From Mining to Refining: Low Commodity Prices Force Shift at Industry Giants

By TATYANA SHUMSKY And TIMOTHY PUKO The world’s largest mining companies have plenty of nickel. Now they are scrounging around for nickels. In a sign of desperation amid plunging commodity prices, mining companies are delving into low-margin businesses—traditionally the domain of the industry’s middlemen—for new sources of revenue. Rio Tinto PLC for the first time has started to refine other companies’ copper ore. Brazil’s Vale SA, the world’s largest iron-ore producer, has begun mixing minerals to make custom supplies for buyers. U.S. coal miner Murray Energy Corp. in June launched its own trading unit. The mining companies are seeking to alleviate the financial pressure from tumbling raw-materials prices. With industrial metals and coal at lows last seen during the financial crisis, the share prices of many companies have collapsed by more than half in the past year. A global supply glut and weak demand have spurred the selloff in futures markets and mining stocks. Anglo American PLC alone posted a $6 billion loss for the year ended June 30, compared with a $100 million profit in the previous period. “Everybody is trying to find ways to squeeze out whatever they can,” said Rick de los Reyes,who helps manage $1.5 billion … continue reading

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