2%. The tech-heavy Nasdaq Composite (^IXIC) increased roughly 1.9%. All three gauges are poised to build on sharp closing gains from Thursday.

Read the full story here
Fri, May 3, 2024 at 9:54 AM EDTPedro GoncalvesMortgage mistake costing homeowners £3,000 Almost a third of homeowners (31%) have let their mortgage rates revert to a higher rate before (Mark Waugh)
Almost a third (31%) of homeowners have let their mortgage slip into a higher rate for at least 1 month after their fixed-rate deal has ended, a mistake that can add £3,000 in unnecessary mortgage repayments

The total amount of time during which people had let their mortgage revert to a higher rate was an average of 10 months over the course of their mortgage, according to a survey by personal finance comparison site finder.com

Someone paying off the cost of the UK’s average house, worth £281,913, on a competitive fixed 3-year rate* of 5.5% would pay £1,361 per month during those 3 years.

But if they didn’t remortgage immediately at the end of the initial fixed term, the interest rate would revert to the lender’s standard variable rate, which is typically around 7.5% at the moment. This would cost them £1,661 per month, which is an extra £300. The average person paying 10 months of this would therefore part with an extra £3,000 to pay the extra interest.

While the average time that homeowners in the survey had left their revert rate going was 10 months, over 1 in 10 (11%) had paid a higher revert rate for more than 1 year. Worryingly, 3% said they’d paid a revert rate for over 5 years. This would cost over £30,000 in extra interest.
Fri, May 3, 2024 at 6:56 AM EDTPedro GoncalvesHSBC expects interest rate cut in June
HSBC is in a strong position to continue paying robust dividends to shareholders chairman Mark Tucker said at the bank’s annual shareholder meeting.

He predicts that the BoE will lower interest rates by 1.5 percentage points by the end of next year. That would lower Bank Rate to 3.75%, from 5.25% today.

“We expect the ECB and Bank of England to cut rates in June, cutting by 150bps by year-end 2025. We expect the Fed to cut in September, cutting by 100bps by year-end 2025,” Tucker said.

The bank returned $19bn to shareholders in 2023 through dividends and share buybacks, has announced a further $8.8bn so far for 2024.
Fri, May 3, 2024 at 6:26 AM EDTPedro GoncalvesTGI Fridays operator Hostmore narrows losses after cost-cutting
TGI Fridays operator Hostmore has narrowed its losses for the past year as it pushed forward with its turnaround strategy.

The UK hospitality company reported lower revenues in the face of the challenging backdrop for hospitality firms.

The update comes weeks after Hostmore, which runs 89 sites across the UK, agreed a deal to merge with US-based TGI Fridays Inc, to create a larger firm which will remain listed in London.

Hostmore said that 2023 was a “transitional year” as it sought to put its finances back on a strong footing.

It revealed revenues for the year to December 31 of £190.7m, dropping from £195.7m in 2022.

Nevertheless, it heavily reduced its pre-tax losses to £25.5m from £108.3m a year earlier.

The reduction came after significant cost-cutting, which it said provided a £6.2m boost last year.
Fri, May 3, 2024 at 5:50 AM EDTPedro GoncalvesTrending tickers: Apple, Coinbase, Anglo American and DiageoApple beat expectations (Reuters / Reuters)
Apple (AAPL) – Apple shares climbed in pre-market trading after the iPhone maker reported fiscal second-quarter earnings that topped estimates and announced an expanded stock buyback programme.

Coinbase (COIN) – Coinbase reported better-than-expected revenue in its first-quarter earnings report, helped by an uptick in cryptocurrency trading following the launch of the first US-listed exchange traded funds (ETFs) tracking bitcoin in January.

Anglo American (AAL.L) – Anglo American has jumped 3% after Reuters reported that Glencore (GLEN.L) was considering an approach for the 107-year old miner, a move that could spark a bidding war.

Diageo (DGE.L) – Guinness owner Diageo has poached the finance boss of the world’s largest Coca-Cola bottler as it seeks to recover from a drop in sales and profits.

Read the full story here
Fri, May 3, 2024 at 4:15 AM EDTPedro GoncalvesOil prices set for steepest weekly drop in 3 months
The oil price is on track for its biggest weekly losses in three months, bringing relief to consumers.

Brent crude futures (BZ=F) rose to $83.98 per barrel. Meanwhile, US West Texas Intermediate (MCL=F) crude futures climbed to $79.22 per barrel.

Still, both benchmarks were on track for weekly losses as investors worried about the prospect of higher-for-longer interest rates curbing growth in the US, the top global oil consumer, and in other parts of the world.

“With the US driving season almost upon us, high inflation may see consumers opt for shorter drives over the holiday period,” analysts at ANZ Research said in a note.
Fri, May 3, 2024 at 4:05 AM EDTPedro GoncalvesFTSE nears all time high but has further to climb, says Interactive Investor
In the City, the blue-chip share index has nearly hit a new all time high at the start of trading.

Richard Hunter, head of markets at Interactive Investor, suggests the London stock market has further to climb:

US markets may have lost some of their mojo but the same cannot be said for a flourishing FTSE100, where opening strength lifted gains in the year so far to 6%. The mixture of technical factors, such as rising commodity prices and higher interest rates underpinning the likes of the mining, oil and banking sectors has been combined with improving sentiment towards the premier index. Even at these elevated levels at or around record highs, the valuation of the index remains undemanding in comparison to many of its peers which could suggest that the recent rally still has some way to go.
Fri, May 3, 2024 at 4:01 AM EDTPedro GoncalvesWall Street ends higher as Fed signals dovish biasWall Street closed higher (Reuters / Reuters)
US stocks strode higher Thursday in a calm after the Fed day storm, as investors set aside rate worries for now to focus on Apple (AAPL) earnings and the coming monthly jobs report.

The S&P 500 (^GSPC) rose roughly 0.9%, while the Dow Jones Industrial Average (^DJI) gained about 0.8%. The tech-heavy Nasdaq Composite (^IXIC) led the gains, up 1.5%.

