|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||10.32 - 10.60|
|52 Week Range||5.91 - 14.81|
|Beta (5Y Monthly)||1.20|
|PE Ratio (TTM)||7.66|
|Forward Dividend & Yield||0.47 (4.59%)|
|Ex-Dividend Date||Mar 12, 2020|
|1y Target Est||N/A|
Chile's powerful copper unions are headed into contract talks with a hand weakened by the coronavirus pandemic, giving an edge to miners like Codelco, Glencore and Antofagasta in negotiations that could influence wages and benefits for years. Chile's generally well-paid copper mine workers argue they should be adequately compensated for working in a riskier environment to keep pits open during the pandemic. Union leaders said it would be harder to achieve wage hikes, bonuses and benefit boosts now that the pandemic has swept through the global copper market and hit profits for miners in Chile, the world's top producer.
Five years after first ditching some coal companies, Nordic investors are turning their focus to bigger carbon emitters in a range of industries, paving the way for other funds to follow. Investors in the Nordic region have been among the vanguard of environmental, social and governance (ESG) investing, with Norway's NBIM grabbing most of the attention due to its size.
Five years after first ditching some coal companies, Nordic investors are turning their focus to bigger carbon emitters in a range of industries, paving the way for other funds to follow. Investors in the Nordic region have been among the vanguard of environmental, social and governance (ESG) investing, with Norway's NBIM grabbing most of the attention due to its size.
(Bloomberg Opinion) -- After 2008, metals and oil rebounded together from the depths of the financial crisis, as China’s consumption of raw materials took off. This time, their recoveries may look quite different.Crude faces a lengthy convalescence from the catastrophic lows of April, when U.S. oil plunged into negative territory. Industrial metal prices have fallen far less, and look healthier: Closures to control the spread of coronavirus in countries like Peru have squeezed production, just as China is gearing up. Add in Beijing’s infrastructure plans, expected to be outlined at the National People’s Congress meeting starting Friday, plus the prospect of green stimulus and more mineral-intensive clean energy, and the outlook looks rosier still.Copper is indicative of these divergent paths. Out of other metals, Bloomberg Intelligence reckons it has moved most closely with oil over 160 years — a coefficient of 0.96 over that time. The link is beginning to weaken, and the current crisis will only make that more pronounced.Why so?Oil has certainly made an impressive comeback over the past few weeks: Many producers are still losing money, but West Texas Intermediate is back above $30, and there was no repeat of April’s crash when the contract rolled over this week. Brent crude is up almost 90% after last month dropping below $20. That’s because the supply glut has shrunk, thanks to the end of Russia’s price war with Saudi Arabia and significant involuntary shutdowns among U.S. producers, easing concerns about global storage capacity. That’s helpful, even if improving prices could bring back some shale activity.Metals have also taken a hit to output from coronavirus lockdowns in Latin America and elsewhere. In late April, BMO analysts estimated these affected 23% of global capacity for copper, 15% for nickel and 24% for zinc. Projects like Anglo American Plc’s Quellaveco in Peru, where workers downed tools, could see delays. That’s helped copper to rise back toward a modest $5,500 per metric ton.Supply reductions aren’t enough to make a difference without better demand, though, and that’s where the divergence becomes clearer. China tells part of the story. Construction activity and manufacturing are on the mend, drawing down metal inventories. It’s true that oil consumption is reviving, too: China’s taxis, buses and cars have been back at normal levels since early April, and traffic congestion has returned. But while that’s good news for gasoline and local refiners, it’s hardly salvation for global oil. Recoveries elsewhere are progressing more slowly and most of the world’s aircraft are still grounded. Simply put, China’s recovery matters more for metals, with the country accounting for roughly half of global consumption. By comparison, it makes up less than 14% of oil demand.Now consider the cautious nature of Beijing’s economic reboot, which is a signal for other countries, and the bumps along the post-pandemic road to recovery. These make the picture darker for oil. Factories might keep producing washing machines, but more of us will stay away from leisure travel and work from home if incidents like the reappearance of the virus in China’s northeast repeat themselves. It’s not even clear that an aversion to the risks of public transport will get us back in our cars again, as my colleague David Fickling has pointed out. Demand for personal protective equipment like masks is hardly enough to offset a drop in gasoline and even jet fuel, which past experience suggests will take years to recover.The NPC is expected to include a revived version of past efforts to develop the country’s western hinterland, alongside other stimulus efforts. No one anticipates a boost