Timis and CNPC as bedfellows
African Petroleum’s quick and bountiful harvest of acreage in West Africa means it will have to look for key partners with deep pockets. State-run Chinese companies fit the bill.
PetroChina, the subsidiary of China National Petroleum Corp. (CNPC), has until Aug. 31 to decide on the outcome of the memorandum of understanding it signed in early July with the managing director of African Petroleum, Karl Thompson, and its president, Frank Timis.
CNPC, which hasn’t picked up acreage in Africa for a number of years and whose main assets in South Sudan are completely frozen because of the political standoff between Juba and Khartoum, wants to invest in new frontiers. So the company is looking fondly at teaming up with a junior which managed in the space of two years to buy numerous permits in Liberia, Sierra Leone, Senegal, Gambia, Ivory Coast and - most recently - Niger and Sudan (AEI 679).
In addition, CNPC can benefit from Timis’ strong connections in presidential circles in a number of countries.
Read the rest of the article online here: WEST AFRICA - Timis and CNPC as bedfellows - Africa Energy Intelligence
July 26, 2012
Vale the latest victim of China`s economic slowdown - #IRON AND STEEL - Mineweb
The iron ore miner's net income hit its lowest level in more than two years, underscoring its dependence on Chinese purchases of its flagship product
IRON AND STEEL
Vale the latest victim of China's economic slowdown
The iron ore miner's net income hit its lowest level in more than two years, underscoring its dependence on Chinese purchases of its flagship product
Author: Guillermo Parra-Bernal and Reese Ewing and Sabrina Lorenzi
Posted: Thursday , 26 Jul 2012
SAO PAULO (Reuters) -
Brazil's Vale became on Wednesday the latest victim of China's economic slowdown after second-quarter profit tumbled because of slowing demand for iron ore that will spill over into the coming quarters.
Net income at the world's largest producer of the mineral hit its lowest level in more than two years, underscoring its dependence on Chinese purchases of its flagship product. Profit also plummeted after a weakening Brazilian currency lifted debt-servicing and the use of derivatives for hedging.
Vale earned $2.662 billion in the quarter, down 58.7 percent from a year earlier, according to a securities filing on Wednesday. The result, the lowest since the first quarter of 2010, missed the average $2.998 billion estimate of 10 analysts in a Reuters poll.
"I'm struggling to find anything good coming out of this earnings report," said a New York-based mining analyst who declined to be quoted by name before his views were sent to clients. "Most of this is probably related to the China problems and their impact on pricing."
Vale's disappointing earnings performance may continue into next year as the global economy stagnates and demand for metals loses traction. Slowing growth in China, which fueled a commodity market rally for a decade and created a bonanza for Vale, is already weighing on iron ore prices and may create a global surplus of the mineral next year.
Vale charged $103.3 per tonne of ore sold, 29 percent less than a year earlier and 5.5 percent below prices in the first quarter. The analyst said that, at such level, the company is likely selling ore at below-market prices to some customers.
The results pose a challenge to Chief Executive Murilo Ferreira, who, with a little more than a year on the job, has struggled to allay investor concerns that Vale is prepared to weather slower growth in Chine, restore good relations with the government and improve project execution.
Vale's cost of doing business may also climb in coming years as Brazil's government, seeking to assert more control of the nation's natural resources, exacts a greater toll from the country's biggest exporter through taxes and royalties.
Preferred shares of Vale, the company's most widely traded class of stock, have sunk 14 percent over the past 12 months. Concern that second-quarter earnings would be worse than analysts' predictions also fueled a 4.9 percent decline in the stock over the past month.
COOLING MARKET
China's share of Vale's iron ore and pellets sales fell to 43.7 percent in the second quarter from 47.2 percent in the prior quarter, while volumes shipped rose.
In spite of that, company's net revenue rose 7.2 percent to $12.150 billion from the first quarter, when heavy rains dampened production and shipments. The result, however, missed analysts' estimates of $12.596 billion in sales.
Sales growth of the company's main products appear to be cooling, and may cool further. Prices for Brazilian iron ore shipments to China are roughly between 15 and 21 percent lower than a year ago, even though volumes were up from a year ago, according to Chinese customs figures.
Although prices for Brazilian ore have slightly improved sequentially, the outlook going forward looks bleak for Vale's sales. Spot iron ore prices extended their losing streak to touch an eight-month low on Wednesday, and are down by more than a third since a record peak in mid-February.