Stocks are recovering from Wednesday’s volatile session dominated by the wait for the Federal Reserve’s policy decision. Chair Jerome Powell played down the likelihood of an interest-rate hike, bringing relief to investors worried that recent signs of “sticky” inflation might prompt that move.

Read the full article here
Fri, May 3, 2024 at 3:56 AM EDTPedro GoncalvesTrainline leads FTSE 230 as it surpasses £5bn ticket sales
Rail ticket platform Trainline (TRN.L) are the top riser on the FTSE 250 (^FTMC) after doubling its operating profits in the last year.

Trainline surpassed £5bn in ticket sales for the first time, as the aggregator enjoyed a recovery in rail travel in Britain and sharp growth across Europe.

The London-listed company’s pre-tax profit more than doubled to £48m in the year ending February 29, buoyed by an easing in rail strikes, which fell to 25 days from 30 in the previous 12 months.

Trainline’s ticket sales grew 22% year-on-year, mainly driven by £3.5bn in UK tickets. The overall British rail market recovered to an estimated £10.6bn in passenger revenues during the reporting period, up from £8.9bn in the prior year.

The bumper year was further boosted by sales across Spain and Italy, which grew a combined 43%, as Trainline further penetrated both international markets.

On the back of its European growth, Trainline also surpassed £1bn in international ticket sales for the first time.
Fri, May 3, 2024 at 3:50 AM EDTPedro GoncalvesAsda refinances £3.2bn of debt
Supermarket Asda has refinanced around £3.2bn of its debt amid “strong demand” from investors.

It said the new bond agreements will now mature in 2030 and 2031.

As part of the refinancing, the UK’s third largest grocery chain said it also used £300m of cash from its balance sheet to reduce its gross debt.

Asda had net debt of £3.8bn at the end of 2023, having built up the debt pile through its takeover by the billionaire Issa brother and private equity firm TDR Capital.

Michael Gleeson, Asda’s chief financial officer, said: “We saw strong demand from investors after taking a thoughtful and prudent approach to refinancing our near-term debt well ahead of maturities – to further strengthen our balance sheet.

“The refinancing also reflects the wider strength of Asda as a diversified retail group with a strong grocery business at its core supported by a fantastic non-food offering in George and following recent investments, a major presence in the high-growth convenience and food-service markets.”
Fri, May 3, 2024 at 3:46 AM EDTPedro GoncalvesAsia stocks hit 15-month high
Asian stocks surged to their highest in 15 months led by tech and Hong Kong stocks.

Hong Kong’s Hang Seng jumped 1% to 18,301.11, tracking gains on Wall Street. News of fresh moves by Chinese leaders to energise the economy helped drive buying of technology shares.

Gains were driven by e-commerce giant Alibaba (9988.HK) climbing 4.4% and rival JD.com (9618.HK) gaining 5%.

Vey-Sern Ling, managing director at Union Bancaire Privée, said: “The strong performance in the past two weeks is probably attracting more fund inflows for fear of missing out.

“Even after the sharp rally, valuations for the China tech stocks are still well below historical average as well as when compared with global peers.”

Several major markets including Tokyo (^N225) and Shanghai (000001.SS) were closed for holidays.
Fri, May 3, 2024 at 3:15 AM EDTPedro GoncalvesHoliday Inn owner boosted by Europe and China
Holiday Inn operator Intercontinental Hotels Group (IHG) has revealed stronger revenues over the first quarter of 2024 driven by growth in Europe and Asia.

It came as the company, which also runs Crowne Plaza hotels, continued to expand by opening more than 6,200 rooms across 46 hotels during the period.

This represented an 11% rise in room openings compared to the same quarter a year earlier.

IHG told shareholders that global revenues per available room grew by 2.6% for the quarter.

Elie Maalouf, chief executive officer of IHG Hotels & Resorts, said: “There was an impressive performance in EMEAA (Europe Middle East Africa and Asia) which was up nearly 9%.

“The Americas, having already recovered very strongly, was broadly flat due to some adverse calendar timing, and Greater China grew by 2.5% and will continue to benefit from returning international inbound travel this year.

“Global occupancy moved up to 62% and average daily rate increased by a further 2% as pricing remained robust, reflecting the complete return of leisure, business, and group travel.”

Watch: Apple Q2 earnings: Key takeaways

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(Bloomberg) — BHP Group Ltd.’s audacious approach for Anglo American Plc stands to reshape the global mining industry if it succeeds as planned, and antitrust authorities from China to South Africa and Japan are likely to play as important a role as shareholders in determining the final outcome.

Most Read from Bloomberg

The proposed $39 billion combination — which has been rejected by the smaller rival — would create the world’s largest copper producer, with about 10% of supply, and add heft to BHP’s already significant iron ore and coal operations. It would also require Anglo to divest South African subsidiaries. That’s more than enough to trigger intense oversight by regulators concerned about implications for market concentration and access to key minerals.

With BHP, Anglo and rivals pondering their next moves, here’s a run through the global antitrust landscape.

China

While Anglo American produces a varied suite of commodities from more than a dozen jurisdictions that span the globe, the biggest likely antitrust obstacle to its ambition focuses squarely on copper. It’s the heart of the deal’s rationale for BHP, given the metal’s role in the energy transition, but also a major concern for governments everywhere — nowhere more so than in China, the top consumer of the metal.

“I would totally anticipate that China would complain, full stop,” Allan Trench, professor at the University of Western Australia Business School, told Bloomberg, highlighting concerns about copper concentrate. That portion of the market — the semi-processed form of the metal – has been very tight this year, forcing smelters into debilitating competition for supplies.

Beijing has established form when it comes to forcing an acquiring company into select divestments to secure antitrust approval. In 2013, Glencore Plc was able to secure its $30 billion takeover of Xstrata Plc — but after agreeing to sell the Las Bambas copper mine in Peru, following concerns raised by China’s regulator. The asset went to a Chinese producer.

Read more: Chinese Miners See Opportunities as BHP’s Mega Bid Unfolds

Since then, however, much has changed. It’s unclear Beijing would, in 2024, be able to impose a penalty and benefit from the remedy. Trade tensions between China and Western nations are more elevated, including around strategic minerals and Beijing’s dominance of green technology.