akin to what was seen in 2008. Even a similar amount would probably have a weaker multiplier effect — yet the boost will matter for copper, zinc and more. And that’s before the wider green fiscal push, in and outside China, that favors mined materials needed for batteries, grids and energy storage. The solar industry in Asia-Pacific alone is expected to use around 378,000 tons of copper by 2027, almost double 2018 levels.Mark Lewis, global head of sustainability research at BNP Paribas Asset Management, splits the long-term pressures in three: the world’s push toward reducing carbon emissions, cheap renewable energy and air pollution, highlighted by the clear blue skies of recent weeks. Add in the behavioral changes brought by the pandemic and the future of oil is more uncertain than ever, he argues. With even Royal Dutch Shell Plc arguing that peak oil demand will come sooner than expected, it’s hard to disagree.There may not be a uniform global green stimulus, and some ambitions will remain just that. Yet a World Bank report last week gives an indication of the potential growth story: It says the goal of limiting the global temperature rise to 2 degrees Celsius will require production of graphite, lithium, and cobalt to ramp up by more than 450% by 2050, compared with 2018, in order to meet energy storage requirements. Aluminum and copper, used across technologies, will also be in demand. And that’s excluding infrastructure like transmission lines.In the future we’ll still need oil. We just might need metals more.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Norway’s $1 trillion wealth fund is doubling down on its climate action by making deeper cuts to its fossil fuel exposure.The exclusions span some of the world’s biggest coal miners and make use of climate rules for the first time to exit oil-sands firms. Glencore Plc and Anglo American Plc, utility RWE AG and Canadian oil producer Suncor Energy Inc. are among those hit by withdrawals that amount to about $3.3 billion based on Bloomberg calculations using the fund’s reported holdings at the end of last year.The move had been eagerly awaited by environmental activists after Norway tightened the fund’s restrictions on investments in thermal coal last year, closing what critics had described as a loophole to continue funding polluters.Oil StocksNorway’s fund, which owns about 1.5% of listed stocks worldwide, was built on the country’s revenue from oil and gas production. It has sought to take a leading role on responsible investment, with ethical guidelines spanning from a ban on tobacco and some weapons to restrictions tied to human rights and environmental issues.The central bank, which manages the fund, even argued for a full exit from oil stocks in order to reduce Norway’s exposure to oil-price risk. But the proposal was watered down by the government last year, sparing the world’s biggest oil producers.The new coal exclusions come after the government introduced absolute caps on thermal coal. Earlier iterations of the rules excluded companies that got more than 30% of their activity or income from coal and missed some of the biggest producers and users in the world.The latest exclusions also capture Sasol Ltd. and AGL Energy Ltd., Norges Bank Investment Management said in a statement on its website. It also placed BHP Group, Vistra Energy Corp., Enel SpA and Uniper SE under observation.Anglo American’s exclusion comes as it plans to exit its biggest thermal coal business within the next three years by spinning off its South African operations. The company has spent decades positioning itself as an environmental and social champion. But it has risked getting left behind on thermal coal, after Rio Tinto Group sold its last coal mine in 2018.Enel is committed to developing its business model in line with the objectives of the Paris Agreement, the Italian electricity giant said in an emailed statement. In November, it announced a plan to phase-out coal and said on Wednesday that revenues from coal, made up 3.5% of the group’s total in 2019.Canada, BrazilNorges Bank’s Executive Board also decided to exclude Brazilian iron-ore giant Vale SA in line with its rules on environmental damage, following repeated dam breaches that killed hundreds of people, as well as the country’s utility Eletrobras SA on the risk of human rights violations. It also excluded Egypt’s ElSewedy Electric Co.Other oil producers affected were Canadian Natural Resources Ltd., Cenovus Energy Inc. and Imperial Oil Ltd.Read: Brazil Iron Ore, Power Giants Excluded From Norway’s Wealth FundNorway’s wealth fund struggled to offload the shares of some of the excluded companies, saying that for several of them, the market situation, including the liquidity of individual shares, meant that it took a long time to sell the shares “in a reasonable manner.”(Adds comment from Enel in the ninth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Norway's $1 trillion sovereign wealth fund said on Wednesday it was excluding Glencore , Anglo American, RWE, Sasol and AGL Energy for their use and production of coal under updated ethical guidelines. Another set of companies - BHP , Uniper , Enel and Vistra Energy - were put under observation for possible exclusion at a later stage if they do not address their use or production of coal.
