Fortescue Q1 iron-ore sales fall 3.9 million tons behind shipments
EU regulators question MMG–Anglo American deal over China supply concerns
European Union merger officials told Anglo American at a closed-door hearing Thursday that they are concerned MMG’s planned acquisition of the London-listed miner’s Brazilian nickel business could divert supplies from Europe to China, Anglo American Chief Operating Officer Ruben Fernandes said Friday. Fernandes characterized EU approval of the deal as “the very best outcome” for European stainless steel customers and for the company’s workers in Brazil, and warned that a prohibition would push the Brazilian operations toward a “care and maintenance” path leading to closure.
“Prohibition means that we will head towards ‘care and maintenance’ as the pathway to closure of the operations in Brazil. That would be the ultimate lose-lose outcome,” Fernandes said, adding that Anglo American presented “the clear realities of the market during the hearing.” Fernandes spoke in comments published on Dow Jones Newswires at 0737 GMT Friday as part of The Wall Street Journal’s Basic Materials Roundup: Market Talk.
In a separate note published at 2211 GMT, Bell Potter analyst David Coates said the central revelation in Fortescue’s unscheduled operational update was 3.9 million tons of missing iron-ore sales and a commensurate build in working capital. Fortescue reported sales of 42.9 million tons in the first quarter — 8% below shipments of 46.8 million tons — and attributed the gap to continuing negotiations with China Mineral Resource Group, China’s centralized ore buying agency. “Typically, variance between Fortescue’s shipments and sales is immaterial,” Coates said, but Bell Potter observed that price realizations appear to have suffered as a result. The firm expects a resolution but warned that “the resolution will include lower price realizations over the long term, particularly as pricing power shifts to buyers in market conditions of stable demand and growing supply.”
Citi analysts, writing in a separate 1109 GMT entry on Air Liquide, said the French industrial-gases supplier plans to accelerate acquisitions to increase density, with a particular focus on China and the United States. “No further details were provided on the potential size, geography or nature of strategic acquisitions but reassurance was given on the strategic fit,” they said. Air Liquide expects mergers and acquisitions to contribute about one percentage point to its 5% sales compound annual growth rate target, primarily through bolt-ons. Citi maintained a buy rating on the stock and a €198 target price; Air Liquide shares were down €1.75 at €166.04 but up 14% year-to-date.
Macquarie analysts said West African Resources should comfortably meet production targets barring material disruptions, particularly if improved access to explosives continues. The conclusion followed the gold miner’s third-quarter operational update, which reported output of 127,950 ounces of gold — 11% above Macquarie’s forecast — alongside sales of 135,000 ounces, up 22% quarter-over-quarter. “We are likely to see improved all-in sustaining costs this quarter, given stronger sales … offsetting the increase in mined and milled tonnage,” Macquarie said. The firm retained an outperform call and an A$4.00-per-share price target on West African Resources, which closed at A$3.50 on Thursday.
The four items were published on Dow Jones Newswires as part of WSJ’s Basic Materials Roundup: Market Talk, which aggregates analyst notes and company commentary throughout the trading day.