Lower debt balances and manageable capex will minimize credit implications arising from a projected yoy decline in copper prices. We expect credit profiles, particularly for issuers with competitive cost profiles, to remain stable over the near term even with a more subdued price outlook. Copper prices increased approximately 50% from June 2016 to June 2018 before declining, enabling some producers to meaningfully reduce debt.
The rating actions follows the company's announcement that it has abandoned its plans to separate the group into two standalone, publicly traded companies and to transfer its European steel operations into a joint venture with Tata Steel Limited, amid the European Commission's expected decision to block this transaction.
Stronger cash flow generation, in the context of a favourable commodity price environment and ongoing business transformation, allowed a reduction in adjusted gross debt to USD10.6 billion at end-2018 from USD13.4 billion at end-2017.
Fitch Ratings and CRU Group are delighted to invite you to a live webcast on the outlook for copper and its impact on credit ratings. The discussion will focus on the conclusions of April’s Global Copper Conference in Santiago de Chile, and on the recent rating actions Fitch has taken in the sector.
The sharp rise in iron ore prices to over $90/dry metric ton (dmt) from under $75/dmt since January, due to supply disruptions in Brazil and Australia, may be more structural than initially anticipated.
Robust cash flow, enhanced by higher iron ore prices and a strong balance sheet, should enable Vale to absorb substantial potential fines and reparation costs without breaching Fitch's negative financial triggers. However, identifying and quantifying all unknown contingent liabilities remains difficult due to continued elevated legal and regulatory risks.
The RWP reflects a review of Fitch's internal assessment of the creditworthiness of the Zhaoyuan municipality, which was prompted by a revision in the criteria that govern the ratings of international local and regional governments. The linkage between Zhaojin Group and the Zhaoyuan municipality remains unchanged.
If the independent review were to conclude that some employees at the charity (an independent organisation) had misappropriated or diverted part of the donations, then this is to a large extent captured by the operating environment constraint that is already factored into the rating.
Growing Chinese thermal coal supply is likely to lead to further tightening of import controls by the government, putting pressure on seaborne coal prices and adding order uncertainties for exporters. Miners from Australian and Indonesia are the most exposed, but the credit impact is muted thanks to sufficient rating headroom as we have already incorporated a downward pricing trend in our rating assumptions.
The proposed notes are rated at the same level as the IDR as they will be unconditionally, jointly and severally guaranteed by MIN and its subsidiaries, which represent more than 95% of group consolidated total assets and net income.
Increased joint venture (JV) agreements in the gold sector will provide companies opportunities to capture synergies and optimize assets. As availability of high-quality assets declines, co-development of properties is more cost efficient, requires less capital, and is therefore positive for credit profiles.
Rusal successfully managed its operations under the US sanctions with limited impact. Due to several extensions granted to the company's grace period by the Office of Foreign Assets Control, Rusal did not bear the full impact of the sanctions.
The EU finalised safeguard measures for steel imports introduced on 2 February will have no material impact on rated steelmakers in EMEA, Fitch Ratings and CRU say. The measures, structured as quotas and tariffs, are marginally supportive for domestic EU steel producers and foreign companies with rolling capacities in the bloc as they could support steel prices in the region
Fitch Ratings and CRU Group have entered into a strategic agreement that incorporates CRU’s expertise and leading market analysis in Metals and Mining into Fitch’s independent and insightful research and credit analytics. Through this partnership Fitch’s credit analysis and research reports will be broader, more frequent and more insightful than contemporary market offerings.