Mining minister Baldo Prokurica, in an interview with Emol TV, credited both public and private measures aimed at protecting workers with the industry´s resilience even as the virus has ravaged other parts of Chile´s economy. "One realizes that Chile has been one of the countries that will be least hit by this pandemic," Prokurica told the web news broadcast. Prokurica said official statistics from Chile state copper agency Cochilco estimate a total reduction in output of about 63,300 tonnes, or approximately 1% of the country´s annual production.
De Beers' Namibia joint venture, Namdeb, increased diamond production by 5.8% in the first quarter from a year earlier, according to data from De Beers' parent Anglo American. Mining in Namibia was not disrupted by the global coronavirus pandemic in the first quarter, as the country only went into partial lockdown on March 27, although De Beers Group cancelled a sales event owing to the lockdown. Before the outbreak of the virus, which has so far infected 16 people in the sparsely populated African nation, diamond mining was touted as one of the drivers of the expected economic recovery.
Moody's Investors Service ("Moody's") has today affirmed the Baa2 long term issuer rating and (P)P-2 short term ratings of Anglo American plc ("Anglo American") as well as the Baa2 ratings of the group's senior unsecured instrument rating. Moody's also affirmed the (P)Baa2 senior unsecured rating and (P)P-2 short term rating on Anglo American's medium-term note (MTN) program.
(Bloomberg Opinion) -- It’s looking decidedly somber out there for the world’s favorite sparkly stone.Diamonds were ailing even before the coronavirus came along. Now, weeks into lockdowns in the U.S. and elsewhere, all but the largest diggers, polishers and retailers are struggling for cash. Unable to sell its stones, Dominion Diamond Mines, the miner that sold luxury brand Harry Winston to Swatch Group AG in 2013, filed for insolvency protection late Wednesday. Anglo American Plc’s De Beers cut 2020 production guidance by a fifth Thursday, in line with demand.To secure their future, diamond giants may need a rebranding akin to the storytelling feat pulled off by Harry Oppenheimer, the late De Beers chairman who cultivated the engagement ring to overcome a slump after the Great Depression. In so doing, he forged a tradition that fueled sales for decades. Today, a refreshed myth-making effort could target the post-pandemic concerns of millennial consumers: marketing the diamond as a store of value in volatile times comparable to art, which is also authentic, traceable and sustainable.Since 2011, when prices peaked thanks to China’s new shoppers, diamonds have faltered. Lab-grown stones, initially priced confusingly close to the real thing, posed a challenge. To make things worse, a supply glut hit the market, pushing producers to cut prices. A 26-million-carat increase in 2017 was the largest single-year volume addition since 1986, according to consulting firm Bain & Co. Meanwhile, financing availability shrank dramatically as traditional lenders pulled away. A 2018 fraud scandal involving celebrated Indian jeweler Nirav Modi didn’t help. The coronavirus will accelerate some developments that aren’t unwelcome. In supply terms, the industry may look healthier if older or more marginal mines are obliged to stop digging. Rio Tinto Group last year had already announced the 2020 closure of its Argyle mine, which produces both low-quality gems and fabled pink diamonds, taking some 13 million carats out of global annual production of just over 140 million. The current crisis will add to that. In March, Dominion stopped work at its Ekati mine in Canada, and other pits have been closed or are working only partially. Not all will return.There will be a shakeout among polishers and perhaps more integration in some parts of the industry, of the sort demonstrated by Louis Vuitton’s purchase earlier this year of the largest rough diamond since 1905. Sales of rough and polished stones will change too, as travel restrictions in South Africa, Botswana and India push more deals online. It’s a remarkable feat for a conservative industry that thrives on face-to-face interaction, and arcane systems like De Beers’ “sights,” as its regular sales are known.Yet the scale of this health crisis, rapidly turning into an economic cataclysm, has also made other problems far worse. India’s polishers are not only strapped for credit, but also struggling with a weaker rupee, lockdowns and curfews; Thousands of workers have been forced to leave hubs like Surat altogether. Elsewhere, both diamantaires and jewelry buyers are stuck at home, making it harder to clear excess inventory. The flow of diamonds has dwindled to barely a trickle.The real concern is demand, where a grim outlook for disposable incomes suggests a hoped-for 2020 recovery is impossible, even as supply shrinks. The very top of the market may be insulated, but further down even China’s “revenge purchases” aren’t going to be enough. As my colleague Nisha Gopalan has pointed out, such splurges won’t save luxury products — especially if U.S. job losses continue to pile up. Inventory could flood the market, too.All this upheaval does makes it a good time to rethink the storytelling behind