CURRENCY FLUCTUATIONS
The dismal performance was also affected by the rising cost of goods sold, a jump in general and administrative expenses and a surge in the cost of hedging - a strategy used by Vale to protect its balance sheet against swings in the currency or in prices of the products it sells or buys as raw materials.
Limiting the decline in profit, the company booked a $377 million one-off gain stemming from the sale of coal assets in Colombia and had to pay lower income taxes in Brazil during the quarter, the filing added.
The Brazilian real's 11 percent drop helped boost Vale's debt-servicing costs and charges related to fluctuations in currency and derivatives prices, but failed to generate significant revenue gains or cost savings.
An account measuring the impact of currency and monetary fluctuations on Vale's balance sheet reached $1.693 billion, the highest level for the item since the third quarter of last year, reflecting a jump in the cost of interest-rate and currency derivatives contracts, the filing showed.
Earnings before interest, tax, depreciation, amortization and other items, a measure of operational profitability known as adjusted EBITDA, came in at $5.119 billion, below an estimate of $6.265 billion in the poll.
Investors tend to follow Vale's quarterly data more closely than year-on-year numbers because the former helps them visualize operational and sales performance trends.
© Thomson Reuters 2012 All rights reservedVale the latest victim of China`s economic slowdown - IRON AND STEEL - Mineweb.com Mineweb
IRON AND STEEL
Vale the latest victim of China's economic slowdown
The iron ore miner's net income hit its lowest level in more than two years, underscoring its dependence on Chinese purchases of its flagship product
Author: Guillermo Parra-Bernal and Reese Ewing and Sabrina Lorenzi
Posted: Thursday , 26 Jul 2012
SAO PAULO (Reuters) -
Brazil's Vale became on Wednesday the latest victim of China's economic slowdown after second-quarter profit tumbled because of slowing demand for iron ore that will spill over into the coming quarters.
Net income at the world's largest producer of the mineral hit its lowest level in more than two years, underscoring its dependence on Chinese purchases of its flagship product. Profit also plummeted after a weakening Brazilian currency lifted debt-servicing and the use of derivatives for hedging.
Vale earned $2.662 billion in the quarter, down 58.7 percent from a year earlier, according to a securities filing on Wednesday. The result, the lowest since the first quarter of 2010, missed the average $2.998 billion estimate of 10 analysts in a Reuters poll.
"I'm struggling to find anything good coming out of this earnings report," said a New York-based mining analyst who declined to be quoted by name before his views were sent to clients. "Most of this is probably related to the China problems and their impact on pricing."
Vale's disappointing earnings performance may continue into next year as the global economy stagnates and demand for metals loses traction. Slowing growth in China, which fueled a commodity market rally for a decade and created a bonanza for Vale, is already weighing on iron ore prices and may create a global surplus of the mineral next year.
Vale charged $103.3 per tonne of ore sold, 29 percent less than a year earlier and 5.5 percent below prices in the first quarter. The analyst said that, at such level, the company is likely selling ore at below-market prices to some customers.
The results pose a challenge to Chief Executive Murilo Ferreira, who, with a little more than a year on the job, has struggled to allay investor concerns that Vale is prepared to weather slower growth in Chine, restore good relations with the government and improve project execution.
Vale's cost of doing business may also climb in coming years as Brazil's government, seeking to assert more control of the nation's natural resources, exacts a greater toll from the country's biggest exporter through taxes and royalties.
Preferred shares of Vale, the company's most widely traded class of stock, have sunk 14 percent over the past 12 months. Concern that second-quarter earnings would be worse than analysts' predictions also fueled a 4.9 percent decline in the stock over the past month.
COOLING MARKET
China's share of Vale's iron ore and pellets sales fell to 43.7 percent in the second quarter from 47.2 percent in the prior quarter, while volumes shipped rose.
In spite of that, company's net revenue rose 7.2 percent to $12.150 billion from the first quarter, when heavy rains dampened production and shipments. The result, however, missed analysts' estimates of $12.596 billion in sales.
Sales growth of the company's main products appear to be cooling, and may cool further. Prices for Brazilian iron ore shipments to China are roughly between 15 and 21 percent lower than a year ago, even though volumes were up from a year ago, according to Chinese customs figures.
Although prices for Brazilian ore have slightly improved sequentially, the outlook going forward looks bleak for Vale's sales. Spot iron ore prices extended their losing streak to touch an eight-month low on Wednesday, and are down by more than a third since a record peak in mid-February.
