Sell By Date

The recent announcement by Anglo American that they were divesting themselves of over 2/3 rds of their existing portfolio was demonstrative of where we are in the broader price recovery phase. This follows on the heels of actions by Glencore and others to rid themselves of loss making operations. The big question now becomes: Divest them to Whom?  Whenever you hear a CEO state categorically that he is not holding a fire sale, one can almost hear the sirens in the background. It is clear that synergistic buyers are most likely not the buyers of these assets, then  might private equity  emerge as the next natural potential acquirer?.  We doubt that bulky projects with extensive future capex needs gets that crowd very excited. If this is the beginning of a buildup of stranded assets across the entire commodity sector, this may be just the catalyst that is needed to provide a much better pricing environment going forward.

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