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jerryking : commodities_supercycle   10

Canada beware: We are suffering a great depression in commodity prices - The Globe and Mail
MICHAEL BLISS
Special to The Globe and Mail
Published Friday, Jan. 15, 2016

The Great Depression of the 1930s used to be understood as a worldwide structural crisis that was partly an adjustment to the great expansion of crop acreage and other primary industries undertaken to meet the demands of the First World War. Unfortunately the history of those years now tends to be viewed through the distorting lenses of economists fixated on monetary policy and financial crisis management.

They thought that the crisis of 2008 might become a replay of the 1930s. For the most part they have not realized that it is today’s global depression in commodity prices that has eerie echoes of the great crack-up. If it’s true that we have overexpanded our productive capacity to meet the demands of Chinese growth, and if that growth is now going to slow, or even cease, then history is worrisomely on the verge of repeating itself....One sign of the beginning of wisdom is to be able to shed illusions. Make no mistake. Right now, the world is experiencing a great depression in commodity prices, led by the collapse of oil, that represents an enormous shrinkage in the valuation of our wealth. As a country whose wealth is still highly dependent on the returns we can get from selling our natural resources, Canada is very vulnerable. In a time of price depression, our wealth bleeds away.
'30s  adjustments  commodities  commodities_supercycle  economic_downturn  Great_Depression  historians  history  illusions  Michael_Bliss  natural_resources  overcapacity  pricing  overexpansion  slow_growth  wisdom  WWI 
january 2016 by jerryking
In the push to get back to black, don’t ignore the economy - The Globe and Mail
Jan. 19 2015 | The Globe and Mail | KONRAD YAKABUSKI.

Rather than worrying about whether Ottawa will be slightly in the red or slightly in the black over the next few years, the questions Canadians should be asking are the following: Is a smaller federal government good for the country if it means reduced services and the gutting of federal institutions? And do the Tories have an economic action plan that does not rely on a global commodities supercycle to underwrite growth?
cutbacks  Konrad_Yakabuski  Jim_Flaherty  Ottawa  public_sector  policy  budgets  Joe_Oliver  commodities_supercycle  austerity 
january 2015 by jerryking
Former Xstrata CEO raises $2.5-billion for new company - The Globe and Mail
ERIC REGULY
- EUROPE BUSINESS CORRESPONDENT

X2’s goal is to create a mid-tier mining and metals group. The company consists of a small office in central London and five executive partners, all of whom worked with Mr. Davis at Xstrata. They include Trevor Reid, who was Xstrata’s finance director, Thras Moraitis, Andrew Latham and Ian Pearce. Mr. Pearce, of Toronto, was the CEO of Xstrata Nickel, formerly Falconbridge Ltd., the Canadian nickel miner bought by Xstrata in 2006 for about $22-billion (Canadian).

With ample funding in place, X2 is expected to move quickly on the acquisitions front. The company won’t say where it is looking, though the team has intimate knowledge of the mining scene in Australia, Canada and South Africa. Mr. Davis is a South African and was the chief financial officer of Australia’s Billiton before its merger with BHP in 2001.

X2 will consider buying operating companies or assets that are being discarded by the big players such as BHP, Rio Tinto and Anglo American, which overpaid for assets before the 2008 collapse in the belief that the upward commodities cycle was unstoppable. They have taken billions of dollars of writedowns in the past couple of years.

ROME — The Globe and Mail

Published
Monday, Mar. 31 2014,
Mick_Davis  Xstrata  Eric_Reguly  mining  natural_resources  commodities  overpaid  commodities_supercycle 
april 2014 by jerryking
Why we’ll never see a $20 barrel of oil again
Mar. 16 2013 | The Globe and Mail | DAMBISA MOYO -- author, most recently, of Winner Take All: China’s Race for Resources and What It Means for the World....As long as China's commodity demand grows at a higher rate than global supply, prices will rise. And the rapid economic growth that China's leaders must sustain to lift people out of poverty -- and thus prevent a crisis of legitimacy -- places a floor under global food, energy and mineral prices....The economic fundamentals of supply and demand remain the key factors in driving the direction of commodity prices and determining whether the commodity super-cycle will persist. In practical terms, this means that oil prices, for example, are more likely to hover near $120 (U.S.) a barrel over the next decade, rather than $50; and we’re unlikely to see a $20 barrel of oil ever again.
oil_industry  commodities  China  China_rising  Dambisa_Moyo  books  commodities_supercycle 
march 2013 by jerryking
Canada’s hazy takeover rules hurt everyone
Oct. 28 2012 | The Globe and Mail |Barrie McKenna.

Following an upsurge of national angst triggered by the buyouts of Canadian resource giants Inco, Falconbridge Ltd. and Rio Tinto Alcan in 2006, Ottawa ordered up the exhaustive “Compete to Win” report. The result was the 2008 federal Competition Policy Review Panel headed by former BCE Inc. chairman Lynton (Red) Wilson, which urged the government to turn the investment review process on its head.

The Wilson panel anticipated the growing clout of state-owned investors as well as the commodities super cycle.

