Ann: Quarterly Report March 2020, page-7

Peter Ker in the AFR today speculates on the possible sale of TEMCO.

Of more interest to me is the bigger discussion on possible acquisitions:

"South32 has confirmed talks are under way with suitors for its Tasmanian manganese smelter and says an austerity drive within the company should be interpreted as caution rather than preparation for an acquisition.

"The miner has one of the strongest balance sheets in the industry with no debt, cash equivalents of $US1.2 billion ($1.9 billion), an undrawn $US1.5 billion line of credit and ongoing cash generation from its assets despite sliding prices for its key products.

South32 wants more exposure to base metals like copper, nickel and zinc, but Mr Kerr said fewer resources companies had debt problems going into this downturn than during the severe commodity price slump around 2015.

‘‘I don’t think people entered this period of uncertainty with as weak balance sheets, but what is uncertain at the moment is the length of the economic impacts of COVID-19.‘Is that another three, four, five or six months and what does the world look like coming out the other side?’’ he said.‘‘So we will continue to look at [acquisition] opportunities, but it will always be opportunistic."

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Ash here.

No one ever willingly sells Tier 1 Cu Ni Zn assets. GK & team will have to wait for someone to go bust or be obliged to sell. They play a long game. We are seeing carnage in oil markets with negative forward prices that will spread to gas, coal and electricity prices, to the extent they are fungible, with downward price implications for all commodities.

Patience and tight seat belts, everyone. This is going to be rough. It will be worth it.

Ash