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July 31, 2008 Dear Friend, Enclosed are updates on Overweight rated International Paper and a preview of the pending Aug 6 Vale, Aug 26 Rio Tinto and Aug 18 BHP Billiton. In the latter report we compare closely the June half-year earnings of Teck Cominco down 3% and Anglo-American up 48% and preview Vale, Rio Tinto and BHP Billiton. We estimate iron ore and coal earnings rise over 100% in 2008 and that nickel, lead, zinc and aluminum earnings fall a lot. Thus, Anglo-American enjoyed a splendid "relative" environment as it has zero exposure to the "nasties" of nickel, lead, zinc and aluminum that penalize to varying degrees each of the other Big Six diversified mining super majors. It is noteworthy that the copper divisions of the various diversified mines did not enjoy particularly good comparisons in the context of FCX's earnings decline paced by at least 25% unit cost increases on each continent. We expect just single digit earnings gains in 2008 for Teck Cominco and Vale due to their exposures to plunging lead and zinc and a higher C$ and energy costs in the case of TCK and plunging nickel and a higher shares outstanding, Brazilian real and higher energy in the case of Vale. BHP Billiton, Rio Tinto, Anglo-American and Xstrata each should record better gains. Faithfully, John C. Tumazos |
Copyright © 2008 John Tumazos Very Independent Research,
LLC
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