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Barrick Gold gets green light to resume Veladero ops after 19-day suspension

Street Talk Episode 40 - Digital Banks Take a Page Out of 'Mad Men'

Broadband Only Homes Skyrocket In 2018 Validating Top MSOs Connectivity Pivot

Power Forecast Briefing: As retirements accelerate, can renewable energy fill the gap?

2019 Credit Risk Perspectives: Is The Credit Cycle Turning? A Fundamentals View

Barrick Gold gets green light to resume Veladero ops after 19-day suspension


Barrick Gold gets green light to resume Veladero operations

After 19 days under a suspension order, Argentine authorities let Barrick Gold Corp. resume normal operations at its Veladero gold mine in San Juan province. Barrick said it would assess the impact to Veladero production, but maintained companywide production guidance between 5 million ounces and 5.5 million ounces of gold for the year at all-in sustaining costs in the range of US$750 per gold ounce to US$790 per gold ounce.

Police clearing protesters at Goldcorp's Penasquito mine

Police started to clear trucks blocking Goldcorp Inc.'s Penasquito gold mine in Zacatecas, Mexico, on Oct. 4, the company confirmed to SNL Metals & Mining. "State government and law enforcement officials commenced the orderly removal of vehicles illegally blocking roadways earlier today," Christine Marks, director of communications, said by email.

Vale's shift to Northern Brazil deposits appeasing investors, upsetting home-state politicians

Vale SA's shift toward new deposits in north Brazil, away from CEO Murilo Ferreira's home state Minas Gerais, has been commended by investors amid prospects of higher earnings as a result of fine ore and lower costs. However, the shift of investment to the north of the country is facing opposition from a group of politicians who are conspiring to oust Ferreira when his term expires in the second quarter of 2017, Bloomberg News reported. Minas Gerais Congressman Newton Cardoso Jr. was cited as saying that Vale needs a CEO who focuses on environmental issues and respects Minas Gerais' investment priorities and job generation needs.


* Independence Group NL launched a A$20.5 million cash bid for Mark Creasy-backed and fellow ASX-listed Windward Resources Ltd. Creasy has already given his nod to the 19-cent-per-share, off-market offer for the 27.44% stake in Windward that he controls.

* Central Asia Metals Plc posted record quarterly copper production of 4,102 tonnes in the third quarter, up 38% year over year from 2,966 tonnes. Nine-month copper production, meanwhile, increased by 31% year over year to 11,010 tonnes, from 8,410 tonnes.

* Kommersant reported that Russia's Finance Ministry proposes to introduce a flat-rate tax on mineral extraction for rich ores of the Polar Division of PJSC MMC Norilsk Nickel. It will increase the tax burden by 7 billion Russian rubles a year, but, since September, the company has benefited from the canceled export duties on platinum group metals, which totaled US$88 million in 2015.

* According to unnamed sources quoted by FastMarkets and Metal Bulletin, the director of nickel marketing at Vale International SA, Nick Williams, left the company after it announced plans to restructure its base metals division to reduce costs. Williams also stepped down from the nickel committee of the London Metal Exchange, the report added.

* Antofagasta Plc reached a 36-month wage deal with unionized supervisors at its Chile-based flagship Los Pelambres copper mine, averting a possible strike. The terms of the wage deal were not disclosed.

* Nevsun Resources Ltd.'s Bisha zinc-copper-gold mine in Eritrea declared commercial production for its zinc expansion, effective Oct. 1, with the successful commissioning of a new zinc flotation plant.

* South Australia's power supplier, Electranet, said the repairs to the transmission lines damaged in a storm last week could be completed by early next week, Reuters reported. The restoration of power will bring BHP Billiton Group's Olympic Dam copper mine back to normal operations. The mining giant is losing an average of 567 tonnes of copper production at a cost of A$2.7 million per day, Reuters estimated.


* Centamin Plc's preliminary total gold production for the third quarter from its Sukari gold mine in Egypt totaled 148,674 ounces, a 41% year-over-year jump from 105,413 ounces in the corresponding quarter last year and a 6% increase over the 140,306 ounces produced in the second quarter.

