The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Whilst we wait for the kettle to boil, I had a look at GLEN's latest thinking on emissions, as reflected in its just-released 2024-2026 Climate Action Transition Plan, see
https://www.glencore.com/publications
It's already dropped Zanaga from its Resources reporting, per last A/R. On the assumption that any change in stake in ZIOC is likely to be downwards - if not out - that exclusion will presumably continue.
In this report, it specifically excludes 'third-party' emissions caused by anything it sells to others...and it's 'too early to say' anything about the implications of what it might be producing if/when the latest Teck Resources acquisition goes through.
So , all in all, pretty much of a 'nothing-burger' , you might conclude.
The only bits of interest that I saw were (1) its differentiation between thermal and steel coal; and (2) its (implied) view of rate of take-up of 'green ore'.
The relevant bits are :
(Speaking of Teck).."When assessing the merits of the transaction, we acknowledged the important distinction between thermal coal and steelmaking coal. We concluded that while not a metal, steelmaking coal is an important transition-enabling commodity as it is an essential input into much of the world’s steelmaking in its current form. Steel is necessary for constructing transportation and infrastructure such as ocean-going vessels, rail, bridges and buildings, as well as energy transition infrastructure including wind turbines. ....
.....In the event the demerger does not proceed, we will assess how best to integrate the EVR [ Ed.: Teck] assets into our climate transition strategy, recognising that THE TRANSITION AWAY FROM STEEL-MAKING COAL for steel production will be slower than thermal coal, given the important role steel is expected to continue to play in supporting the construction of transportation and renewable energy infrastructure, AND THE EXPECTED LIMITED AVAILABILITY IN THE MEDIUM TERM OF ALTERNATIVE STEEL PRODUCTION TECHNOLOGIES THAT DO NOT REQUIRE COAL."
GLEN's view appears to be sceptical about the short-term impact of hydrogen - whether green, blue , grey or black - forcing mills to 'up their game' in the interim by looking at the other way of reducing emissions materially, DRI with high quality ore.......
On the face of it , then, no adverse implications for a ZIOC/Zanaga deal, AFAICS, if anything some cautious optimism.
GLA
Abu Dhabi emerges as lynchpin of a major multilateral restructuring of the Egyptian economy, with a USD 35bn investment in a tourism project in Egypt in Ras El-Hekma, located 350km from Cairo or a two-hour drive from Alexandria. The project is an ambitious 170 million square metres city comprising mostly tourist amenities, but also a free trade and investment zone including residential and commercial real estate. Essentially another Dubai, in North Africa.
Ex Ashmore :
.."A new balance of power
The Egyptian rebalance also illustrates the fast-shifting balance of power. The big regional players are setting up a new structure for a world where the United States (US) is no longer a bastion of security for the Middle East, in our view.
Egypt is the MENA country with the largest Arab population, which brings tremendous potential, but also risks. The war in Gaza and the Civil war in Sudan made Egypt an even more important geopolitical concern.
That’s why the UAE’s support is likely, in our view, to come with strings attached in the format of structural reform to support social stability.
The fact that Egypt is being basically bailed out by the UAE is relevant. The strength of the Abraham Accords and the fact that UAE and Saudi Arabia did not severe ties with Israel, in the face of the ongoing war in Gaza is relevant. The fact that Saudi Arabia has re-established diplomatic relations with Iran is relevant.
On top of it, China trading commodities in RMB and the partnership of Russia with OPEC set up a much more complex balance of power. The large regional players are proving their independence to pursue their own strategic interests..."
The media goes on to point out that Saudi Arabia is interested in investing in tourism projects in the Red Sea. The articles mentioned Ras Gamila, at the tip of the Sinai Peninsula, 4km away from Sharm El-Sheikh airport, and the 280km stretch from Hurghada to Marsa Alam. Coincidently, both areas are opposite to the mega Neom development in Saudi Arabia."
'Build it and they will come'
GLA
I'm with Jiving, FWLIW :
Saudi has the money, which China currently lacks...and the desire to spend it in pursuit of its domestic/international goals, including industrialisation and diversification (up and 'downstream').
As it spends, it reduces its exposure to the USD, replacing Treasuries with 'hard' assets that are also an inflation hedge.
It's positioning itself to continue as the last man standing on traditional fossil fuels, whilst at the same time benefitting from the 'halo effect' and greater market acceptability of its newer 'green' products.
It's also moving towards a more non-aligned position, where it can hope to avoid being drawn into an 'us or them' position. Making investments for its own (bona fide) account is both 'good business' and avoids taking sides.
It's already hedged its bets on the US Presidential election, see https://www.bbc.com/news/world-us-canada-68296877
.."Donald Trump's son-in-law and former adviser Jared Kushner has defended his business dealings with Saudi Arabia and its Crown Prince Mohammed bin Salman.
After leaving the White House, Mr Kushner's private equity firm received a $2bn (ÂŁ1.59bn) investment from Saudi Arabia's sovereign wealth fund.