CURRENCY FLUCTUATIONS
The dismal performance was also affected by the rising cost of goods sold, a jump in general and administrative expenses and a surge in the cost of hedging - a strategy used by Vale to protect its balance sheet against swings in the currency or in prices of the products it sells or buys as raw materials.
Limiting the decline in profit, the company booked a $377 million one-off gain stemming from the sale of coal assets in Colombia and had to pay lower income taxes in Brazil during the quarter, the filing added.
The Brazilian real's 11 percent drop helped boost Vale's debt-servicing costs and charges related to fluctuations in currency and derivatives prices, but failed to generate significant revenue gains or cost savings.
An account measuring the impact of currency and monetary fluctuations on Vale's balance sheet reached $1.693 billion, the highest level for the item since the third quarter of last year, reflecting a jump in the cost of interest-rate and currency derivatives contracts, the filing showed.
Earnings before interest, tax, depreciation, amortization and other items, a measure of operational profitability known as adjusted EBITDA, came in at $5.119 billion, below an estimate of $6.265 billion in the poll.
Investors tend to follow Vale's quarterly data more closely than year-on-year numbers because the former helps them visualize operational and sales performance trends.
© Thomson Reuters 2012 All rights reservedVale the latest victim of China`s economic slowdown - IRON AND STEEL - Mineweb.com Mineweb
Mongolia's Treasure Trove
Tags:
mining stocks
#Mongolia's Big riches for tose who can stomach the volatility. $$IVN
Mongolia's Treasure Trove
- Forbes.com
When I was invited as a U.S. representative to the Asian Development Bank to speak at the 1991 opening of the Mongolian Stock Exchange, I expected a frontier adventure, as the country had just broken free from Russia to form a fledgling democracy. I got more than I bargained for and, in retrospect, was lucky to get out of there alive.
The first challenge was vodka. Mongolians are the highest per capita imbibers of vodka in the world. I nearly drowned in the stuff as dozens of toasts and calls of “bottoms up” went on late into the evening of my arrival in the capital of Ulan Bator.
The second day I was a bit wobbly but went with my hosts deep into the rugged steppe for a traditional barbecue capped by races to the top of mountains and a clifftop midnight wrestling match. I held my own but a slip would have led to my demise.
Two decades later global investors, especially China and Russia, are eyeing its huge untapped natural resources. Mongolia, three times the size of France with a population of only 2.7 million, is a relatively poor country with a per capita income of about $3,000. But it is sitting on a treasure trove. The country’s top ten mines are estimated to be worth $2.75 trillion in coal, copper, gold, uranium and rare earths.
This makes every Mongolian a millionaire--if they can get this stuff out of the ground and to global markets. Unfortunately, corruption is a rising issue, and inflation tops 20% as a gold rush mentality takes hold.
Still, willing buyers are certainly there, with $5 billion pumped into the economy in 2011 fueling a stunning 17% increase in the country’s GDP.
The Mongolian Stock Exchange is not for the fainthearted, but the brave have been rewarded with returns of 121% in 2010 and 58% in 2011, although the index made up of the largest 20 companies has cooled 10% so far in 2012. There are 332 companies listed on the exchange, with a total market value of $3.2 billion.
There is political risk. Mongolia’s former president is facing corruption charges that he insists were engineered by the current president to keep him from participating in the recent parliamentary elections.
If you’re gun-shy about investing directly in the Mongolian market but want a piece of the action, go with Vancouver-based Ivanhoe Mines (NYSE, IVN, 8), which has a 66% share of Mongolia’s Oyu Tolgoi gold and copper mine, which is on the Mongolia-China border. Temasek, Singapore’s investment arm, recently put up $420 million for a 5.5% stake in Ivanhoe; Australia’s Rio Tinto has a controlling interest in it. Ivanhoe’s stock has lost 64% of its value in the past 12 months as copper and gold prices have pulled back.
The Oyu Tolgoi deposits reportedly contain 79 billion pounds of copper and 45 million ounces of gold. Rio Tinto has already spent $7 billion to prepare the mine for operation. It is expected to begin production in August.
For stocks listed on the Mongolian Stock Exchange, my favorite is APU JSC (APU, 3), the country’s largest beverage company. The company was founded in 1924 and privatized in the 1990s. It has the dominant market share of--you guessed it--vodka and beer while also producing milk and juices.