* Sibanye Gold Ltd. confirmed that four of its employees were injured, two of them critically, by unknown assailants on Oct. 4 at the Cooke gold mine in Gauteng, South Africa. The incident is related to an illegal industrial action that started Oct. 3 following a union membership verification dispute between two of South Africa's rival unions. Meanwhile, BDlive wrote that normal operations at the mine had resumed on the morning of Oct. 5.

* Separately, Sibanye Gold CEO Neal Froneman blamed the apartheid-era past for the present government regulations and labor problems confronting South Africa's mining sector, Bloomberg News reported. "We need to critically and honestly acknowledge the role of our industry where it acted against the interests of the vast majority of South Africans if we wish to secure full reconciliation with our broader society," Froneman was quoted as saying.

* On a 100% basis, Caledonia Mining Corp. Plc's third-quarter gold production increased 23% year over year to 13,430 ounces at its 49%-owned Blanket mine in Zimbabwe. The company remains on track to meet full-year 2016 production guidance of 50,000 ounces.

* Keras Resources Plc completed the acquisition of Arcadia Minerals Pty. Ltd. and its Klondyke gold project in Western Australia. The company has also completed an agreement with Haoma Mining NL that gives it the right to mine and option to purchase tenements contiguous to and near the Klondyke project.

* Compañía de Minas Buenaventura SAA CFO Carlos Galvez believes gold is going to continue its run on the back of strong demand from India and China, and the inability of the U.S. to start increasing interest rates, Bloomberg News reported. The company intends to start development at its San Gabriel mine in Peru in 2017.

* Havilah Resources Ltd.'s total gold production at its Portia gold mine recently exceeded 10,000 ounces, 5,000 ounces of which is attributable to the company. The company said it is on track to deliver about half of its 10,000-ounce hedge book at an average price of A$1,618 per ounce.

* Norton Gold Fields Ltd., controlled by China's Zijin Mining Group Co. Ltd., is set to wind up production at the Homestead gold mine within the Paddington operations in Western Australia by year's end, which will result in about 50 layoffs.

* Jaguar Mining Inc. entered into an earn-in agreement allowing Avanco Resources Ltd. to earn up to a 100% interest in the former's Gurupi gold project in Brazil.

* Roxgold Inc. produced 32,987 ounces of gold in the third quarter and achieved commercial production "ahead of schedule and under budget" at its Yaramoko gold mine in Burkina Faso, effective Oct. 1. The company sold 34,594 ounces in the three-month period at an average sales price of US$1,334 per ounce.

* Kinross Gold Corp. agreed to a new, three-year collective labor agreement with unionized employees at its Tasiast gold mine in Mauritania.


* Vale is looking to expand its market share in China for the supply of iron ore as it is working up distribution deals with smaller Chinese customers in the country's interior, Bloomberg News reported, citing Humberto Freitas, the miner's logistics and mineral exploration executive director. Investec wrote in a note to clients, "This seems a smart move given that some of the biggest casualties of the weakness in iron ore prices over the last five years have been small domestic Chinese iron ore miners — many of whom were tied to steel producers. Seeking to supply such steelmakers seems a good strategy given that domestic iron ore miners are probably damaged beyond repair and cannot compete at current prices."

* U.S. steelmaker Nucor Corp. is looking to tap into new growth opportunities in different products and countries as it benefits from U.S. trade cases that limit low-cost imports from countries such as China, Bloomberg News wrote, citing CEO John Ferriola. Ferriola was cited as saying that the trade cases help the company's profitability, but Nucor's growth plans are not dependent on the success of these trade cases.

* Tata Steel Ltd. raised 10 billion Indian rupees via a private placement of 8.15% unsecured nonconvertible debentures.

* Ferrexpo Plc produced 2.60 million tonnes of iron pellets from its own ore in the third quarter, down 7.8% compared to 2.82 million tonnes in the second quarter. Production for the first nine months of the year totaled 8.30 million tonnes, in line with the same year-ago period.

* The Chamber of Minerals and Energy and the Minerals Council of Australia have launched a new website in its bid to fight against the new iron ore tax proposed by Brendon Grylls, according to The West Australian. The website claims to make people aware of the effects of the new tax.