Mr Kushner worked closely with Saudi Arabia on a number of issues during the Trump administration."
These include the Israeli / Arab rapprochement (publicly Bahrain and UAE, believed Saudi behind the scenes) that was torpedoed by Hamas/Iran last October.
It seems likely Saudi is in pole position (see what I just did?) to make the initial equity investment in ZIOC, but surely it makes sense for it to engage closely (perhaps even as minority co-investors) with the Chinese EPC and other contractors that we believe are already 'in the frame' for Project implementation ?
As to other potential Topco investors, the UAE may still want to be involved...and also has the right 'connections' with Kushner : the New York Times reports that Kushner's investment fund also received money from the UAE.....and Qatar.
https://www.middleeasteye.net/news/jared-kushners-firm-received-hundreds-millions-uae-qatar-says-report
Let's see what the next few weeks brings!
GLA and ATB
Hi Mitch984,
I see your PoV : it might suit China to 'do a Tesco' (acquire a site, not for development but simply to block others), but (a) if not developed the concession might be revoked and (b) if not developed, with the lead times involved (4-6 years), it's not much use as an alternative supply, save in the (much) longer term...
AIUI
Re the Taiwannews recent article, for a bit of context, see wher Kinmen Island is on the map
https://www.newsweek.com/american-special-forces-train-taiwan-soldiers-penghu-kinmen-china-coast-
I'm no apologist for China, but you can see that an American presence there might be considered provocative/ an escalation : Kinmen is about 6 miles from the mainland or 1/15th the distance Cuba is from the US....a factor in the Cuban missile crisis of the '60's.
GLA
First article comment, others to follow later.
The Lowry Institute article is nearly 3 years ago, reflecting the mood/position then. How has it fared ?
One of its possible scenarios - establishment of a 'single desk' buyer to better coordinate sourcing of product (think: Covid PPE panic buying)- is already in place : BaoWu now has that role.
The changing consortia around Mbalam Nabeba appear to reflect a second approach where .."The ministry envisages a China Inc-style approach to build alternative suppliers, with steel makers, resources companies, banks and transport companies all encouraged to form consortia to explore projects abroad..."
There's been a change of emphasis (more on the strategic/Taiwan-related) since then, but .." China’s complaints – about high prices, market manipulation and Australian perfidy – have been the same for about 15 years. “The Chinese don’t trust markets, especially ones they don’t control themselves,” says one mining executive with extensive China experience."
One that has stood the test of time : “China and Australia are in a kind of multi-scrotum clutch on iron ore,” he said. “They are not going to hurt us. We are not going to hurt them.”
Meanwhile, I note 4 x 100K transactions today...
GLA and ATB
Ashmore latest
.."Argentina: CPI inflation slowed to 13.2% mom in February, 180bps lower than consensus, from 20.6% mom in January. Inflation rose to 276% in yoy terms, up from 254% in January, but better than consensus at 282%..."
In the right direction..
GLA
Hi Vet10,
Thanks for this.
There's a lot of MoU about, let's hope for some substance in ZIOC's next update.
The rush to green ore is being challenged by the realities of Chinese economic slowdown, per the CRU consultant " the high-grade ore from Simandou would be preferred when steel margins were favourable.
“In the current scenario, where steelmakers are struggling with the weak margins, they would still opt for lower grade ores to control their productivity, making ores from Australia preferable,” she said".
That, of course, hardly addresses China's strategic desire to wean itself off dependency on Australia!
The article ref to Mbalam Nabeba on the one hand - and to Tsingshan Group's building a US$1.5 billion steel plant in Zimbabwe- is interesting, Tsingshan is name-checked as a possible offtaker in the Chinese consortium proposed (April 2023), see https://www.businessincameroon.com/mining/1304-13043-chinese-tsingshan-bids-for-mbalam-iron-output
.."Chinese Tsingshan International reached a binding Memorandum of Understanding with CCC Mining Group Limited, an associate entity of Bestway Finance on the Mbalam iron project, to acquire part of the project’s output. ...other participants named are China Railway 20 Bureau Group Corporation (CR20G), China Machinery Engineering Corporation (CMEC), China Civil Engineering Construction Corporation (CCECC), and China National Chemical Engineering Heavy-Mechanized Corporation Ltd (CNCEHMC)..."
This is interesting (if confusing!) because 'our' CMEC is IN, while BaoWu and Yantian Port (named Feb 2022) appear to be OUT, see
https://www.businessincameroon.com/mining/0103-12371-mbalam-nabeba-project-the-five-chinese-firms-eying-the-exploitation-component-revealed
.."a consortium, possibly with Chinese firms Yiantian Port, China Railways Corporation Co (CRCC), Metallurgical Construction Corporation (MCC), China Baowu Steel Group, Shanghai Tsingshan Mineral Co Ltd, and the partner of the Nabeba project...."