diamonds, though. Coordinated marketing, once the industry’s go-to solution, will need to make a comeback as consumers emerge from the wreckage of coronavirus. Post-pandemic values may change broadly.Three things could be highlighted. First, a store of value for the long term, especially for the largest gems where prices vary less. Like art, or fine wine, only wearable. Better yet, to appeal to the millennials that make up its consumer base, the industry can promote the stones’ authenticity, building on existing work around provenance and traceability, dating back to the Kimberley Process, the multilateral system aimed at ensuring the proceeds of diamond mining aren’t used to fund conflict. The industry is also sustainable, with relatively clean, chemical-free processes.Marketing spend has recovered after a dip in the past decade, but coordinated industry expenditure remains far below even the early 2000s. While the likes of De Beers and Alrosa PJSC may be reluctant to sponsor cash-strapped smaller rivals, it would be money well spent. Nearly seven decades after Marilyn Monroe’s immortal song, it's time for a new myth.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- After years of buying at the peak of the economic cycle and selling in the trough, could the world’s big diggers do the reverse? Compared to peers in oil and gas, Rio Tinto Group and the largest diversified miners are riding out the coronavirus storm in sheltered positions: They have low operating costs, little debt and more than $60 billion in liquidity.History matters here. Just over a decade ago, miners binged on hubristic investments like Rio’s acquisition of aluminum producer Alcan or Anglo American Plc’s Minas Rio iron-ore venture. In the hangover years between 2012 and 2016, some $200 billion was written off, and a generation of chief executives were shown the door. It was a near-death experience akin to what the energy sector is going through today, and one that left behind an industry focused on cleaning up, cutting back and returning cash to shareholders. Rio has been among the most generous, handing back $36 billion since 2016.It means the industry’s largest players went into this crisis with two things: balance sheets at their most robust in years, and a pedestrian growth outlook. Almost the opposite is true at long-coveted targets like Freeport-McMoRan Inc., with a market value of $11 billion, and First Quantum Minerals Ltd., valued at $3.5 billion. These mid-size base metal producers are beginning to look fragile, with expanding copper mines but nearly $19 billion of total debt between them. Their shares have fallen more than 40% this year. No one knows how long a recovery from the pandemic will take, or what life will look like on the other side, but miners have a little more certainty than most: Metals like copper, used for electrification and a host of consumer goods, will be needed, and will be in short supply. It’s a tantalizing state of affairs. As ever, things aren’t quite that simple, and even the heftiest miners aren’t immune to the world’s turmoil. BHP Group has to contend with the crashing oil price. Anglo American is dealing with lockdowns in South Africa, Peru and elsewhere, as governments try to contain the spread of coronavirus. Glencore Plc, long the most buccaneering of the large players, is tackling succession, trouble in Zambia and a pending U.S. Department of Justice investigation into its business practices.At Rio, Chief Executive Officer Jean-Sebastien Jacques has perhaps the strongest motivation to act. He is less exposed to many of these uncertainties, and is running a miner that still relies on iron ore for about three-quarters of its Ebitda, as steel consumption hovers at or near a peak in China. Large mainland miners, like acquisitive Zijin Mining Group or Jiangxi Copper Co., may be his competitors. There are cashed-up bullion players, too: Barrick Gold Corp.’s CEO, Mark Bristow, has said he could consider copper and even Freeport’s Indonesian Grasberg mine.The trouble is, we’re not yet at the distress levels that will prompt boards to approve a rush for checkbooks. Travel and due diligence are impossible, markets are too volatile for share deals and the next few months remain an unknown quantity. Shareholders may balk. In past crises, even distressed sellers were able to command premiums, so bargains will be tough. Copper prices are still above the depths of 2016.Worse, not even the most obvious prey would be easy to snap up: Freeport and First Quantum come with traps. Freeport, the world’s largest listed copper producer, faces the question of who will lead it when veteran Richard Adkerson retires, along with concerns over older U.S. mines and the costly move underground at Grasberg. Rio, unhappy with the environmental and political risks, sold its interest in the Indonesian mine in 2018. First Quantum, more bite-sized and so perhaps more appealing, battened down the hatches earlier this year with a poison pill, after Jiangxi Copper built an 18% stake. Its flagship Cobre Panama mine has yet to operate through a full wet season. Chinese players eyeing miners with Australian assets, meanwhile, would also have to deal with a regulator bent on discouraging opportunistic foreign bargain-hunters.Yet the longer the pandemic