Lure of Anglo’s copper mines could test BHP’s spending resolve
BHP needs to offer at least a 40% premium over Anglo's share price for a new takeover bid, but its CEO has committed to spending discipline.
Two separate Wall Street reports gave fertilizer producers a boost on Tuesday. Investment bank Citigroup upgraded its recommendations for the two top producers Mosaic and Potash Corp. of Saskatchewan to buy citing strong global agricultural fundamentals and reduced Chinese exports.
In a separate opinion Barron’s magazine over the weekend said Mosaic’s stock is worth a look as potash prices are predicted to rise throughout the year thanks to depleted inventories and consolidation among Russian producers.
CNBC discusses the Citigroup upgrade here:
“Citi also raised the target share prices for Mosaic and Potash Corp. to $85 and $67, respectively. Mosaic shares have traded between $64.75 and $70.75 in the past 52 weeks, while Potash has traded between $27.95 and $63.96.”
JPMorgan analyst Jeffrey Zekauskas flags other catalysts: Mosaic this month notified Potash Corp. that it has satisfied its obligation to supply its rival with potash under a previous tolling agreement. The dispute is headed for a trial early next year, but Mosaic will stop shipping potash to its rival starting July. This could free up a million tons of potash each year that could boost per-share profits by 50 cents.
Last week MINING.com reported on ratings agency Standard & Poor’s view on Potash Corp.:
“S&P believes Potash Corp. will benefit from strong fundamentals in the potash business and from the fact that its mines are considered low cost and have long reserve lives. Potash Corp, worth some $46bn on the stock market, has attracted renewed interest from investors on the back of rising global food prices, record earnings at the company, and after a $40bn hostile takeover bid was scuppered by the Canadian federal government in November last year.”
