BHP and Rio stumble

BHP and Rio are struggling … and shrewd investors, including Glencore’s Ivan Glasenberg, see through the false economics of over-producing.

Summary: While Glencore stalks Rio Tinto, BHP Billiton is trying to win support for its demerger plan, and both major miners are expanding their iron ore operations in the face of a falling price. All-in costs are likely higher than reported and investors appear to be seeing through the miners’ spin, with BHP’s market cap falling more than $21 billion since the spin-off plans were announced. Rio has rejected a merger offer from Glencore, but the suitor knows how to play the takeover game. BHP could be next in line to receive an offer.

Key take-out: The divergence between the aims of the major miners’ shareholders and management has been widened by changes in commodity and capital markets. This gives raiders an opportunity to pounce.

{{content.question}}

{{ twilioFailed ? 'SMS Code Failed to Send…' : 'SMS Code Sent…' }}

Hi {{ user.FirstName }}

Looks like you've already taken a free trial

Please enter your payment details

We have sent you a code via SMS to {{user.DayPhone}}

please enter this code below to activate your membership

We cannot send you a code via SMS to {{user.DayPhone}}

If you didn't receive SMS code please

SMS code cannot be sent due to: {{ twilioStatus }}

Please select one of the options below:

Looks you are already a member. Please enter your password to proceed

Please untick this box when using a public or shared device


Verify your mobile number to unlock a FREE trial

Please sign up for full access

Updating information

Please wait ...

  • Mastercard
  • Visa
Mastercard

The email address you entered is registered with InvestSMART.

Please login or select "Don't know password"

Please untick this box when using a public or shared device


Register as a new member

(using a different email)

Related Articles