The shift toward clean fuel has also turbo-charged expectations for copper demand, while miners are only finding it harder — and more costly — to bring new pits online.

“Glencore’s bid for Xstrata came at a time when the China demand story had already been driving the copper price for more than a decade and there were some questions over how long that had to run further,” said Craig Lang, principal analyst at CRU Group. “It was pre the green-energy transition, which is driving the demand outlook today.”

WilmerHale law firm partner Lester Ross said that Beijing would have concerns, stressing that China would want to ensure supply is unaffected. “The most important thing — more than the price setting — is simply access to, and control of, the resource,” Ross said.

Peter Arkell, chairman of the Global Mining Association of China and managing director of consultants Carrington Day, said both BHP and Anglo were good suppliers to the Chinese market: “They both have very strong relationships with China, so I don’t think, from that point of view, China’s going to be concerned.”

Of course, China could still benefit from the deal, if metals heavyweights like China Minmetals Corp. acquire assets that BHP wants to — or is forced to — divest.

South Africa

Anglo may have its roots in South Africa, but BHP’s putative deal envisages the spinoff of its controlling stakes in local platinum and iron ore companies to its shareholders as a condition. With the country due to head to the polls, that’s already touched a nerve.

A keenly contested race, this month’s election could see the ruling party lose its majority for the first time since the African National Congress came to power in 1994. The opposition has already presented BHP’s bid as a stinging rebuke of the government’s handling of the economy in a country with one of the world’s highest unemployment rates and deteriorating infrastructure.

Read more: BHP CEO Flies to South Africa to Push $39 Billion Takeover

“The South Africans will be pretty worried, given the prominent position of Anglo’s history of significant participation in the South African economy,” said Arkell. “From the South African regulator’s point of view, if a Chinese entity entered the discussion for some or all of Anglo’s assets, the South African regulators might say ‘Actually, we prefer that’.”

Chile

There may be a smoother ride in Chile, where Anglo’s interests include a stake in the giant Collahuasi mine. While the authorities may take a look at the potential deal’s impact, they aren’t expected to impose any significant restrictions given the country ships out almost all of the copper it mines.

“In antitrust terms, in Chile there are no risks from the point of view of copper production, since Chile practically does not consume this metal,” said Juan Ignacio Guzman, head of GEM, a mineral consulting firm in Chile.

Chile’s competition authority, meanwhile, has declined to comment on any antitrust issues given it hasn’t been notified of, or studied, the BHP proposal.

Japan

Japanese authorities are also likely to run the slide rule over any transaction, in part because adding Anglo’s coal and iron ore mines in Australia and Brazil to BHP’s already extensive portfolio could rattle Japanese steel mills, which rely heavily on external supplies. In the steelmaking-coal business, a combined business could account for as much as 19% of all seaborne shipments, although that’s less than BHP’s share in 2022, according to Bloomberg Intelligence.

Rest of World

Given the size and significance of the potential bid, BHP will need to notify competition authorities in countries or blocs such as the European Union beyond the dozen or so in which Anglo produces materials. Back in 2012, the EU authorities gave their seal of approval to Glencore’s takeover of Xstrata after the former resolved concerns that centered on preserving competition in zinc, offering to sell its stake in the then-largest producer of the metal.

“Many countries’ competition laws have extraterritorial reach,” said Wendy Ng, an associate professor at the University of Melbourne’s law school. “I would expect that BHP-Anglo American will need to file for merger competition review in countries beyond the 12” that Anglo operates in, she said.

BHP declined to comment for this story.

–With assistance from Sybilla Gross, Shoko Oda and William Clowes.

Most Read from Bloomberg Businessweek

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April 30th

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(Bloomberg) — Glencore Plc is evaluating a potential bid for Anglo American Plc, a move that could set up a takeover battle with BHP Group Ltd. for the mining company, Reuters reported, citing people it didn’t identify.

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Anglo last week rejected a $39 billion all-stock proposal from BHP. The Australian miner is considering making an improved proposal, people familiar with the matter said Saturday. A tie-up with Anglo would give BHP about 10% of global copper mine supply ahead of an expected shortage of the metal that some watchers predict will send prices soaring.

Anglo’s American depositary receipts jumped in New York trading on Thursday, rising as much as 7.5%.

Read More: BHP CEO Flies to South Africa to Push $39 Billion Takeover

(Updates with ADR price in last paragraph.)

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By Clara Denina, Pratima Desai and Felix Njini

LONDON (Reuters) -Commodities group Glencore is studying an approach for Anglo American, two sources said, a development that could spark a bidding war for the 107-year old mining company.

Glencore has not yet approached Anglo, one of the sources said. The discussions are internal and preliminary at this stage and may not result in an approach, the source added.

"We do not comment on market rumour or speculation," a Glencore spokesperson said.

Anglo on Friday rejected a $39 billion all-stock proposal from the world's No. 1 miner BHP Group.

BHP's proposed premium was 31% above Anglo's closing price on April 23.

A source familiar with the matter previously told Reuters that the Australian mining giant is considering making an improved offer. It has until May 22 to make a formal bid.

U.S. shares of Anglo American rose after the news, closing up 6.5% on the session. Glencore’s U.S. shares fell 1%.

Anglo is attractive to its competitors for its prized copper assets in Chile and Peru, a metal used in everything from electric vehicles and power grids to construction, whose demand is expected to rise as the world moves to cleaner energy and wider use of AI.

Anglo American and Glencore each own 44% of the Collahuasi mine in Chile, estimated to have some of the world's largest reserves of copper.

At the same time, Anglo's sprawling portfolio also includes platinum, iron ore, steelmaking coal, diamonds and a fertiliser project.

Anglo's share price has jumped since the offer was made public.

Before that, the miner had underperformed its peers following production downgrades and writedowns that led to a strategic review of its assets in February.

Glencore is still in the middle of a $6.9 billion acquisition of 77% of Canadian miner Teck's coal unit, which it expects to close by the third quarter this year.

