Four "new" entrants to world's top 100 mining stocks - the oil miners
Introducing Suncor, Petro-Canada, Canadian Oil Sands Trust, and Sasol, all miners, at heart.
Author: Barry SergeantPosted: Thursday , 21 May 2009
JOHANNESBURG -
Investing is a moveable feast; akin sometimes to being among converted zealots about to take the mountain one day, the next day like being in a casino full of yahoos, and the next day falling like giddy Icarus under hot-waxed wings. By the same token, definitions in the investing game shift and alter continuously, wrinkles here, holes there, and hidden quicksand down there. There are some days when clarity may surface, if only for a moment.
On the global resources scene, one description of a miner is of a man standing next to a hole in the ground; because this man is a miner, he's a liar. The cynics will tell you that Bre-X proved that, once and for all. The more modest definition of a miner is of a hard working dedicated entrepreneur that has independent evidence to prove that the gold you are about to buy from him is really . . . gold.
But looking at the underlying stuff being sought, and hopefully found, and then dug out and sold, when is a miner a miner? Oil and gas companies are normally considered as being in a separate class, led by Exxon Mobil, the world's most valuable company of any kind, with a current market value (capitalisation) of USD 340bn. For oil and gas companies, there is no real digging involved, unlike miners who have to sweat it out.
Cement makers also are not seen as miners, even though cement is made by heating limestone (which does not grow on trees) with small quantities of other materials, often clay, to 1,450°C in a kiln. The resulting "clinker" is then ground with a small amount of gypsum into a powder to make "Ordinary Portland Cement". Is limestone mined, or quarried? Is gypsum, a common mineral, mined, of simply picked up? What about companies which produce aggregates? Are those too boring to be classified as miners?
In the mining arena, BHP Billiton is often described as the world's "biggest miner", where the more accurate description would be the world's "biggest diversified resources stock", given that it operates a material oil and gas division, in its words, a petroleum division. And then there are companies that go upstream, as seen in the case of steel maker ArcelorMittal, which is getting increasingly into iron ore and also coal mining. There are also any number of miners which have gone downstream; Shenhua, a giant Chinese coal miner, also produces power in coal fired stations and, inevitably, is involved in rail and port operations. Vale, the world's No 2 mining company by value, operates and owns for its Brazilian iron ore mines rail roads, handling facilities, and ports. During 2008 the supergroup splashed out USD 1.6bn for 12 "large" ore carrying ships. Every miner would like one or two of those, but that would entail finding trustworthy skippers.
Even with supposedly clear gold miners, the profile may not be so simple. Barrick, the world's biggest gold digger, produced 7.7m ounces of gold in 2008, but it also happened to produce 370m pounds of copper, worth USD 1.2bn, at its gold mines. And there sits 1.1bn ounces of silver in Barrick's proven and probable reserves.
Barrick's giant Pascua-Lama project, straddling high ground in Argentina and Chile, and recently given a USD 2.9bn build green light, holds reserves of 17.8m ounces of gold, 717.6m ounces of silver, and 649.5m pounds of copper. Then, of course, there was the 2008 formation of Barrick Energy, inspired by high exogenous power costs across the Barrick group. That included the 2008 acquisition of Cadence Energy Inc. for cash of USD 377m, and also oil and gas assets at Sturgeon Lake, Alberta, from Daylight Resources Trust, for cash of USD 83m.
Does all this qualify Barrick as a "diversified resources group?" There are other companies that cross the divide into hydrocarbons, as users and/or owners; takePotashCorp, world's No 5 miner by value, and by far the biggest miner of potash. In order to produce the magic combine of NPK (nitrogen, phosphorus and potassium), the three key ingredients of integrated fertiliser, PotashCorp also mines phosphate rock, and produces nitrogen (typically ammonia and/or urea), using natural gas as a feedstock.
And then there is Syncrude Canada - the world's largest producer of light sweet crude oil from oil sands. Syncrude operates oil sands mines, utilities plants, bitumen extraction plants and an upgrading complex. This is the leading single source of Canada's oil, producing 111.3m barrels a year. Syncrude is unlisted, but is owned by seven entities, including Canadian Oil Sands (37%), Imperial Oil(25%), and Petro-Canada (12%).