* The consortium formed by Dutch multinational Trafigura Beheer BV and Abu Dhabi sovereign wealth fund Mubadala still has not been able to acquire MMX Sudeste, a subsidiary of MMX Mineração e Metálicos SA. The initial plan was to invest 260 million Brazilian reais in the next four years to take over the iron ore operations consisting of the Tico-Tico e Ipê mines in Brazil. However, the mines continue to be under an embargo by the environment ministry of Minas Gerais state, Semad, daily Valor Econômico reported.

* Brazilian administrative tax court CARF decided to maintain a ruling against Gerdau SA unit Gerdau Aços Especiais SA in regard to taxes for the period between December 2006 and December 2007 concerning operations by a subsidiary in Hungary, where profits obtained from other countries were consolidated. Gerdau said it would continue appealing the ruling, daily Valor Econômico reported.

* Kazuo Tanimizu, managing executive officer of Nippon Steel & Sumitomo Metal Corp., expressed concern about the tax hike proposal in Western Australia, saying that it would present uncertainty for future investments in the mining sector and could also jeopardize Western Australia's global iron ore competitiveness, The West Australian wrote.

* Resource Generation Ltd. has selected Stefanutti Stocks Mining Services as the preferred mining contractor for the development of its Boikarabelo coal mine in South Africa's Waterberg region.

* Australia's biggest iron ore producers may fail to meet their full-year guidance on the back of lower-than-expected shipments in the past three months, Bloomberg News reported, referring to a note by Macquarie Group Ltd.

* Ukraine's merchant pig iron producer Donetskstal Iron and Steel Works CJSC idled one of its two blast furnaces, which is expected to remain shut until October-end, Metal Bulletin reported, citing industry sources.


* Dakota Minerals Ltd. has estimated a maiden resource at the Lynas Find lithium project in Western Australia of 7.3 million tonnes at 1.25% lithium oxide, 85 parts per million tantalum pentoxide, and 0.99% iron(III) oxide in the indicated and inferred category.

* A review by Premier African Minerals Ltd. of immediately available tungsten-rich material at its RHA tungsten operations in Zimbabwe estimated sufficient tonnage in the open pit and underground operations to support an initial three-year operation at 39,000 tonnes per month, upon the installation of the proposed X-ray transmission system for ore sorting at the plant that is expected by the end of November.

* Syrah Resources Ltd. shares have lost more than 20% on Oct. 5 after it emerged that Tolga Kumova resigned as managing director of the graphite miner, The Australian Financial Review wrote. According to the report, Kumova will take on another role after deciding that he does not have the "skill base" to oversee the company's transition from junior explorer to an operating miner.

* Elcora Advanced Materials Corp. made the first shipment of processed graphite from its Ragedara mine, part of the Sakura project in Sri Lanka.

* CGN Mining Co. Ltd. entered into a mining principles agreement with CGNPC, CGNPCURC, National Atomic Co. Kazatomprom JSC and UMP, setting out key principles and terms for the parties' cooperation in fuel and mining projects. This comes after the companies inked a deal to jointly build a nuclear fuel assembly plant and mine uranium deposits in Kazakhstan in December 2015.


* In a bid to avoid court hearings following a deadlock, South Africa's President Jacob Zuma asked Mines Ministry to negotiate an out-of-court settlement with mining companies over the 26% black equity ownership quotas proposed under a new law, reported, citing Deputy Mines Minister Godfrey Oliphant. Separately, Oliphant was quoted as saying by Bloomberg News that the government wants to finalize the country's mining charter by the end of this month.

* The International Monetary Fund expects metal prices to decline by 2% in 2017, and by 8% in 2016, according to its latest World Economic Outlook. In April, the fund projected a 1% drop in 2017 and a 14% fall in 2016.

The Daily Dose is updated as of 7 a.m. ET, and scans news sources published in Chinese, English, Indonesian, Malay, Portuguese, Russian, Spanish, Thai and Ukrainian. Some external links may require a subscription.

Listen: Street Talk Episode 40 - Digital Banks Take a Page Out of 'Mad Men'

Mar. 20 2019 — Some fintech companies are making hay with digital platforms that tout their differences with banks, even though they are often offering virtually the same products. In the episode, we discuss with colleagues Rachel Stone and Kiah Haslett the deposit strategies employed by the likes of Chime, Aspiration and other incumbent players such as Ally Financial, Discover and Capital One. Those efforts conjure up memories of a Don Draper pitch in Mad Men and likely will enjoy continued success.