The Leopard Asia Frontier Fund likes and holds concrete producer Remikon JSC (RMC, 0.14), also traded on the Mongolian Stock Exchange. Right now 80% of the cement supporting Mongolia’s construction boom is imported from China, but Remikon is planning to build an $8 million cement plant near its limestone deposit.
For speculators I’m going with Sydney-traded Aspire Mining (AKM, 0.15). While the company has exploration licenses for five projects, a lot is riding on its Avoot coking coal project, potentially the country’s third largest. Mining is not expected on any scale until 2016. The company has about $28 million in cash with no debt, and the stock price is tempting after falling 77% over the last 12 months.
Mongolia is a frontier market with huge potential. Steel your nerves and take a small stake.
Read the article online here: Mongolia's Treasure Trove - Forbes.com
Mongolia's Treasure Trove
- Forbes.com
When I was invited as a U.S. representative to the Asian Development Bank to speak at the 1991 opening of the Mongolian Stock Exchange, I expected a frontier adventure, as the country had just broken free from Russia to form a fledgling democracy. I got more than I bargained for and, in retrospect, was lucky to get out of there alive.
The first challenge was vodka. Mongolians are the highest per capita imbibers of vodka in the world. I nearly drowned in the stuff as dozens of toasts and calls of “bottoms up” went on late into the evening of my arrival in the capital of Ulan Bator.
The second day I was a bit wobbly but went with my hosts deep into the rugged steppe for a traditional barbecue capped by races to the top of mountains and a clifftop midnight wrestling match. I held my own but a slip would have led to my demise.
Two decades later global investors, especially China and Russia, are eyeing its huge untapped natural resources. Mongolia, three times the size of France with a population of only 2.7 million, is a relatively poor country with a per capita income of about $3,000. But it is sitting on a treasure trove. The country’s top ten mines are estimated to be worth $2.75 trillion in coal, copper, gold, uranium and rare earths.
This makes every Mongolian a millionaire--if they can get this stuff out of the ground and to global markets. Unfortunately, corruption is a rising issue, and inflation tops 20% as a gold rush mentality takes hold.
Still, willing buyers are certainly there, with $5 billion pumped into the economy in 2011 fueling a stunning 17% increase in the country’s GDP.
The Mongolian Stock Exchange is not for the fainthearted, but the brave have been rewarded with returns of 121% in 2010 and 58% in 2011, although the index made up of the largest 20 companies has cooled 10% so far in 2012. There are 332 companies listed on the exchange, with a total market value of $3.2 billion.
There is political risk. Mongolia’s former president is facing corruption charges that he insists were engineered by the current president to keep him from participating in the recent parliamentary elections.
If you’re gun-shy about investing directly in the Mongolian market but want a piece of the action, go with Vancouver-based Ivanhoe Mines (NYSE, IVN, 8), which has a 66% share of Mongolia’s Oyu Tolgoi gold and copper mine, which is on the Mongolia-China border. Temasek, Singapore’s investment arm, recently put up $420 million for a 5.5% stake in Ivanhoe; Australia’s Rio Tinto has a controlling interest in it. Ivanhoe’s stock has lost 64% of its value in the past 12 months as copper and gold prices have pulled back.
The Oyu Tolgoi deposits reportedly contain 79 billion pounds of copper and 45 million ounces of gold. Rio Tinto has already spent $7 billion to prepare the mine for operation. It is expected to begin production in August.
For stocks listed on the Mongolian Stock Exchange, my favorite is APU JSC (APU, 3), the country’s largest beverage company. The company was founded in 1924 and privatized in the 1990s. It has the dominant market share of--you guessed it--vodka and beer while also producing milk and juices.
The Leopard Asia Frontier Fund likes and holds concrete producer Remikon JSC (RMC, 0.14), also traded on the Mongolian Stock Exchange. Right now 80% of the cement supporting Mongolia’s construction boom is imported from China, but Remikon is planning to build an $8 million cement plant near its limestone deposit.
For speculators I’m going with Sydney-traded Aspire Mining (AKM, 0.15). While the company has exploration licenses for five projects, a lot is riding on its Avoot coking coal project, potentially the country’s third largest. Mining is not expected on any scale until 2016. The company has about $28 million in cash with no debt, and the stock price is tempting after falling 77% over the last 12 months.
Mongolia is a frontier market with huge potential. Steel your nerves and take a small stake.
Read the article online here: Mongolia's Treasure Trove - Forbes.com
Subscribe to:
Posts (Atom)