And then there is Suncor, also a big oil sands specialist. As one analyst puts it: "Suncor and Syncrude are today the largest mines in the world - by tons of material moved as well as value of product mined". Logic dictates the inclusion of relevant names as mining companies; after all, coal (carbon) companies, always seem to make the cut as mining companies. For now, however, Imperial Oil remains a better fit outside mining, given its substantial business beyond its interest in Syncrude. Imperial Oil is 69.6% held by ExxonMobil. Suncor and Petro-Canada are currently engaged in a friendly merger; the pro forma value of the new company would be USD 48.8bn, which would rank it No 5 mining company in the world, by market value.
And then there is South Africa-based Sasol, best known for upgrading coal to produce synfuels, from gasoline to diesel and beyond, along with a plethora of chemical by products. The group also has interests in natural gas, oil, and chemicals, but, at its core, Sasol mines around 43m tons of saleable coal a year, mainly for gasification feedstock and utilities coal for its complexes in South Africa. Around 3m tons of group coal production is exported.
WORLD'S TOP 100 MINING STOCKS |
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| Stock | From | From | Value |
| price | high* | low* | USD bn |
GBP 14.14 | -33.6% | 93.3% | 137.46 | |
USD 19.45 | -55.3% | 121.0% | 95.31 | |
CNY 26.64 | -49.9% | 65.7% | 64.37 | |
GBP 28.16 | -59.0% | 183.0% | 63.26 | |
CAD 130.24 | -47.1% | 112.1% | 33.61 | |
GBP 15.72 | -56.6% | 73.5% | 32.84 | |
USD 36.22 | -31.0% | 109.7% | 31.63 | |
CAD 36.35 | -50.3% | 93.4% | 29.76 | |
GBP 6.39 | -74.0% | 121.3% | 29.28 | |
USD 36.73 | -30.2% | 165.4% | 26.82 | |
USD 56.82 | -65.2% | 159.0% | 25.25 | |
INR 293.05 | -43.3% | 154.4% | 24.51 | |
USD 35.99 | -47.0% | 87.8% | 22.93 | |
USD 45.55 | -15.3% | 115.2% | 21.82 | |
USD 10.84 | -65.7% | 208.8% | 20.66 | |
USD 50.00 | -60.7% | 218.5% | 20.59 | |
CAD 44.85 | -29.9% | 124.1% | 19.01 | |
USD 21.72 | -57.9% | 176.0% | 17.23 | |
USD 20.24 | -46.5% | 121.9% | 17.20 | |
CNY 12.06 | -44.9% | 101.0% | 16.17 | |
CNY 10.73 | -50.0% | 81.9% | 15.06 | |
ZAR 506.03 | -65.0% | 44.6% | 14.37 | |
CNY 9.14 | -20.9% | 143.1% | 14.11 | |
USD 10.75 | -58.7% | 138.9% | 13.60 | |
USD 37.11 | -4.8% | 177.6% | 13.14 | |
USD 18.68 | -26.3% | 172.7% | 12.97 | |
ZAR 166.20 | -54.4% | 92.0% | 11.99 | |
AUD 31.82 | -14.4% | 92.3% | 11.85 | |
EUR 51.60 | -47.0% | 92.6% | 11.73 | |
CAD 27.48 | -50.9% | 83.2% | 11.61 | |
GBP 5.64 | -63.3% | 207.9% | 11.29 | |
CAD 30.51 | -31.3% | 112.9% | 10.46 | |
CNY 28.20 | -6.3% | 304.0% | 10.02 | |
USD 36.66 | -38.3% | 182.4% | 9.65 | |
USD 9.49 | -78.5% | 90.9% | 9.25 | |
USD 12.95 | -9.8% | 179.1% | 9.12 | |