A precondition of BHP's proposal was that Anglo sell its shares in Anglo Platinum (Amplats) and Kumba Iron Ore in South Africa, a country the world's largest listed company exited in 2015.

In a statement on May 2, BHP said that the proposal "reflects the priorities for its portfolio and opportunity for synergies."

Glencore owns coal and chrome assets in South Africa.

"Unlike BHP, Glencore could benefit from keeping Kumba and marketing iron ore, and Glencore may face less political pushback in South Africa, especially if it were to propose a straightforward all-share deal that does not include Kumba and Amplats demergers," Jefferies analyst Christopher LaFemina said in a research note on April 29, where he assessed different takeover scenarios for Anglo American.

(Reporting by Clara Denina, Pratima Desai, Felix Njini and Ira Iosebashvili, Editing by Veronica Brown and Michael Erman)

(Bloomberg) — BHP Group Ltd. has deployed a senior team including its chief executive officer to South Africa as the world’s largest miner ramps up efforts to win over government officials, regulators and local shareholders, all of whom could yet determine the outcome of its proposed tie-up with rival Anglo American Plc.

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The executives have already begun conversations with key stakeholders, focusing on explaining the detail of the existing $39 billion proposal — currently back on the drawing board after it was rapidly rejected by its target — and its benefits, according to people familiar with the matter. Melbourne-based CEO Mike Henry has flown to South Africa and was in the country on Thursday, the people said.

Despite its own historic links, BHP is starting on the back foot in South Africa, where the now London-based Anglo was founded and remains a household name, after its approach for the smaller miner last week caught senior officials off-guard. BHP’s complex proposal includes a plan for Anglo to spin off its Johannesburg-listed platinum and iron ore units before an eventual takeover of the remaining assets.

News that BHP wants an Anglo shorn of Kumba Iron Ore Ltd. and Anglo American Platinum Ltd. comes at a difficult time for the government. The country is due to hold a national election later this month, a keenly contested race which could see the ruling party lose its majority for the first time since the African National Congress came to power in 1994. The opposition has already presented BHP’s bid as a stinging rebuke of the government’s handling of the economy in a country with one of the world’s highest unemployment rates and deteriorating infrastructure.

BHP issued a statement on Thursday emphasizing that its proposal was not an indictment of the country.

“The proposed structure does not reflect a view of South Africa as an investment destination and is based on portfolio and commodity considerations,” the company said.

BHP’s team aims to engage with President Cyril Ramaphosa’s administration among other key stakeholders, the people said, laying out the exact detail of the multi-stage deal, plus the benefits of returning control of Amplats and Kumba to South Africa, with more of their cash flow likely to stay close to home and a larger free float on the Johannesburg Stock Exchange. South Africa’s state pension fund controls 8.4% of Anglo’s shares – only BlackRock Inc. owns more.

Even with more clarity, a charm offensive will be tough to pull off. Mining Minister Gwede Mantashe told Bloomberg on Wednesday, a public holiday in South Africa, that BHP had not yet contacted his department to explain its plans. Also the ANC’s national chairperson, he has said that he “wouldn’t support” the deal as currently outlined. The minister has criticized BHP for divesting its South African assets in 2015 through the creation of South32 Ltd., only 14 years after its merger with Billiton Plc.

Read more: BHP’s $39 Billion Bid for Anglo American Was Years in the Making

Founded in 1917 by Ernest Oppenheimer, Anglo American has long ties to South Africa and was built on the back of the country’s gold mines before moving into diamonds. Over recent decades, however, the company has grown rapidly overseas, developing and buying coal mines in Australia, iron ore in Brazil and adding copper in Peru and Chile.

Anglo’s South African platinum and iron ore properties are going through troubled times. Amplats is slashing costs in response to slumping platinum prices and Kumba has cut output guidance due to the poor performance of state-run rail and port infrastructure.

If a sweetened offer is successful in winning over BHP’s quarry, Anglo itself will have a crucial part to play in helping the transaction over regulatory hurdles in South Africa, said Dawid Heyl, a portfolio manager at Ninety One, which has a 2.3% stake in the target company.

“I think they would be able to convince government and all of its bodies to let the deal go through,” Heyl said, adding that catch would make a hostile approach difficult.

If Anglo wants to play a “defense strategy” with shareholders, it can use its “position in South Africa to say it’s going to cost a lot of money in terms of capital gains tax or dividend tax to dividend Kumba and Amplats out to existing shareholders,” Heyl said.

South Africa will have opportunities to step in. The country’s Competition Commission has said the distribution of Anglo’s shareholdings in Kumba and Amplats to the group’s shareholders – a precondition in BHP’s opening proposal – would “very likely” require the agency’s approval. The subsequent takeover could also need sign off from the regulator since BHP would be buying manganese and diamond mines located in the country.

Regulators including the Competition Tribunal evaluate antitrust impacts but also “public interest” factors, including how a proposed acquisition will affect employment levels and historically disadvantaged people. Some concessions and guarantees there could win BHP more favor.

Oil trader Vitol Holding BV was recently allowed to acquire service stations in South Africa as long as it buys products from local refineries, maintains employee headcount and increases employee ownership. Meanwhile, Amplats is currently considering a restructuring that could cut 3,700 jobs.

(Updated with BHP statement from fifth paragraph.)

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(Bloomberg) — As BHP Group considers its next move, there’s one big question facing the mining world’s bankers, analysts and executives at rival producers: What’s Anglo American Plc actually worth?

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Anglo’s shares are trading about 8% above the price implied by BHP’s initial proposal, which was swiftly and firmly rejected, and Bloomberg reported on the weekend that the larger firm was considering an improved offer.

But how high can BHP go? The world’s biggest miner needs to thread the needle with an offer that can win over Anglo investors while maintaining the support of its own shareholders — especially given the company’s history of disastrous dealmaking.

And while BHP’s bid is driven by its interest in Anglo’s huge copper business, the company produces a hodgepodge of other commodities from diamonds to platinum and coal — each with different market dynamics and degrees of attractiveness. BHP wants Anglo to spin off its majority stakes in two South African miners even before a deal takes place, and has suggested it would put other unwanted pieces up for sale as well.

