Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Two new articles in The Times have Glencore as the favourite (suggesting that they are holding back, pending a renewed BHP offer). Analysts are quoted saying that an Anglo-Glencore tie-up may offer significant synergies, adding value to the merged groups. Given the prospects for net zero metals, particularly copper, it's hard not to see any outcome being advantageous to investors, in the medium to long term.
Bidding war in prospect as Glencore mulls move for Anglo American
https://archive.ph/thvBJ
Buyers ready to dig deep for world’s miners
https://archive.ph/FMv3M
I cannot conceive how a GLEN.L bid for AAL.L would hold ANY attraction for a shareholder of either company. I would therefore be very surprised if one emerges. Judging by the vertical collapse back down in the AAL.L share price this afternoon after the spike on the GLEN.L rumour this morning so do others?
If you are an AAL.L shareholder why on earth would you swap your existing shares, at what will inevitably be lowball ratio (any bid is going to be, unfortunately), for an arguably even worse yo-yo share in GLEN.L? You will be getting low-balled by BHP as well but at least you then have a realistic prospect that the BHP share price eventually delivers the remaining upside you believe you are owed. I just don't see that happening with GLEN.L.
There is in my view - as someone who knows both shares well - no sensible prospect of meaningful further upside, ever, if you swap to GLEN.L shares. GLEN.L has only once traded above its 2011 listing price. (It currently still trades around 15% below it and that is only after a massive and unexpected upswing since February on rising copper prices.) The one rise above the listing price happened fleetingly in 2023, i.e. after 12 years, due to the Ukraine-induced bubble in coal and other commodity prices.
GLEN.L’s distribution was also destroyed in January, and it seems likely to remain so now for the foreseeable future. It has also emerged this week that its pending acquisition of Teck, which was supposedly going to serve as a catalyst for a significant upward re-rating of the share price by leading to a spin out of all its coal assets will now likely result in the company retaining both the Teck coal assets and its existing ones. I.e. likely leading to a permanent downward re-rating of the sp instead, because it hence becomes permanently uninvestible to many institutional shareholders
In short GLEN.L has repeatedly trashed the supposed upside in various acquisitions, most notably Xstrata in 2013, and Teck now looks like being the latest. It has essentially traded since it listed as a junk commodity, prone to plunge 20% and more at the drop of a hat.
If you are a GLEN.L shareholder why on earth would you trust GLEN.L management to take on AAL.L, at the same time as Teck? The most likely scenario is that they turn around and tell you shortly thereafter that - oops - they have re-assessed that many of AAL.L’s assets do not carry the value that believed them to when acquiring them. In fact, that many of them are going to be mothballed / junked / written down to zero. That is literally what happened with Xstrata.
Nor me they ain't got the cash it will be some sort of mass share giveaway diluting Glencore and it will be years if you hold glen like me to see a big profit in my portfolio. Even the dividends will not make up for it, I would love to get a majority cash offer for AAL and be done. I actually believed in this business and held when it was £40 plus thinking it will get to £45-£50 .
I didnt think Glencore was in a position to spend this kind of cash....
I hold GLEN, BHP and AAL .I am expecting a dark horse from China to walk in and sweep the decks.
IF BHP INCLUDED A £10 CASH OFFER FROM ITS HUGE RESERVES,IT WOULD BE A DONE DEAL.
It would be hard to refuse.
A bird in the hand is worth two in the bush.
Exciting :)
This could get tasty next week with other potential bidders discussing over the weekend . Only 19 days left for BHP to revise their bid. I don't think they will leave it to the last minute . IMO.
Interesting, though not altogether surprising, news. One idea doing the rounds is that Glencore could pitch a simple all-share merger to Anglo, without the conditions that complicated BHP’s offer. I don't hold Glencore, so this would be my preferred scenario. In any case, the report should send the sp rocketing again tomorrow.
Me too.
I think they are downplaying the future potential of Woodsmith in order to keep a lid on the takeover price.
I hope that the project commences production by 2027, as planned.
OR
Any AGM chatter? Don’t think they can discuss deals though? Cheers
I’m assuming you’ve never tried to buy something, that wasn’t up for sale in the first place
I have stuck with POLY 4 since Sirius shambles. I reckon this is the perfect long term investment. The world may collapse around us but food production will still play an important part in our everyday activities. The Chinese showed a great deal of interest I in this product in the initial stages, so they will be watching this scenario with some envious interest. The game has just begun. Roll on a billion pound industry!