lockdowns drag on, the more the pain increases, as fixed costs go out and no cash comes in. It’s visible already in lithium, with Tianqi Lithium Corp. seeking to sell part of its stake in the Greenbushes operation in Australia, as it struggles to repay debt taken on to buy a stake in Chilean giant SQM. It’s rare to see large Chinese producers in distressed sales, even if lithium prices have plummeted since 2018. Rare-earth producer Lynas Corp., meanwhile, says it may need public funds to complete an ore-processing plant. Buyers won’t pounce yet. A global economic recovery isn’t in sight and will be slow; most will need a little more confidence that growth is coming back. That will mean a wider improvement than China’s stimulus and return to work, as encouraging as State Grid Corp.’s 2020 investment plans may be. They’ll also need travel restrictions to lift. Wait too long, though, and the opportunity to buy cheap will pass — again. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The cost of insuring against potential debt default by mining companies has risen to the highest in five years on mounting fears of recession, demand destruction and shutdowns to contain the spread of the coronavirus. Commodity group Glencore's five-year credit default swaps (CDS) - which traders use as a hedge against uncertainty - were up at 443 basis points on Tuesday from 190 bps at the end of February, data from information provider IHS Markit showed. Glencore's relatively higher debt has driven the jump in its debt insurance costs, analysts said, while Anglo's climbed on its exposure to South Africa and the struggling diamond sector.
Copper miners in Chile are considering cutting production amid strict measures to contain the spread of the new coronavirus, an association of companies in the sector has told Reuters. A report by the National Mining Society (Sonami), which represents all miners of the red metal across Chile, the world's largest producer, said the realities of coronavirus were forcing the companies it represented to weigh tough decisions. "Over the days, we have seen miners go from providing information about the disease and taking preventive measures to halting projects already underway," the association said in a statement sent to Reuters.
Unfortunately for some shareholders, the Anglo American (LON:AAL) share price has dived 30% in the last thirty days...
Those following along with Anglo American plc (LON:AAL) will no doubt be intrigued by the recent purchase of shares by...
Colombian mining companies, including coal producers Cerrejon and Drummond, will reduce operations to slow the spread of coronavirus, the sector's guild said on Tuesday. Some 15,000 workers directly employed in the industry will stop working, as will 18,000 indirect workers, the Colombian Mining Association (ACM) said in a statement. The Andean country will enter a nationwide 19-day quarantine late on Tuesday aimed at preventing further spread of coronavirus, which has killed more than 15,300 people worldwide.
(Bloomberg Opinion) -- Lockdowns imposed to control the coronavirus have battered China’s appetite for everything from coal to copper, pushing stockpiles of raw materials higher and global prices lower. The next crunch could come from supply. The risk of an outbreak is growing in ill-prepared producer countries, with mandatory quarantines and border shutdowns threatening to choke off production.Prices of bulk commodities are already seeing some support from such disruptions, as ports and mines close. Coking coal in particular has outperformed owing in part to Mongolia’s decision in late January to seal its border with China, which cut off a key source of supply. The impact may be only short term. With factory shutdowns spreading through the U.S. and Europe, the reduction in wider metals supply would need to be dramatic to offset crumbling global demand. Upheaval could provide some price support regardless.Appetite for virtually all commodities has slumped since January, when the extent of damage from the novel coronavirus became clear. Even where mills, smelters and factories stayed open, that largely translated into crammed warehouses. China’s industrial production, investment and retail sales for the first two months of the year plunged across the board, with construction particularly weak. China’s economy is now all but certain to contract in the first quarter from a year earlier.With European automakers and other manufacturers shuttering operations, the drop in commodity demand in the first three months is likely to be even worse than during the global financial crisis. Steel demand will fall more than a fifth, copper will slide 14% and aluminum almost a third, analysts at BMO Capital Markets estimate.It hasn’t helped futures prices that the latest wave of closures is coming as we head into the second quarter, usually a peak period for demand. China, by contrast, was worse hit during the quieter Lunar New Year. Copper, a bellwether of confidence in global manufacturing, has tumbled to four-year lows of around $4,800 per metric ton on the London Metal Exchange.Travel and quarantine restrictions have already damaged supply, making it harder for miners to fly employees in and out and impeding projects under construction. Peru’s quarantine has already