Diversified Dilemma

The mining industry can be loosely divided into two types of companies: “pure plays,” which focus on one particular metal such as copper or gold, and “diversified” miners — conglomerates like BHP and Anglo that produce a wide range of often-unrelated commodities.

Pure plays in a certain market tend to trade at similar multiples of their earnings, making them easier to value.

But things get a lot messier when it comes to diversified miners, each with a unique combination of commodities under a single management and corporate structure. The diversification helps makes the companies more resilient to demand shocks in any single market, but also means that investors don’t get the full benefit of price rallies if group earnings are weighed down by weakness in other parts of the business.

In Anglo’s case, its particularly unusual mix of niche commodities — it’s the only large miner with big diamonds and platinum operations, for example — are seen as one of the reasons that the company hasn’t been successfully targeted in the past. The iconic De Beers business in particular could be difficult to value, as its only real competitor is Russia’s sanctioned diamond miner.

Even in the absence of a blowout offer from BHP or another rival, Anglo is under pressure to convince shareholders that it can realize more of the latent potential in its portfolio.

Read: Anglo’s Stumbles Make It Prey for Mining’s Biggest Predator (1)

Bloomberg reported last week that activist hedge fund Elliott Investment Management has emerged as a top-ten shareholder, and Anglo was already reviewing its businesses even before the BHP bid, in an effort to turn a corner after a series of disappointments that sent its shares plunging.

There are growing expectations that even if Anglo rejects its suitors’ advances, the company could end up being broken down to realize the value of the sum of its parts.

All About Copper

There’s no doubt that Anglo’s South American copper business is the crown jewel. In fact, analyst estimates suggest that the copper business — if it were split out into a standalone, pure-play company — would probably have a higher valuation than Anglo’s entire market capitalization just before Bloomberg broke the news of BHP’s approach.

The question is what other suitors will be willing to pay for the rest of Anglo’s businesses.

The listed South African iron ore and platinum businesses, which BHP wants Anglo to spin off, trade at much lower multiples to earnings than Anglo’s high-flying copper business probably would on its own.

Still, Anglo has some of the world’s best coking coal assets in Australia, while its Minas Rio iron ore mine in Brazil also holds appeal to BHP. While part of the rationale for the deal is to dilute BHP’s dependence on the steelmaking ingredient, Anglo produces a very high-quality iron ore product which is increasingly in demand and would improve the sort of material BHP could offer its customers.

That could leave BHP with more room to bump up its offer — while other iron ore majors like Rio Tinto could also be interested.

Buy or Build

One factor is particularly crucial in determining where the ceiling for incoming bids might be: The difference between the cost of buying Anglo and the typical investment needed to build a copper mine from scratch.

Construction costs have surged in recent years and projects frequently face lengthy delays and stiff local opposition, which helps increase the appeal of buying existing mines instead.

On the other hand, pure-play copper miners tend to trade at relatively high multiples — even before the usual takeover premiums are factored in — and the mining industry has been punished by investors in the past for overpaying in a series of disastrous deals.

That’s partly why Anglo is now being viewed as an attractive target: production missteps across its mining portfolio sent its shares tumbling over the past year while other copper miners have rallied.

It’s over a decade since BHP pursued a deal of this size, but there is one recent purchase that might be instructive: the company last year acquired Australian copper miner Oz Minerals for $6.4 billion.

Even if BHP is only interested in Anglo’s copper, its initial bid is still about 13% lower than the price-per-ton of copper it paid for Oz’s mines, according to Bloomberg calculations.

Analysts and traders surveyed by Bloomberg suggested BHP would need to offer between £28 and £35 per share, with the average estimate coming in at £30.43 — about 15% higher than where Anglo’s shares were trading Thursday.

And after Anglo rejected BHP’s multi-step deal structure, there’s also the potential that a rival might be better positioned to make a higher, simpler offer.

“From what we have seen so far the proposal does not reflect the value of the assets or the growth pipeline,” John Teahan, portfolio manager of the Redwheel Climate Engagement Strategies, said in an emailed statement. “It appears a rather opportunistic bid due to the recent weakness in the Anglo American share price, but the move may spur further interest.”

–With assistance from Alexandra Muller, Henry Ren, Jack Farchy and Thomas Biesheuvel.

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(Bloomberg) — A takeover of Anglo American Plc would need to be pitched at more than £30 ($37.6) per share, a higher price than BHP Group Ltd. offered last week, according to analysts and traders surveyed by Bloomberg.

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Anglo American shares are trading 8.8% above the value of BHP’s rebuffed takeover proposal, a sign traders are also expecting a higher bid. The premium has increased since Bloomberg News reported over the weekend that BHP is considering making an improved proposal.

Of the 12 survey participants who gave an acceptable price for a possible deal, the average value was £30.43 per share, with a range in responses between £28 and £35. BHP’s initial proposal, which has several moving parts, was at about £24.44 pence a share, according to a rough calculation by Bloomberg News based on where all the stocks are trading near midday in London.

Analysts at Deutsche Bank led by Liam Fitzpatrick see two possible scenarios: either the company is acquired at an improved price, or Anglo American delivers on some of the divestments proposed by BHP, which include a spin-off of platinum and iron ore subsidiaries.

A bid price above £31 would reflect fuller value, particularly if a cash component is introduced to compensate for uncertainties related to the spin-offs, Fitzpatrick wrote in a research note published Monday.

There is no certainty that any offer will ultimately be made. BHP has until May 22 to announce a firm intention to make an offer.

(Adds comparison to current BHP proposal in second and third paragraph)

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By Felix Njini and Clara Denina

JOHANNESBURG/LONDON (Reuters) – BHP Group can't cherry pick Anglo American assets without paying a hefty premium, Anglo investors told Reuters, concerned that they stand to lose heavily by holding shares in South African subsidiaries.