Seems to be growing.
If BHP have to take the unwanted SA assets to seal a deal, it will limit their offer. They might even walk away, as a large part of the attraction of their first offer was that AAL shareholders would be shouldering the risks of the disposals. I'll be pleasantly surprised if the offer is increased to 30, but here's hoping :)
Yuri.F To describe Woodsmith as endless delays in various stages is entirely unjust and unworthy of you. Anglo bought the mine in the early stages of construction, and decided from the start that they would take a slightly different approach to the engineering challenges.
What is being achieved here is a low impact, highly efficient mine that will access a world class resource for between fifty to one hundred years.
The huge financial aspects of the project can be justifiably articulated, but not the engineering.
My take on the saga is this. And for the record I got carried away with the story of riches. Losses now recouped. SXX design standards and procedures were probably significantly lower than AAL who may not have been as due diligent as they should have been. Once they took over Woodsmith and imposed their standards and methods the CAPEX requirements exploded. Not surprisingly the programme was extended to minimise cash burn. Alongside market forces on the existing businesses became a double whammy.
As for its future, Woodsmith does appear to have a future and one would hope any suitor has carried out its own due diligence on Woodsmith. BUT that could equally to mothball if copper is the prize or to complete with the copper boom and windfall.
I’m sitting tight at the moment.
Not a bad idea in my view
So more than a billion of impairment AAL announced a while ago, endless delays in various stages of project delivery doesn't raise any flags?
Would BHP be interested in the Woodsmith SXX mine, and who's ordering the polyhalite?
Interested 😁
Little holding.
HI picstloup, glad to hear that the recent bid talk has recouped much of your SXX losses, I remember your balanced and rational view of events re the SXX takeover. Sadly, an awful lot of others blamed anyone but themselves. Events subsequent to the SXX demise illustrate how far from ever being able to fund the development of the mine they were. My cautionary words then still underestimated that gulf by some distance. In this takeover bid Woodsmith is almost irrelevant, BHP want AAL 's copper and maybe additional iron ore , but I wouldn't be surprised if ,when the bid (or another from elsewhere) succeeds, that a partnership for woodsmith or even the whole thing is up for sale again.
From today's FT:
Who are Anglo American’s possible suitors?
https://archive.ph/Rohha
4 years ago I had a nearly £50k loss in Sirius/Woodsmith. Not life-altering, but depressing. I put all the take-over money, and a lot more, into Anglo. With the Thungela bonus, it has put me significantly into profit (roughly the same as the previous loss).
Woodsmith is an amazing resource. It is taking longer to bring to production than the inept Sirius team hoped, but rewards will come to those with patience. I'll certainly invest my profits in the AAL take-over on whoever finally gets Woodsmith.
Gertfrobe, who lost possibly the same as me on Sirius, spent the next two years digging up every negative story about Anglo s/he could find to post here. A really sad waste of energy.
The completion timelines at the Woodsmith mine have changed, primarily because the decision was taken when Anglo took control to avoid the cost incurred with multiple tunnel boring machines and focus on the slower but cheaper single TBM option.
There was a big piece on Woodsmith in the FT last November. Read it again today. That said the company hopes to get to $380 per tonne (due to the sustainability/organic premium) but that there are issues to achieving that. The other polyhalite producers in Boulby said they are lucky to get to $260 for their product because there's no market for it.
BUT, they are producing in limited quantities and AAL (and SXX previously) have signed a number of quite hefty offtake agreements. Quoting from that piece in the FT, BHP's CCO, Vandita Pant, said: "Crop production went up 50 per cent since 2000 and farmed land has only gone up 3 per cent [per capita]. To meet another 35 per cent increase [by 2050], we need to increase productivity even further. The key becomes crop yields.”
In that piece the FT described BHP as "another mining company that has entered the fertiliser business." So you sense BHP considers Woodsmith a hugely attractive feature to AAL's portfolio. And that's before you even get to the copper.
In essence, AAL (or whoever takes it over) must create that missing market for polyhalite, almost from scratch. But if they do then analysts have estimated the mine value at £13 billion (more than a third of current market cap) but if they fail to achieve that, then it is estimated to be worth c£1bn. So this is not a share without a fair dollop of risk - but the fact the world's biggest miner is prepared to take that risk is hugely encouraging to me...