prompted Anglo American Plc to stop all nonessential work at its $5 billion Quellaveco project and withdraw most of the site’s 10,000 staff and contractors. Canada’s Teck Resources Ltd. has suspended work at its Quebrada Blanca Phase 2 in Chile, while Rio Tinto Group says work has slowed on its underground mine at Oyu Tolgoi in Mongolia.Lockdowns may be even more severe. Copper mines are among the worst affected as Chile and Peru, the world’s top two producers, scramble to contain the virus, prompting Anglo American, Antofagasta and others to send staff home. Chilean state behemoth Codelco will work at reduced capacity for two weeks, while workers at BHP Group’s Escondida, the world’s largest copper mine, threatened action to compel the company to take more preventative steps. The miner said Saturday it would reduce the number of contractors onsite. Analysts at Bank of Nova Scotia estimate a two-week halt in operations in those two countries would amount to 325,000 tons of lost production — roughly 4% of their combined annual output. This serves to underline the geographical concentration of a handful of key materials. Lithium is produced mainly in Chile and Australia, while iron-ore exports are dominated by Australia and Brazil. The price surge after last year’s Vale SA dam disaster shows what a port closure could do to the iron-ore market, though such a move appears unlikely given the huge budget contribution that the material makes to Brazil and Australia.Many producer countries are developing economies and ill-equipped to handle an epidemic that has floored even the world’s richest nations. In Brazil, the response has been patchy at best, with some states taking measures that are increasingly at odds with the federal government. Poorly implemented lockdowns, as seen in the Philippines, could push thousands of casual workers out of cities in search of work in more remote areas — potentially extending the spread.If more drawbridges are raised, expect supplies from explosives and tires to heavy equipment to get blocked, hampering even mining operations that could otherwise keep going. In the meantime, low prices will hurt some higher-cost projects, though rock-bottom prices for oil, a significant input, will cushion the blow. This will affect smaller producers first, given the healthy balance sheets of big miners. Still, operations like Rio’s Pacific Aluminium, or pricey U.S. copper mines, look vulnerable.Demand was the first part of an unprecedented crunch for the global commodities industry. The second act is only beginning. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Oil majors and big miners have been falling over themselves to promise better behavior when it comes to greenhouse gases. A significant number now say they are targeting zero emissions. Unfortunately, not everyone agrees on exactly what that means. It leaves investors clear on good intentions, but far less so on how to price transition risk, compare strategies and judge success.The real trouble sits with the widest and most significant category of emissions — those that don’t come directly from operating a well or mine, but are produced indirectly when oil, gas, iron ore or coal is burned or processed by customers. For outfits like BP Plc and BHP Group, these so-called Scope 3 emissions can add up to as much as 90% of their total footprint. They’re also far harder to control, as they aren’t produced by the reporting companies themselves.Resources giants, even poorly performing oil majors, have the scale and financial clout to manage a transition to a carbon-light economy — should they choose to. The rapid destruction of value in segments of the coal sector has left few in doubt of how quickly they could be left behind if they ignore such downstream emissions. This week's collapse in oil prices is another memento mori for carbon-intensive businesses.That doesn’t mean everyone has embraced the idea of targeting Scope 3 emissions. Rio Tinto Group, for one, has said it can’t set targets for its clients, though it will engage in as yet unspecified projects with the likes of China Baowu Steel Group Corp. BHP will produce numbers later this year. Others, like BP, have promised to eliminate Scope 3 emissions where they’ve drilled the oil, but won’t commit to doing the same if they’re only doing the refining. Spain’s Repsol SA is among the few to be promising an absolute zero target for all three sets of emissions.In this flurry of green activity, what should investors be demanding?The first thing should be transparency. Many of the biggest emitters have yet to make full Scope 3 disclosures, including such pillars of developed-market stock indexes as Exxon Mobil Corp., Anglo American Plc, and Fortescue Metals Group Ltd. At this point, that decision is almost churlish: It isn’t hard for investors to do their own calculations. Those that don’t face up to the reality of decarbonization will increasingly be treated like any other business that’s careless about its medium- and long-term liabilities.A second point is comparability. Although the overwhelming majority of Scope 3 emissions for resources companies come from the processing and combustion of their products, the standard incorporates a range of other activities such as waste disposal, product