The world's No. 1 miner is weighing up its next move after its initial $39 billion takeover proposal for smaller rival Anglo was rejected last week. The proposed premium was 31% on Anglo's implied value.

BHP has proposed that Anglo sell its shares in units Anglo Platinum (Amplats) and Kumba Iron Ore as an option to exit the South African assets it doesn't want included in the deal.

Anglo said the unsolicited proposal significantly undervalued the company and introduced uncertainty, complexities and execution risk.

If the BHP proposal goes ahead, Anglo investors "could be stuck with three pieces of paper for a deal that could take a long time to close," a source at a Cape Town-based fund manager told Reuters.

The process to de-merge South African assets could take as long as 18 months, the source added, due to various regulatory processes that the transaction would need to go through. There is a risk that South African regulatory authorities, particularly its central bank, could be concerned about capital outflows from foreign investors not willing to hold the shares, the source added.

"BHP could just make it a clean offer and then it's up to them to deal with the un-bundling of the shares," the source said. "When the deal goes through they un-bundle Amplats and Kumba to their shareholders."

Amplats and Kumba's share prices could also come under significant selling pressure if the units were demerged, as several shareholders would not be able to hold the stocks as these are in South Africa, another source familiar with the companies said.

The majority of shares in Kumba and Amplats are sitting in liquid hands, the source said. "So the 30% premium is going to get eaten up by the loss on those other shares tanking."

CHERRY-PICKING

"I think it (the current bid) … places all of the risk on Anglo shareholders," said Django Davidson, partner and portfolio manager at Hosking Partners, which holds shares in Anglo.

"BHP wants to buy the good bits without any of the friction of disposing of the bad bit. It's by no means clear what the de-mergers would mean for the relationship with the South African government and what the underlying commodity prices will do over that period," Davidson added.

BHP has until May 22 to submit a binding offer and investors anticipate the company to sweeten its bid.

"BHP is seeking to make Anglo some sort of an agent for their own deal," Shane Watkins, Chief Investment Officer at All Weather Capital, said.

All Weather Capital holds shares in Anglo and BHP and Watkins said the nation's central bank is unlikely to approve the transaction if Anglo opts to de-merge its South African units.

"Anglo must tell BHP they don't like the deal or that they should buy the whole company, BHP can't cherry-pick," another source said.

(Reporting by Felix Njini and Clara Denina; Editing by David Evans)

(Bloomberg) — BHP Group Ltd.’s proposal for Anglo American Plc to spin off platinum and iron ore units before a takeover would likely require approval from South African regulators, according to a government agency.

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Under BHP’s offer, Anglo would need to first divest its controlling interests in Kumba Iron Ore Ltd. and Anglo American Platinum Ltd., both of which are listed in Johannesburg and operate assets in South Africa. Anglo rejected the initial $39 billion proposal from the Australian mining giant last week.

Analysts have pointed to South Africa as one of the biggest potential hurdles to a deal, even if Anglo’s board can be won over. Founded in 1917 by Ernest Oppenheimer, Anglo has long ties to South Africa and was built on the back of the country’s gold mines. The proposed spinoffs highlight the fragile state of the country’s critical mining industry, as the ruling African National Congress struggles to bolster its appeal before elections next month.

Even before BHP’s proposal, Anglo’s platinum subsidiary was weighing thousands of job cuts in a country with one of the world’s highest unemployment rates. The ANC’s national chairman has signaled his opposition to BHP’s proposed takeover.

Even though BHP doesn’t want to buy Kumba and Amplats, South Africa could have an important role to play if an eventual deal is structured in the manner originally outlined. The country’s Competition Commission not only evaluates antitrust impacts but also “public interest” factors, including how a proposed acquisition will affect employment levels and historically disadvantaged people.

“There are numerous and current merger reviews in which the agency has imposed stringent conditions on the basis of the transactions’ effect on the public interest criteria,” said John Oxenham, Johannesburg-based managing partner at Primerio, a law firm that specializes in competition cases.

BHP is considering making an improved proposal for London-listed Anglo, Bloomberg reported April 27, citing people familiar with the matter. The main prize for BHP is Anglo’s South American copper operations, while the non-South African iron ore business and coking coal mines in Australia would also fit well with its existing operations.

If Anglo shareholders accept an improved offer with the same conditions, spinning off Kumba and Amplats is “very likely to meet the mandatory thresholds” that would require approval from South Africa’s regulatory authorities, Competition Commission spokesman Siyabulela Makunga said in an emailed response to questions. The agency assesses each deal “based on its own merits” in accordance with the law, he said.

Read More: BHP’s $39 Billion Bid for Anglo American Was Years in the Making

South Africa Mines Minister Gwede Mantashe has signaled his opposition to the takeover, telling Bloomberg last week that he “wouldn’t support” the proposal. “I don’t think Anglo will agree to that,” said Mantashe, who also chairs the ANC.

The country’s state pension fund – the Public Investment Corp. – is also Anglo’s second-largest shareholder, controlling an 8.4% stake, according to data compiled by Bloomberg.

–With assistance from Antony Sguazzin.

(Updated with information on Competition Commission from third paragraph)

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(Bloomberg) — Copper’s surge to $10,000 a ton just days after the bombshell news that BHP Group is trying to buy Anglo American Plc is highlighting a core disconnect at the heart of the industry: miners just aren’t building enough mines.

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The biggest producers all want to increase copper output to take advantage of rising demand in electric vehicles, grid infrastructure and data centers. BHP has made its $39 billion proposal to buy Anglo American in large part because the world’s biggest miner wants to grow in copper.

Read: BHP’s $39 Billion Bid for Anglo American Was Years in the Making

Yet, that bullishness still isn’t translating into the huge investments involved in developing new pits and shafts and associated infrastructure. A successful takeover would make BHP the biggest copper producer with about 10% of the market, but it won’t make any difference toward meeting the world’s supply needs.

Production from existing mines is set to fall sharply in the coming years, and miners would need to spend more than $150 billion between 2025 and 2032 in order to fulfill the industry’s supply needs, according to CRU Group.