Mr. Wilson’s prescription was to scrap the “net benefit to Canada” test and replace it with a “national interest” benchmark used by countries such as Australia. He urged Ottawa to reverse the burden of proof on takeovers, making it the responsibility of the government to demonstrate why a deal is bad for the country, not the other way around. And the panel said the government should publicly explain the rationale for blocking or approving transactions, scrapping a regime that “does not meet contemporary standards for transparency.”...The absence of investment reciprocity or evidence that state-owned actors won’t behave like other companies both would qualify as possible reasons for saying no.
Barrie_McKenna  barriers_to_entry  burden_of_proof  commodities_supercycle  competition_policy  FDI  M&A  mergers_&_acquisitions  national_interests  rules_of_the_game  say_"no"  SOEs  transparency 
november 2012 by jerryking
What makes Mick Davis stand out -- strong nerves
27 Mar 2007 | The Globe and Mail pg.B.2. | Eric Reguly.

Canadian mining bosses should get out of the office more often...For Canadian (mining CEOs) when the price rises sharply, visions of price collapse immediately fill their heads, and for good reason. The last downward cycle was so brutal that the mining companies were lucky to come out of it alive. They totally misjudged the current cycle, though. The Canadian CEOs should have spent less time on the golf course and more time watching stockpiles of nickel (and copper, zinc and lead) in Shanghai, Mumbai, Taipei and Seoul disappear like beer at Oktoberfest....Xstrata CEO Mick Davis and the intelligence gatherers at Glencore International, the commodities trader that controls 35 per cent of Xstrata, endlessly traipse around the planet to pick up information on reserves and supply and demand. They feed the data into a black box, which rattles and shakes and spits out a range of eye-popping numbers. Then Xstrata runs out and buys nickel companies when nickel prices are outrageously, unsustainably, stupidly high, or so everyone else thinks. Then the company and its shareholders make obscene amounts of money....CVRD and Inco have been spectacularly right, the Canadians spectacularly wrong. The result is a Canadian nickel mining industry with no nickel miners left of any size. Falconbridge, Inco and LionOre have been eradicated as independent, home-grown names. Investors who sold Inco and Falconbridge left fortunes on the table...The Xstrata lads didn't just get smart on price forecasts. They also figured out how to treat the hedge funds: Respect but don't fret about them. The hedgies pump volatility into the system. When commodity prices fall, say, 10 per cent, share prices might fall by double that amount as the hedgies head for the tall grass. As a CEO, you need strong nerves to endure such violent up and down movements. Mr. Davis has strong nerves and it has paid off. Many other mining bosses look at the hedge funds with fear.
CEOs  commodities  commodities_supercycle  Eric_Reguly  Glencore  inventories  lessons_learned  market_intelligence  Mick_Davis  mining  price_forecasts  scuttlebutt  sellout_culture  stockpiles  volatility  Xstrata 
june 2012 by jerryking
Trader Hits Jackpot in Oil, As Commodity Boom Roars On - WSJ.com
February 28, 2008| WSJ | By ANN DAVIS.
Mr. Hall Bet Early On Market Shift; Buoying Citigroup.

Profiles Andrew J. Hall, an enigmatic British-born trader who, in 2003, anticipated an important shift in the way the world valued oil -- and bet big....Mr. Hall's bet -- that long-term and short-term energy prices would soon abandon their historical relationship with one another -- looked like a long shot when he made it....Around 2003, Mr. Hall became convinced big structural changes were looming in the oil markets. For more than a decade, oil had ranged from $10 to $30 a barrel. But growth in demand was starting to outstrip growth in supply. And the once-sleepy economies of China and India were starting to compete for that fuel.

To place his bet, he focused on what was then a stagnant corner of the commodities world: The extremely long-term market in which traders buy and sell oil to be delivered years in the future.

Futures are contracts to buy or sell a product later on, at a price agreed upon today. Back in 2003, oil for future delivery was considerably cheaper than oil in the "spot," or current, market. For instance, a barrel of oil for delivery in 2005 was as much as 20% cheaper than spot oil....A key to Mr. Hall's success, says a friend, Thomas Coleman, a Louisiana oil-storage executive and fellow art collector, is an ability to block out the noise of the crowd. When Mr. Hall "locks in on an idea, he'll take it to the extreme," Mr. Coleman says.
Citigroup  Phibro  traders  oil_industry  hedge_funds  big_bets  commodities  collectors  pattern_recognition  structural_change  extremities  commodities_supercycle  ratios  noise  turbocharge  extremes 
june 2012 by jerryking
Commodities Report: Mining Start-Ups Look for Northern Exposure - WSJ.com
NOVEMBER 30, 2010 | | Phred Dvorak. The Toronto bourse
estimates Canada has snagged more than a third of the world's equity
financing by mining companies during the past 10 years, and 55% in the
first three-quarters of this year.

The flow of mining deals comes amid a boom in commodities prices that
has pushed gold and copper to records and silver to near 30-year highs.
Canada  Canadian  mining  finance  start_ups  TSX  stockmarkets  TMX  commodities  commodities_supercycle  bourses 
november 2010 by jerryking
FT.com / Comment / Analysis - A new Asian invasion
June 24 2005 | Financial Times | By Dan Roberts, Richard
McGregor and Stephanie Kirchgaessner. "China’s strategic desire for
control of natural resources, global brands and a short cut to
international markets, combined with unprecedented access to cheap money
from the country’s state-owned banks, therefore means its companies can
afford to are ready to outbid more traditional trade purchasers and
private equity groups."
FDI  China  U.S.  industrial_policies  mercantilism  SOEs  natural_resources  brands  mergers_&_acquisitions  Asian  shortcuts  commodities  commodities_supercycle 
april 2010 by jerryking

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