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Technology, Media & Telecom
Broadband Only Homes Skyrocket In 2018 Validating Top MSOs Connectivity Pivot


The segment stood at an estimated 23.6 million as of Dec. 31, 2018, accounting for 24% of all wireline high-speed data homes.

The following post comes from Kagan, a research group within S&P Global Market Intelligence.

To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Mar. 20 2019 — The U.S. broadband-only home segment logged its largest net adds on record in 2018, validating Comcast Corp.'s and Charter Communications Inc.'s moves to make broadband, or connectivity, the keystone of their cable communication businesses.

The size and momentum of the segment also put in perspective the recent high-profile online-video video announcements by the top two cable operators as well as AT&T Inc.'s WarnerMedia shake-up and plans to go toe-to-toe with Netflix in the subscription video-on-demand arena in the next 12 months.

We estimate that wireline broadband households not subscribing to traditional multichannel, or broadband-only homes, rose by nearly 4.3 million in 2018, topping the gains from the previous year by roughly 22%. Overall, the segment stood at an estimated 23.6 million as of Dec. 31, 2018, accounting for 24% of all wireline high-speed data homes.

For perspective, broadband-only homes stood at an estimated 11.3 million a mere four years ago, accounting for 13% of residential cable and telco broadband subscribers.

The once all-powerful, must-have live linear TV model, which individuals and families essentially treated as a utility upon moving into a new residence, increasingly is viewed as too expensive and unwieldy in the era of affordable, nimble internet-based video alternatives. This has resulted in a sizable drop in penetration of occupied households.

As a result, continued legacy cord cutting is baked in and broadband-only homes are expected to continue to rise at a fast clip, with the segment's momentum in the next few years compounded by Comcast's, Charter's and AT&T's ambitious moves into online-video territory.

Note: we revised historical broadband-only home estimates as part of our fourth-quarter 2018, following restatements of historical telco broadband subscriber figures and residential traditional multichannel subscriber adjustments.

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Q4'18 multichannel video losses propel full-year drop to edge of 4 million

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Q4'18 multiproduct analysis sheds more light on video's fall from grace

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Watch: Power Forecast Briefing: As retirements accelerate, can renewable energy fill the gap?

Mar. 19 2019 — Steve Piper shares the outlook for U.S. power markets, discussing capacity retirements and whether continued development of wind and solar power plants may mitigate the generation shortfall.

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Credit Analysis
2019 Credit Risk Perspectives: Is The Credit Cycle Turning? A Fundamentals View

Mar. 15 2019 — On November 20, 2018, a joint event hosted by S&P Global Market Intelligence and S&P Global Ratings took place in London, focusing on credit risk and 2019 perspectives.

Pascal Hartwig, Credit Product Specialist, and I provided a review of the latest trends observed across non-financial corporate firms through the lens of S&P Global Market Intelligence’s statistical models.1 In particular, Pascal focused on the outputs produced by a statistical model that uses market information to estimate credit risk of public companies; if you want to know more, you can visit here.

I focused on an analysis of how different Brexit scenarios may impact the credit risk of European Union (EU) private companies that are included on S&P Capital IQ platform.

Before, this, I looked at the evolution of their credit risk profile from 2013 to 2017, as shown in Figure 1. Scores were generated via Credit Analytics’ PD Model Fundamentals Private, a statistical model that uses company financials and other socio-economic factors to estimate the PD of private companies globally. Credit scores are mapped to PD values, which are based on/derived from S&P Global Ratings Observed Default Rates.

Figure 1: EU private company scores generated by PD Model Fundamentals Private, between 2013 and 2017.

Source: S&P Global Market Intelligence.2 As of October 2018.

For any given year, the distribution of credit scores of EU private companies is concentrated below the ‘a’ level, due to the large number of small revenue and unrated firms on the S&P Capital IQ platform. An overall improvement of the risk profile is visible, with the score distribution moving leftwards between 2013 and 2017. A similar picture is visible when comparing companies by country or industry sector,3 confirming that there were no clear signs of a turning point in the credit cycle of private companies in any EU country or industry sector. However, this view is backward looking and does not take into account the potential effects of an imminent and major political and economic event in the (short) history of the EU: Brexit.