“Copper looks like the last remaining supply risk for the EV industry,” said Bernard Dahdah, senior commodities analyst at Natixis SA. “In a net-zero scenario, we’re going to need a vast amount of copper, and we’re going to need a different strategy to boost supply.”

The question of supply has been the driving force for copper’s 16% rally this year. Unlike the last time that prices hit $10,000, copper demand is relatively tepid for now and the physical market is well supplied.

Read: The Copper Market Grapples With a Crucial Question

Instead, the surge is being fueled by investors betting on looming shortages and the expectation that mining executives and their shareholders aren’t ready to finance and build enough new projects — and would rather buy out their rivals instead.

The reasons behind the underinvestment aren’t new, but they’re all getting worse: high-quality deposits are getting harder to find, and so is funding for small explorers; social and environmental resistance to mining is growing, and the cost of labor, equipment and raw materials has surged. And the handful of miners that have kept building have had a torrid time of late.

Speaking at the copper industry’s annual Cesco Week gathering earlier this month — and one day after BHP had privately made its pitch to Anglo — BHP’s head of copper and potash strategy Laura Whitton gave an assessment of the ways in which copper mining had become more difficult and more expensive.

The world was more reliant on older mines with lower ore grades than in the past, she said. “On supply, there’s a true challenge.”

While the copper market is relatively well supplied for now, investment bank analysts and a growing crowd of hedge fund investors are increasingly bullish on the outlook, believing it has the potential to rally to unprecedented levels over the next few years as the market faces growing shortages.

One key challenge is that new mines take years and often decades to build, and so decisions need to be calculated based on whether copper prices far in the future will justify the investment.

Miners would need $12,000 copper to justify spending on new mines, according to Olivia Markham, who co-manages the BlackRock World Mining Fund. And even then their investors may be reluctant to fund them.

“At a geological level, we have the projects — what we need is the money,” said Dahdah. “The last time copper prices were at $10,000, miners didn’t increase spending, they increased dividends.”

The lessons of the past decade would suggest that if the money does flow, it could come from China, but there are headwinds there too. Chinese-owned miners were responsible for about 40% of the net increases in supply over the past decade, but that looks set to fall to 16% over the next five years, according to McKinsey and Co.

Massive Chinese investment in overseas mining assets has already upended the markets for key battery metals such as nickel, lithium and cobalt, pushing them all into surpluses. Copper is also a key component in EV batteries and motors, but the global market is so large that China won’t be able to solve the industry’s supply challenge on its own.

“There is a clear and compelling need for additional mine capacity to be brought online,” said William Tankard, principal analyst for base metals at CRU. “The gauntlet is being laid down at the feet of the miners, and it’s going to be exceptionally challenging to deliver.”

Copper rose 0.4% to $10,003 a ton on Monday, adding to five weeks of gains.

–With assistance from Jack Farchy, Martin Ritchie and Jake Lloyd-Smith.

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(Bloomberg) — Several of Glencore Plc’s largest shareholders believe that the company should retain its coal assets, according to people familiar with the matter, throwing a proposed spinoff into doubt.

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Glencore, the world’s largest shipper of thermal coal with a market capitalization of about $73 billion, had said it intended to spin the business off within two years of closing a deal to buy the steelmaking coal assets of Teck Resources Ltd.

But major Glencore shareholders believe that the company would be better off retaining its coal business, the people said, asking not to be identified because the information is private. The company’s largest shareholders are former Chief Executive Officer Ivan Glasenberg, the Qatar Investment Authority, and BlackRock Inc.

Glencore’s coal business is one of its most profitable units, driving record returns in recent years, and the plan to exit coal and list a new company in New York represented a major strategic pivot under current boss Gary Nagle. The company had long resisted pressure to follow rivals in exiting the business, arguing that the world still needed the dirtiest fuel and that it was more responsible to run the mines itself than sell them.

Read: Glencore, an Empire Built on Coal, Prepares to Say Goodbye

It’s not clear when and in what form Glencore might put the spinoff to a shareholder vote, with the deal to buy Teck’s coal business yet to close. The shareholders will only form a final view once there is a concrete proposal on the table, and their stance could still evolve, the people cautioned.

While Glencore announced its intention to spin off its coal assets when it agreed to the Teck deal in November, it has since then made clear that the separation would only go ahead if shareholders wanted it.

A Glencore spokesperson referred to comments made by CEO Nagle in February.

“When we announced the transaction, we said our intention was to spin out, and that is our intention,” Nagle told investors. “But it’s always subject to what our shareholders want, and we will consult with our shareholders, and it’s the decision of the shareholders ultimately to do that.”

Glencore’s coal business has long been a source of controversy among climate activists and some investors. In 2020, Norway’s sovereign wealth fund said it had sold its Glencore stake due to the company’s exposure to thermal coal.

When he unveiled the deal to buy Teck’s coal assets in November, Nagle argued that a spinoff made sense because Glencore’s coal and metals businesses would attract higher valuations as separate businesses than as one.

After the spinoff, Glencore’s remaining business would be one of the biggest miners and traders of copper, nickel and cobalt, all essential commodities for the energy transition.

But Glencore’s largest shareholders increasingly view the coal business as a cash cow that strengthens the entire company, the people said, and they see few benefits in spinning it off.

Glasenberg, the company’s largest shareholder according to data compiled by Bloomberg, rose to become Glencore CEO after running the company’s coal business and has long been a fan of the commodity.

Other shareholders like QIA also appreciate the cash flows that coal brings. Some, including BlackRock, might be forced to sell the coal business if it was spun off due to their own policies preventing them from owning coal-focused companies.

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Written by Karen Thomas, MSc, CFA at The Motley Fool Canada

2024 has been an interesting year so far. Despite a backdrop of higher interest rates and stubbornly high inflation, the TSX Composite Index is up 5% so far this year. Similarly, many stocks keep moving higher as they shake off macroeconomic risks and uncertainties. In this article, I’d like to discuss two hot stocks that have outperformed this year and are likely to continue to move higher.

Without further ado, here they are.

