Insights
Valuation | M&A and divestments
Insightful business cases for sound decision-making
Investments in Metals & Mining tend to be big and consequential bets, so the foundation of good decision-making is a disciplined, consistent and holistic approach to business case evaluation.
Valuation
Investing in risky jurisdictions - sovereign risk
A Metals & Mining investment is inherently risky, the information about what’s in the ground is never complete or fully accurate, and your revenue line is exposed to the vagaries of markets. On top of that if the operation happens to be in a risky jurisdiction, you then have an additional layer of uncertainty from the sovereign risk exposure you cannot mitigate through diversification.
Valuation
An alternative approach to Country Risk Premium (CRP)
Building sovereign risks into the free cash flows is labor-intensive but is a far more insightful approach than a simple CRP added to the discount rate.
M&A and divestments
Five key lessons for divestment programs
A divestment program, be it for a full division or a substantial set of assets within the portfolio, is a consequential strategic decision for a corporation. The following are 5 key lessons from my hands-on experience with divestments in the Metals & Mining space (but also applicable to other capital-intensive industries)
Corporate Finance
Opex versus Capex trade-offs – a shareholder perspective
The design of a mining project often confronts opex versus capex trade-offs. Should I invest heavily upfront and secure a lower cost of production going forward through economies of scale? Or should I avoid the capital upfront while sacrificing future profitability?
Industry Analysis
Why can’t aluminium tariffs bring back self-sufficiency to the US?
There is no realistic scenario in which the US could become self-sufficient in the production of primary aluminium. Achieving this would require far more draconian measures—such as a tariff level so persistently high that it would effectively shut down trade—combined with significant industrial policy. Neither seems plausible. Nor, I would argue, are the conditions in place for significant investments in new primary aluminium capacity in the US.