Mining at rock bottom?
The Financial Times has done the rounds of the financial sector and found mixed views on whether mining is still in a slump or if the only way is up for the sector.
The paper quotes Baring Asset Management’s Clive Burstow who reckons there have been some improvements made.
“If I look back three years, mining companies have learnt a very painful lesson,” he said.
“Balance sheets have been restructured, capex has been cut, project pipelines trimmed and costs removed.”
Investec Asset Management’s George Cheveley is of a similar view.
“The number of cuts is rising and we’ve some inklings of demand recovery, which makes me at least feel we’re near the bottom,” the FT quotes him as saying.
“The cuts quite often signal the bottom — but not the recovery.”
However, Orbis Investment Management fund manager Dan Brockelbank strikes a more cautious note in the FT article.
“When you think about cycles, think about the extent of the upcycle,” he said.
“If you look back in 20 years’ time, I’d be surprised if this is the bottom. We haven’t seen a cathartic cleansing yet.
“Look at basic commodity consumption: China has about a fifth of the world’s population but consumes 55% of basic commodities – that’s just not sustainable.”
Mitsui boss unloads
Mitsui Australia boss Yasushi Takahashi has told the Brisbane Mining Club that the resources sector performed terribly in terms of both labour and capital productivity over the past 10 years, theCourier Mail reports.
He told nearly 300 industry players at a Tattersall’s Club lunch that, paradoxically, the boom years’ focus on production and capacity masked underlying problems with costs and efficiencies.
Well, Takahashi is no orphan there. The view that miners took their eyes off the productivity ball with the view of production at all cost is certainly not a new one.
“Naturally our mining costs jumped up and productivity deteriorated [during the boom], but we could enjoy record profits on the back of soaring prices,” the paper quotes Takahashi as saying.
“Those rosy-colour times are over.”
More stock sales for Freeport McMoRan
Phoenix-based miner Freeport McMoRan has raised $US1 ($A1.4) billion through a sale of its shares and plans to sell another $1 billion to raise cash amid weak commodity prices, the Wall Street Journal reports.
Freeport shares fell 9.7% Friday to $10.88. The stock is down 68% over the past 12 months.
Last month the company became the target of activist investor Carl Ichan.
The company plans to use the proceeds from the offerings on things such as the repayment of debt and working capital.
According to the WSJ Ichan said he had boosted his stake in Freeport to 8.8%.