Agnico-Eagle Mines stock: +24.3% year to date

Arguably the world’s safest gold mining company, Agnico-Eagle Mines (TSX:AEM), finds itself in a favourable position these days. Years of laser focus on operational excellence and a conservative company risk profile have brought the company years of consistency, stability, and strong cash flows.

Today, the market is noticing like never before. This is because of two things. Firstly, in today’s world of increasing geopolitical turmoil and conflict, investors appreciate that Agnico is not affected by these forces. This is a function of the fact that Agnico-Eagle’s mines are all in politically safe, pro-mining jurisdictions, including places like Canada, Europe, Australia, and Mexico.

The benefits of this are innumerable. For example, Agnico’s mines operate without disruption caused by civil unrest and/or government interference. In turn, this leads to consistently stable results that are only affected by market forces and operational factors. In other words, Agnico is more of a master of its own fate versus other gold companies that have operations in unstable parts of the world.

Secondly, the gold price has rallied 8.5% so far this year. This is a function of inflation and geopolitical turmoil in the world. Gold is the safe haven for investors, after all. In fact, with persistently high inflation and continued geopolitical turmoil, the outlook for the price of gold remains bullish.

This, coupled with Agnico’s record production, has resulted in Agnico-Eagle Mines stock rallying 24.3% so far this year.

Teck: +26% year to date

Teck Resources (TSX:TECK.B) is a $34.5 billion globally diversified mining and metals company. It has operations in places such as Canada, the U.S., Chile, and Peru. Right now, the company’s operations are made up of three segments: copper, zinc, and steelmaking coal, which currently make up the biggest portion of the company’s revenue.

But this is about to change, as Teck has recently sold its coal business in two separate transactions after it was clear that shareholders did not support a spinoff of the business. The sale values the coal business at US$9 billion, which means that Teck will receive a significant cash infusion. This cash will be used for three things: debt repayment, investment to expand its copper business, and a quote “significant” return of cash to shareholders.

Once the sale of its coal business closes, Teck will emerge as a copper-focused company. The company has already been focusing its capital spend on its copper business. In fact, copper production increased 58% in Teck’s latest quarter.

Interestingly, this transformation and focus could not come at a better time. The copper market is expected to be undersupplied over the next few years, as supply disruptions and increases in demand have taken hold. As a result, copper prices have been rallying and are up 18% so far this year.

Looking ahead, with current liquidity of $7.9 billion and the $9.6 billion in cash proceeds from the coal business, Teck has the financial capability to significantly ramp up its copper operations in the next few years. This positions the company really well to benefit from the expected bullish copper market.

The post 2 Sizzling Hot Stocks to Buy Right Now appeared first on The Motley Fool Canada.

Should you invest $1,000 in Agnico Eagle Mines right now?

Before you buy stock in Agnico Eagle Mines, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Agnico Eagle Mines wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 … if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $15,578.55!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 32 percentage points since 2013*.

See the 10 stocks * Returns as of 3/20/24

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MOST ACTIVE MINING STOCKS

Daily Gainers


CMC Metals Ltd.	CMB.V	+900.00%
Eden Energy Ltd	EDE.AX	+200.00%
GoviEx Uranium Inc.	GXU.V	+42.86%
Eagle Nickel Ltd.	ENL.AX	+41.67%
Citigold Corp. Limited	CTO.AX	+33.33%
Mount Burgess Mining NL	MTB.AX	+33.33%
Exalt Resources Limited	ERD.AX	+31.94%
Casa Minerals Inc.	CASA.V	+30.00%
Cariboo Rose Resources Ltd	CRB.V	+28.57%
Belmont Resources Inc.	BEA.V	+28.57%

EasternTime (ET)	Presentation	Ticker(s)
9:30 AM	Bannerman Energy Ltd.	OTCQX: BNNLF \| ASX: BMN
10:30 AM	Global Atomic Corp.	OTCQX: GLATF \| TSX: GLO
11: 00 AM	F3 Uranium Corp.	OTCQB: FUUFF \| TSXV: FUU
11:30 AM	Western Uranium & Vanadium Corp.	OTCQX: WSTRF \| CSE: WUC
1:00 PM	Myriad Uranium Corp.	OTCQB: MYRUF \| CSE: M
1:30 PM	C2C Metals Corp.	Pink: CTCGF \| CSE: CTOC

EasternTime (ET)	Presentation	Ticker(s)
9:30 AM	Novo Resources Corp.	OTCQX: NSRPF \| TSX: NVO
10:00 AM	CleanTech Lithium Plc	OTCQX: CTLHF \| AIM: CTL
10: 30 AM	Outcrop Silver	OTCQX: OCGSF \| TSXV: OCG
11:30 AM	WallBridge Mining Company Ltd.	OTCQB: WLBMF \| TSX: WM
12:00 PM	Minera Alamos, Inc.	OTCQX: MAIFF \| TSXV: MAI
1:00 PM	Graphite One Inc.	OTCQX: GPHOF \| TSXV: GPH
1:30 PM	Spruce Ridge Resources Ltd	OTCQB: SRCGF \| TSXV: SHL
2:00 PM	AbraSilver Resource Corp.	OTCQX: ABBRF \| TSXV: ABRA
2:30 PM	White Gold Corp.	OTCQX: WHGOF \| TSXV: WGO

EasternTime (ET)	Presentation	Ticker(s)
9:30 AM	Serabi Gold Plc	OTCQX: SRBIF \| TSX: SBI
10:30 AM	Silver Range Resources Ltd.	Pink: SLRRF \| TSXV: SNG
11: 00 AM	Newcore Gold Ltd.	OTCQX: NCAUF \| TSXV: NCAU

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MOST ACTIVE MINING STOCKS

Daily Gainers

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FOUND POSTS

CATL Commits US$4.4 Billion to Expand Mining Business

Mark Morabito’s Intrepid Metals Secures Key Land Position at Corral Copper Project in Arizona

India Expands Access to Critical Minerals With Mining Rule Changes

Glomar and Cobalt Blue Target US Refinery for Seabed Mineral Processing

Ontario Funds 68 Early-Stage Mining Projects Through Exploration Program