Reminder : Mbalam-Nabeba concession is currently being litigated for 'illegal expropriation' (Sundance Resources) and the journalist acknowledges the lack of transparency in the reported offtake proposal.
The 'evolving' structure of the Mbalam-Nabeba consortium suggests to me that they're still 'winging ' it.
From ZIOC's point of view, maybe it's helpful that BaoWu is seemingly no longer 'spoken for' ?
GLA and ATB
Https://libertysteelgroup.com/liberty-steel-signs-mou-with-ad-ports-group-to-explore-plans-to-host-a-green-iron-production-facility-in-kezad/,
which claims that it will source quality magnetite from Australia.
The Gupta group is pretty 'entrepreneurial' , seems to be mainly good at harvesting subsidies from the naive and unsuspecting, see
https://www.bbc.com/news/uk-scotland-59332620
Lots of bees around the honey-pot...
GLA
Hi Forensic 505,
My guess is that the mark-up is a considered reflection of changing prospects on a blend of Argentina's ability AND willingness to pay. A court judgment-improving enforcement/recovery prospects- must improve the 'willingness (gritted teeth)' metric ?
Argentina sovereign debt prices in the secondary market have risen from a low of 18c 2 years ago, through 22c a year ago and currently stand at around 34c (on the dollar).
Although not strictly comparable (and there's an added factor in that they're in differing sectors, with their own specific characteristics), here's what's happened to the share prices of 2 businesses in Argentina : Grupo Galicia (GGAL) - a financial services group - and YPF itself over the last 3 years.
The share-price is a fair proxy for (1) the 'smart money's ' assessment of likely realisability of the company's business plan and (2) associated 'country' risk.
-GGAL has progressed from $7 through $9 to $10 as at 12 months ago and today stands at $24;
-YPF has progressed from $4 through $4.30 to $ 9.50 as at 12 months ago and today stands at $ 18.30;
Again, we're not comparing like-with-like, but BUR's evaluation doesn't seem to be an outlier. And, presumably, it's been passed by its auditors....
AFAICS/NAI/DYOR
GLA and ATB
Two comments from elsewhere
Highly Geared13 Mar '24 - 19:18 - 1073 of 1075
Indeed. I think the CEO mentioned $40m - $50m FCF from the end of this year. So about £35m. I’d value on about 5x FCF, which doubles the current share price.
74tom13 Mar '24 - 21:51 - 1074 of 1075
He said $50-60m free cash flow PA, so ÂŁ43m at the midpoint, which at 5x would put shares at 98p.
We can debate whether a 5X FCF multiple is the right one, but the overall outlook on that metric is favourable, IMO.
NAI, DYOR etc etc
Mind you, check the poster's history....and you can see where he's coming from...
Sent 29 Dec 2023, share price 37p
.."…just a pre warning that you might want to short this! I’m in here for a few k and already down. My last two stocks were bad.
Dev_clever lost me (100%) ÂŁ20k in investment and over ÂŁ100 before they went bust unexpectedly. They did a voluntary suspension and then went bust.
Helium 1 lost me about ÂŁ2k (50%) when I sold and a then dropped further to a total of 86% down in 5 weeks .
So I am the kiss of death. Currently 5% down, so good luck to you all. You’ll need it with me on board..."
As my father always said, when reading an article' 'Consider the source'...
GLA and ATB
Thanks for this!
Hopefully, there'll be an update shortly, to factor in the end 2023 numbers...
pp 22 and 68 list 'recent acquisitions'and seemed to suggest 'open to offers/look what we've got';
pp 54 shows geographic expansion plans (S/T Uruguay and Guyana, longer term Colombia, Ecuador, Peru). Curious that there's no ref to the J/V in Chile (?);
pp 17 and 32 show existing connections. I look at the gap across to Congo (Pointe Noire), where expansionist AbuDhabi Ports has just taken a 30 year concession and wonder if they're in the frame...
ATB and GLA
Today's BrazzaNews carries a story about imminent disposal (for scrap) of an EquatorialCongo EC Air Boeing 757 (Congo's former national airline) that has sat abandoned at Brussels airport for the last 7 years, for unpaid debts.
Wiki https://en.wikipedia.org/wiki/Equatorial_Congo_Airlines, says
..."The airline commenced operating in September 2011, and it was reported that the carrier's business plan does not expect it to become profitable until its third year of operation, i.e. 2014. No annual reports have been published, and the main sources for business information are press releases and reports. According to Swiss journalist Marc Renfer in an article published on official media, ECAir lost over 450 million Euros between 2011 and 2016...."
By contrast, Ethiopian Airlines shows what CAN be achieved, if managed properly :
https://en.wikipedia.org/wiki/Ethiopian_Airlines
.."Ethiopian Airlines is Africa's largest airline in terms of passengers carried, destinations served, fleet size, and revenue. Ethiopian is also the world's fourth-largest airline by the number of countries served..."
GLA and ATB