distribution, and even business travel and staff commuting.To add to that complexity, companies can replace the standardized emissions factors used to produce the figures with bespoke ones if their customers operate particularly efficient plants. Without full transparency about where those savings come in, companies could reduce their footprint by leaning on overly generous assumptions, and claim credit that more rigorous competitors would miss out on.There is also the unsolved question of how to manage double-counting, when, for example, coking coal and iron ore are sold to a producer that will use both in making steel.Investors should demand the means to measure progress, and success. Laying out ambitions for emissions 30 years hence is all but meaningless unless you’re also describing a path to get there. If investors are to take these numbers seriously, they’ll want to see plans for the steps along the way.That won’t be easy. For oil majors, it will require nothing less than a reinvention of their entire businesses, moving into industries that have historically produced lower returns than fossil fuels, as former BP Chief Executive Officer Bob Dudley has pointed out.Mining giants that have depended on revenues from high-volume bulk commodities such as coal and iron ore will have to either push their customers to switch to new technologies such as hydrogen-reduced steel, or depend on less lucrative base metals, specialty commodities and agricultural inputs.Providing too much detail about the road ahead risks disclosing a company’s business strategy, too, or tilting the market. How much of the reductions will come, as with Glencore Plc, from allowing mines and wells to deplete naturally as their reserve base is used up? How much will depend on selling assets, such as BP’s near-20% stake in Rosneft? How much will rely on technology that exists, but is not yet used on a wide scale, like carbon capture and storage?The last point on fund manager wish lists should be consistency. Investors will benchmark talk of long-term ambitions against performance on actual, shorter-term activity.Gabriel Wilson-Otto, head of stewardship, Asia Pacific, at BNP Paribas Asset Management, suggests that will mean keeping an eye on capital spending: Projects that generate downstream emissions decades into the future should be attracting more scrutiny. Similarly, corporate lobbying will be monitored for evidence it is allowing organisations to flash up green ambitions but still campaign against action on climate.None of this should be a burden on good governance. The CDP, a nonprofit research group that pushes for greenhouse disclosure, found in 2014 that the return on investment for companies that do so was 67% higher than for those that didn’t.The winds of decarbonization are blowing through the commodities industry. Companies that don’t bend in the face of these changes will break. To contact the authors of this story: Clara Ferreira Marques at email@example.comDavid Fickling at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Unfortunately for some shareholders, the Anglo American (LON:AAL) share price has dived 40% in the last thirty days...
Anglo American has signed a 15-year contract in Brazil to buy 70 MW of solar power from Atlas Renewable Energy as of 2022 for its operation in Minas Gerais, the mining company said in a statement on Tuesday. Atlas will invest 881 million reais ($190 million) in a solar farm in Minas Gerais state to cover the Anglo American contract, the mining company said. Anglo aims to be using 100% renewable energy by 2022.
Mining giant Anglo American’s stock plunged on Friday after an earlier explosion at a facility of its platinum unit forced it to slash production guidance.
Coal production in Colombia, the fifth-largest coal exporter in the world, fell 2% to 82.2 million tonnes in 2019 after output at one of the principle mines declined and operations were interrupted by droughts, the government said Wednesday. In 2018, the South American country recorded coal production of more than 84.2 million tonnes. A judicial ruling prevented the extension of mining operations at Cerrejon, a coal mine in the La Guajira province which is jointly owned by BHP Group, Anglo American and Glencore.
The following are the top stories on the business pages of British newspapers. - Anglo American has insisted that its 405 million pound ($521.68 million) bid for Sirius Minerals is "fair and reasonable" after hedge fund Odey Asset Management joined small shareholders in pushing for a higher offer. - Royal Dutch Shell will not "get into an arms race" with BP over carbon targets, a senior executive has said, in a sign that Europe's biggest oil group will not rush to match its rival's "net zero" pledge.
As bushfires and floods fuel public concerns in Australia about global warming, the country's powerful mining lobby is facing increasing pressure from investors to drop support for new coal mines, according to a dozen interviews with shareholders in global mining companies. Nearly a third of shareholders in BHP Group Ltd , the world's biggest miner, last year voted for resolutions to axe its membership in industry groups advocating policies counter to the Paris climate accord, which aims to limit global warming to "well below" 2 degrees Celsius.