Thursday, May 21, 2015
- Archer Daniels Midland (ADM +0.9%) says it is expanding grain export capacity at its Puerto San Martin port in Argentina to help boost shipments from the country.
- The expansion, to be completed by early 2016, will include a new berth for unloading barges and additional grain storage, and will increase the terminal's capacity to ~2.5M metric tons from ~2M.
- The investment comes after several recent strategic deals by ADM aimed at reaching its goals of doubling its grain origination over the next decade.
- U.S. crude oil posted its biggest rally in a month, with the July Nymex contract surging 3% to $60.72/bbl after yesterday's EIA storage report revealed a third consecutive weekly draw and U.S. oil output fell to below 9.3M bbl/day, its lowest level since early February.
- Increased fighting in Iraq raised worries about the security of Middle East crude shipments, and a retreat in the dollar today also took some pressure off prices.
- Still, some analysts caution that stocks of crude oil and oil products are higher than last year, meaning that shortages should not occur and prices could face yet another leg down.
- S&P's energy sector (+0.9%) is today's top performer thanks to the rally.
- Commodity ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, TWTI, OLEM
- Energy company ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, XES, IYE, IEO, IEZ, FENY, PXE, PXI, FIF, PXJ, NDP, RYE, FXN, DDG
- Potash Corp. (POT +1.5%) CEO Jochen Tilk says he views the company's stakes in fertilizer companies Sinofert Holdings and Arab Potash as "strategic," but continues to review whether to keep its shares in Israel Chemical (ICL +0.2%) and SQM (SQM +0.1%).
- Tilk, speaking at a BMO investor conference in New York, says if POT could not build on its SQM and ICL minority stakes, it will consider whether it should keep them.
- ICL CEO Stefan Borgas responds that if POT wants to increase its stake, it should speak directly with Israel's government, adding that many investors have approached ICL about interest in POT's stake.
- First Quantum Minerals (OTCPK:FQVLF -4.6%) lays out plans for C$600M in new spending over the next 18 months to speed up project development, as it raises as much as C$1.44B in a public offering.
- First Quantum is earmarking C$300M-C$400M for expansion of the Kansanshi copper mine in Zambia, C$150M to advance permitting for the Haquira project in Peru, plus some money for the Taca Taca deposit in Argentina; the C$600M comes on top of C$1.4B budgeted for projects such as Cobre Panama.
- "It's better to build at the bottom of the cycle than at the top, but also to try and get as much of that pipeline into production to coincide with the inevitable rise in the copper price in the next two or three years," company president Clive Newall tells analysts.
- China's commitment to invest in Brazil's iron ore sector puts the big Australian exporters on notice, as Vale (VALE +1.6%) is forecast to increase production from current levels of 330M metric tons of iron ore to 450M by 2018 - greater than the combined output of BHP Billiton (BHP +1.2%) and Rio Tinto (RIO +0.9%).
- China's new A$5B revolving line of credit for Vale means the company now can fund a $16B expansion of its iron ore mines; the deal also saw Chinese invest in several of Vale's giant iron ore carriers, ships that can carry vastly more resources and reduce transport costs by ~25%.
- Vale last year accounted for 18% of the supply to the Chinese market vs. nearly 60% by Australian producers.
- Anglo American's (OTCPK:AAUKF, OTCPK:AAUKY) diamond producing De Beers unit says it will seek to sell its Kimberley Mines in South Africa in the coming months as it focuses on much larger mines across southern Africa.
- De Beers says it wants a potential buyer who is willing to invest in the operations and extend the mine's operating life beyond 2018.
- Kimberley Mines, South Africa's second-largest diamond operation, is a mature mine that produces diamonds largely from tailings; it recovered 722K diamond carats last year and has a mining right that extends to 2040.
- Chile's government has removed BHP Billiton's (BHP +0.7%) $4B Spence copper expansion project from its 10-year development timeline, saying it expects the miner will miss its targeted deadline of first production by 2020.
- BHP has conducted a pre-feasibility study to deliver copper from the ore body that lies beneath its existing Spence mine by 2020 as part of a plan to extend the life of the facility by up to 50 years, but Chile's copper commission says it expects the timeline to slip, with the massive Escondida mine remaining the priority.
- In 2012, the commission predicted the development of $105B of resource projects in Chile in the following decade, but the slump in global commodity prices has prompted it to revisit its 10-year horizon and downgrade the pipeline of projects to $75B by 2025.
- Cliffs Natural Resources (NYSE:CLF) says it is seeking court protection from creditors of its Wabush iron ore mine and related assets in eastern Canada, after it sought similar protection earlier this year for its Bloom Lake mine and other Canadian iron ore assets.
- CLF says in an SEC filing that a "more comprehensive restructuring and sale process" will result if it was able to include the Wabush group under the same creditor protection and allow a more "streamlined exit" from eastern Canada.
- CLF idled its Wabush operations in Newfoundland and Labrador in Q1 2014 as it sought to cut costs.
- Australia's government says it will not seek to hold a special parliamentary inquiry into recent activity in the iron ore market, a quick turnaround after Prime Minister Abbott said last week that he backed an inquiry because it was needed to discover the facts behind the sharp drop in iron ore prices.
- A senator had been calling loudly for parliament’s economics committee to investigate claims that BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO) are driving down prices by boosting supply to undermine smaller competitors; a probe was advocated by some smaller Australian producers such as Fortescue Metals (OTCPK:FSUMF) that are more vulnerable to lower prices because they lack to scale to keep down production costs.
- BHP CEO Andrew Mackenzie said in recent days that the uncertainty around an inquiry would damage investor confidence in Australia, and this view apparently won out.
- BHP +1.4%, RIO +1.8% premarket.
Visit Seeking Alpha’s new Earnings Center
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs