The best cure for low prices is low prices. This miner is set to benefit
Investors are still not quite sure what to make of the turnaround plan at miner Anglo American, with the shares no higher than they were in late 2021, but the demerger of Valterra Platinum offers the latest pause for thought.
Valterra's shares trade in Johannesburg and London and the timing of the spin-off could be interesting since platinum prices stand at a three-year high and the CRB Commodities index is making a good go of testing its loftiest level since 2011.
We remain interested in Anglo American on the basis that the proposed restructuring should reduce debt, simplify the group structure and leave the FTSE 100 constituent as a more focused play on copper, iron ore, nickel and phosphates. In addition, the valuation does not look demanding relative to the company's book, or net asset, value per share.
Potential future catalysts to unlock that value could be the proposed sale or flotation of diamonds specialist De Beers, further debt reduction and any hint of further advances in commodity prices, a trend that could result from China's efforts to stimulate its economy, American determination to foster growth, or safe haven buying of real assets if inflation rears its head once more.
Anglo American retains a near-20pc stake in Valterra after a deal which saw investors get 110 shares in the leading producer of platinum group metals (PGM) for every 1,075 they held in the parent.
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The Guardian
12 minutes ago
- The Guardian
Rachel Reeves says she cannot rule out autumn tax rises after ‘damaging' week
Rachel Reeves has said it is impossible for her to rule out tax rises in the autumn budget and insisted she never thought about quitting despite a turbulent week for her and the government. In an interview with the Guardian, the chancellor said 'there are costs' to the watering down of the welfare bill and acknowledged it had been a 'damaging' week for Downing Street. The chancellor's tears in the Commons on Wednesday spooked the financial markets and raised questions about her future in the job, but No 10 quickly weighed in behind her, saying she and the prime minister were in lockstep. Reeves said she had never considered resigning her position, despite being the focus of some Labour backbench anger over her handling of the economy, saying: 'I didn't work that hard to then quit.' She said she regretted going into prime minister's questions in tears after a 'tough day in the office' but hoped that people 'could relate' to her distress. 'It was a personal matter but it was in the glare of the camera. And that's unfortunate, but I think people have seen that I'm back in business and back out there,' she said. 'I went to prime minister's questions because I thought that was the right thing to do, because that's where I always am at lunchtime on a Wednesday. You know, in retrospect, I probably wished I hadn't gone in … [on] a tough day in the office. But, you know, it is what it is. But I think most people can relate to that – that they've had tough days.' Her challenging moment in parliament came in the same week that a backbench rebellion forced the government to drop key welfare cuts, which leaves Reeves with a £5bn black hole to fill in the country's finances. 'It's been damaging,' she admitted. 'I'm not going to deny that, but I think where we are now, with a review led by Stephen Timms [a work and pensions minister], who is obviously incredibly respected and has a huge amount of experience, that's the route we're taking now. 'That's the right thing to do. It is important that we listen in government, that we listen to our colleagues and listen to what groups outside are saying as well.' Timms is working with disability groups to reform the personal independent payments (Pip) system, which had been the target of government cuts until the huge backbench rebellion drove the government to drop them. Reeves said the government had learned lessons about bringing MPs and the country along with them in the run-up to what is widely expected to be a difficult budget this autumn ahead. 'As we move into the budget for the autumn, I do want to bring people into those trade-offs,' she said. Asked whether she was prepared to rule out tax rises, she said: 'I'm not going to, because it would be irresponsible for a chancellor to do that. We took the decisions last year to draw a line under unfunded commitments and economic mismanagement. So we'll never have to do something like that again. But there are costs to what happened.' While tax rises could be on the table, Reeves signalled that her fiscal rules would remain and that 'we'll continue to keep that grip on the public finances'. But she stressed the need to accompany this with a strong explanation of how the Treasury's choices fit with Labour values. 'I'm not going to apologise for making sure the numbers add up,' she said. 'But we do need to make sure that we're telling a story, and a Labour story. We did that well in the budget and the spending review, we increased taxes on the wealthiest and businesses. In the budget last year, I made it really clear that priorities in that budget were to protect working people, to invest in the NHS and to start rebuilding Britain.' Some within government and the Labour party have been pushing for either a reconsideration of the fiscal rules or rethinking the remit of the Office for Budget Responsibility, which produces two forecasts and rulings a year on whether the rules have been met. Asked whether she would consider one forecast instead of two, Reeves said: 'We are looking at how the OBR works, but I think it is really important to have those independent economic institutions, because if you start undermining those … and getting rid of the checks and balances on a government, I do think that is risky. But the International Monetary Fund have made some recommendations about how to deliver better fiscal policymaking. And obviously I take those seriously.' The IMF has suggested that while the OBR could still produce two forecasts, it could be possible to only have one annual assessment of whether the chancellor is hitting her fiscal rules. However, government sources suggested that any changes could be more along the lines of more regular exchange of information to reduce last-minute changes like those in the spring statement. Reeves also spoke of her drive to reduce child poverty but she would not be drawn on whether she would lift the two-child benefit cap. Keir Starmer has said the government 'will look at it' but experts have warned it could be more difficult given the hole left by the U-turn on the welfare cuts. The chancellor said she wanted to reduce child poverty but was 'not wedded to any specific policy', adding: 'I think people can see how serious I am about making sure that all good kids get a good start in life by what we did in the spending review just a few weeks ago.'
Reuters
13 minutes ago
- Reuters
Sterling heads for weekly loss as fiscal concerns loom
July 4 (Reuters) - Sterling was poised for a weekly loss on Friday, marking a lacklustre end to a week that saw fiscal and political uncertainties rattle investor appetite for UK assets. The pound was flat and last fetched $1.36, while against the euro it inched 0.1% lower and was last at 86.26 pence. Gilt yields were broadly steady in late morning trading. However, on a weekly basis, cable was down 0.4% against the greenback, while it had fallen about 1% against the euro, marking its biggest one-week drop against the currency since U.S. tariffs on world economies took effect in early April. UK stocks, bonds and cable witnessed a selloff earlier in the week, after the government's welfare reforms were not well received by ruling Labour Party members and stirred speculation about the future of finance minister Rachel Reeves. Some analysts even drew parallels between this week's market reaction and the rout during former Prime Minister Liz Truss' premiership in 2022. With the Keir Starmer-led government completing one year in power, uncertainties prevail over the options it has to balance public accounts. "There is speculation that given the difficulties the government has faced in finding savings from welfare budgets, tax rises are likely in the Autumn Budget," said Susannah Streeter, head of money and markets at Hargreaves Lansdown. "Bets are rising that the Bank of England will cut interest rates more quickly with a reduction in August increasingly on the cards. So, that's kept a bit more downwards pressure on sterling." Traders expect the Bank of England to lower borrowing costs by 25 basis points next in September and are anticipating another interest rate cut by the same amount before the year ends, data compiled by LSEG showed. Further, top ratings agency S&P said the inability of Britain's government to make modest cuts to welfare spending this week underscores that it has very limited budgetary room to manoeuvre. Despite the week's developments, the pound is at a near four-year high against the dollar and is up about 9% so far this year, having benefited from broader dollar weakness and as a U.S.-UK trade deal offered some relief on the tariff front.
The Guardian
14 minutes ago
- The Guardian
Who's really to blame for Labour's troubles – Rachel Reeves or the invisible PM?
She is not the first chancellor to cry in public, and may not be the last. But Rachel Reeves is the first whose tears have moved markets. No sooner had the realisation dawned that she was silently weeping – over a personal sorrow she won't be pushed into revealing, she insisted later, not a political one – as she sat beside Keir Starmer at Wednesday's prime minister's questions, than the pound was dropping and the cost of borrowing rising. The bond traders who forced out Liz Truss's hapless chancellor still clearly rate her judgment and want her to stay, even if (perhaps especially if) some Labour MPs don't. Yet it is an extraordinary thing to live with the knowledge that a moment's uncontrolled emotion can drive up the cost of a nation's mortgages, just as a misjudged stroke of the budget pen can destroy lives. The most striking thing about her tears, however, was Starmer's failure to notice. Intent on the Tory benches opposite, the prime minister simply ploughed on, not realising that his closest political ally was dissolving beside him. Though within hours, a clearly mortified Starmer had thrown a metaphorical arm around her, and Reeves herself was back out talking up her beloved fiscal rules as if nothing had happened. But it's the kind of image that sticks: her distress and his oblivion, an unfortunately convenient metaphor for all the times he has seemed oddly detached from his own government. Quite aside from whatever private grief she is now carrying, Reeves has for years been shouldering an exhausting load. From the start, she and Morgan McSweeney, Starmer's chief of staff, did an unusual amount of the heavy lifting on behalf of their oddly apolitical leader – and in government the stakes have only risen. McSweeney, a natural fixer now jammed faintly awkwardly into a strategist's role, was once credited with near-mythical influence over Starmer, but for months is said to have been struggling at times to get the boss's ear. Reeves, meanwhile, has ended up by default running much of the domestic agenda, while Starmer focuses on foreign policy crises and a handful of big issues that passionately exercise him. Since even close aides and ministers complain of never really knowing what he wants, the result is a Treasury-brained government that tends to start with the numbers and work back to what's possible, rather than setting a political goal and figuring out how to reach it. Perhaps that makes sense to the City, but not to Labour MPs frogmarched through a series of politically toxic decisions with no obvious rationale except that the money's got to come from somewhere. To many of them, Starmer appears at best like a kind of political weekend dad: largely absent from everyday life and reluctant to get involved in political battles, but swooping in at the last minute to issue orders. Complaints of Downing Street dysfunction have been a staple under at least the last four prime ministers, but there's a weakness at the core of this No 10 that is putting the rest of government under undue strain, like a runner trying to push on through an injury who ends up pulling every other muscle in the process. On the left, there is growing talk of trying to force a 'reset' in spring, if next year's Scottish and Welsh elections go as badly as they assume: force Reeves out, let radicalism in, fight Reform's emotive rightwing fire with a form of leftwing populism perhaps loosely resembling what the Democrats' Alexandria Ocasio-Cortez or the New York mayoral candidate Zohran Mamdani are doing in the US. It's exactly what the markets fear, judging by their reaction to Reeves' temporary wobble. But even Labour MPs who'd never go that far are growing restless for change. Just raise taxes, cries this week's New Statesman magazine, echoing a widespread view that the fiscal straitjacket imposed by Reeves is killing the government. I argued for the same thing in the Guardian back in March, and haven't changed my mind. But the political cost of doing so is arguably higher now than it would have been then, when tax rises could plausibly still have been framed as an emergency response to Donald Trump pulling the plug on Europe's defence and forcing Britain to rearm, rather than as an admission that the government can no longer get its spending plans past its own backbenchers. In their understandable frustration, however, some fail to ask why Reeves holds the iron grip she does; why Treasury thinking isn't more often challenged by No 10. If this government's mistakes often have her fingerprints somewhere on them, then so do many of its successes. Last week, I was at a housing conference, surrounded by people still euphoric at getting everything they asked for in last month's spending review: unprecedented billions poured into genuinely affordable and social housing – with emphasis thankfully for once on the social – with a 10-year settlement from the Treasury, creating the long-term certainty they need to make it happen. Angela Rayner fought like a tiger for it, but Reeves made the money happen, and the result will change lives. Children who would have grown up in grim, frightening temporary accommodation will have safe, permanent homes. Vulnerable people will escape the clutches of unscrupulous landlords and first-time buyers will climb ladders otherwise out of reach. It's everything a Labour government exists to do, but as with so many unseen good things happening – on green energy, say, or transport – the money didn't fall from the sky and won't be there in future if an ageing and chronically unfit population carries on consuming welfare spending or health spending (the next big battleground, judging by the detail of Wes Streeting's 10-year plan) at current rates. To a frustrated Treasury, this week's rebellion was evidence that Labour MPs don't live in the real world, where hard choices must be faced for good things to happen. But, to the rebels, it's evidence that the Treasury doesn't live in their real world, where vulnerable people struggle with deep-rooted health problems only aggravated by being pushed into poverty, and the Greens as much as Reform are threatening to eat them for breakfast over it. There is some truth in both arguments. But that's precisely why it is ultimately a prime minister's job, and nobody else's, to draw all the threads of the government together: to balance political yin against economic yang, such that neither dominates or bends the project out of shape. Chancellors come and, eventually, even the best go. But sometimes it's only then that you can really tell whether the problem was ever really the chancellor. Gaby Hinsliff is a Guardian columnist