GBP 5.82 | -20.4% | 151.1% | 8.93 | |
USD 56.49 | -30.1% | 170.7% | 8.79 | |
USD 32.05 | -63.9% | 100.3% | 8.57 | |
USD 51.38 | -54.9% | 132.7% | 8.06 | |
USD 11.35 | -49.6% | 263.8% | 8.04 | |
USD 41.00 | -48.8% | 192.9% | 7.82 | |
USD 18.10 | -77.6% | 472.8% | 7.69 | |
MXN 199.87 | -32.6% | 193.5% | 7.59 | |
USD 26.86 | -24.7% | 198.4% | 7.38 | |
USD 10.00 | -41.2% | 202.1% | 7.33 | |
USD 39.79 | -66.6% | 115.1% | 7.19 | |
ZAR 187.00 | -46.2% | 82.4% | 7.12 | |
GBP 6.33 | -4.3% | 580.6% | 7.06 | |
EUR 186.75 | -71.8% | 94.4% | 6.73 | |
CNY 15.39 | -41.4% | 102.5% | 6.68 | |
USD 13.92 | -74.1% | 435.4% | 6.65 | |
CNY 27.46 | -18.3% | 232.0% | 6.58 | |
USD 5.27 | -69.4% | 93.8% | 6.58 | |
GBP 15.20 | -44.6% | 323.7% | 6.57 | |
CNY 38.83 | -17.9% | 335.8% | 6.55 | |
CNY 13.21 | -35.2% | 108.0% | 6.25 | |
AUD 2.62 | -80.1% | 125.9% | 6.23 | |
AUD 3.15 | -13.5% | 107.2% | 5.74 | |
CNY 50.24 | -46.4% | 35.8% | 5.65 | |
CNY 35.37 | -33.8% | 253.7% | 5.57 | |
AUD 82.00 | -31.7% | 21.5% | 5.46 | |
GBP 6.56 | -64.8% | 284.0% | 5.46 | |
INR 578.00 | -24.2% | 168.8% | 5.15 | |
USD 66.01 | -1.5% | 196.3% | 5.06 | |
CNY 14.48 | -35.5% | 173.2% | 5.06 | |
INR 361.00 | -36.3% | 243.0% | 4.91 | |
HKD 6.85 | -6.4% | 5.2% | 4.77 | |
CNY 44.22 | -0.1% | 235.0% | 4.61 | |
JOD 39.00 | -60.6% | 52.3% | 4.59 | |
USD 10.76 | -18.8% | 96.7% | 4.58 | |
PLN 71.00 | -36.8% | 253.6% | 4.44 | |
INR 124.40 | -20.0% | 180.2% | 4.40 | |
CNY 15.18 | -8.0% | 232.9% | 4.12 | |
CNY 35.30 | -36.6% | 233.6% | 4.08 | |
USD 21.85 | -16.5% | 220.9% | 4.02 | |
USD 0.36 | -75.0% | 140.0% | 4.02 | |
USD 9.46 | -83.7% | 269.5% | 3.94 | |
CNY 27.92 | -5.7% | 249.0% | 3.94 | |
USD 500.00 | -78.0% | 163.2% | 3.91 | |
CNY 73.57 | 0.0% | 222.7% | 3.87 | |
AUD 26.37 | -0.2% | 182.0% | 3.87 | |
USD 10.16 | -2.3% | 357.7% | 3.71 | |
CNY 18.94 | -1.6% | 246.9% | 3.59 | |
CAD 50.16 | -38.7% | 293.4% | 3.43 | |
USD 9.22 | -4.9% | 287.4% | 3.42 | |
USD 24.78 | -79.7% | 110.0% | 3.25 | |
ZAR 76.00 | -53.5% | 60.0% | 3.22 | |
ZAR 126.00 | -59.0% | 65.8% | 3.18 | |
CLP 11,904.00 | -56.0% | 80.1% | 3.18 | |
GBP 12.76 | -62.0% | 149.3% | 3.13 | |
USD 0.16 | -82.8% | 700.0% | 3.10 | |
AUD 4.67 | -14.5% | 54.1% | 2.93 | |
CNY 34.13 | -11.3% | 229.8% | 2.86 | |
INR 79.00 | -56.9% | 115.0% | 2.83 | |
USD 9.46 | -40.7% | 276.9% | 2.72 | |
INR 162.10 | -25.3% | 170.2% | 2.69 | |
CNY 6.69 | -29.6% | 106.5% | 2.68 | |
CNY 16.95 | -51.5% | 98.2% | 2.66 | |
CNY 17.64 | -14.8% | 191.1% | 2.65 | |
Averages/total |
| -40.2% | 173.2% | 1266.75 |
Weighted averages |
| -50.6% | 124.7% |
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* 12 month |
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Source: market data; table compiled by Barry Sergeant | ||||
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