To this purpose, S&P Global Market Intelligence has developed a statistical model: the Credit Analytics Macro-scenario model enables users to study how potential future macroeconomic scenarios may affect the evolution of the credit risk profile of EU private companies. This model was developed by looking at the historical evolution of S&P Global Ratings’ rated companies under different macroeconomic conditions, and can be applied to smaller companies after the PD is mapped to a S&P Global Market Intelligence credit score.

“Soft Brexit” (Figure 2): This scenario is based on the baseline forecast made by economists at S&P Global Ratings and is characterized by a gentle slow-down of economic growth, a progressive monetary policy tightening, and low yet volatile stock-market growth.4

Figure 2: “Soft Brexit” macro scenario.5

Source: S&P Global Ratings Economists. As of October 2018.

Applying the Macro-scenario model, we analyze the evolution of the credit risk profile of EU companies over a three-year period from 2018 to 2020, by industry sector and by country:

  • Sector Analysis (Figure 3):
    • The median credit risk score within specific industry sectors (Aerospace & Defense, Pharmaceuticals, Telecoms, Utilities, and Real Estate) shows a good degree of resilience, rising by less than half a notch by 2020 and remaining comfortably below the ‘b+’ threshold.
    • The median credit score of the Retail and Consumer Products sectors, however, is severely impacted, breaching the high risk threshold (here defined at the ‘b-’ level).
    • The remaining industry sectors show various dynamics, but essentially remain within the intermediate risk band (here defined between the ‘b+’ and the ‘b-’ level).

Figure 3: “Soft Brexit” impact on the median credit risk level of EU private companies, by industry.

Source: S&P Global Market Intelligence. As of October 2018.

  • Country Analysis (Figure 4):
    • Although the median credit risk score may not change significantly in certain countries, the associated default rates need to be adjusted for the impact of the credit cycle.6 The “spider-web plot” shows the median PD values for private companies within EU countries, adjusted for the credit cycle. Here we include only countries with a minimum number of private companies within the Credit Analytics pre-scored database, to ensure a robust statistical analysis.
    • Countries are ordered by increasing level of median PD, moving clock-wise from Netherlands to Greece.
    • Under a soft Brexit scenario, the PD of UK private companies increases between 2018 and 2020, but still remains below the yellow threshold (corresponding to a ‘b+’ level).
    • Interestingly, Italian private companies suffer more than their Spanish peers, albeit starting from a slightly lower PD level in 2017.

Figure 4: “Soft Brexit” impact on the median credit risk level of EU private companies, by country.

Source: S&P Global Market Intelligence. As of October 2018.

“Hard Brexit” (Figure 5): This scenario is extracted from the 2018 Stress-Testing exercise of the European Banking Authority (EBA) and the Bank of England.7 Under this scenario, both the EU and UK may go into a recession similar to the 2008 global crisis. Arguably, this may seem a harsh scenario for the whole of the EU, but a recent report by the Bank of England warned that a disorderly Brexit may trigger a UK crisis worse than 2008.8

Figure 5: “Hard Brexit” macro scenario.9

Sources:”2018 EU-wide stress test – methodological note” (European Banking Authority, November 2017) and “Stress Testing the UK Banking system: 2018 guidance for participating banks and building societies“ (Bank of England, March 2018).

Also in this case, we apply the Macro-scenario model to analyze the evolution of the credit risk profile of EU companies over the same three-year period, by industry sector and by country:

  • Sector Analysis (Figure 6):
    • Despite all industry sectors being severely impacted, the Pharmaceuticals and Utilities sectors remain below the ‘b+’ level (yellow threshold).
    • Conversely, the Airlines and Energy sectors join Retail and Consumer Products in the “danger zone” above the ‘b-’ level (red threshold).
    • The remaining industry sectors will either move into or remain within the intermediate risk band (here defined between the ‘b+’ and the ‘b-’ level).

Figure 6: “Hard Brexit” impact on the median credit risk level of EU private companies, by industry.

Source: S&P Global Market Intelligence. As of October 2018.

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  • Country Analysis (Figure 7):
    • Under a hard Brexit scenario, the PD of UK private companies increases between 2017 and 2020, entering the intermediate risk band and suffering even more than its Irish peers.
    • Notably, by 2020 the French private sector may suffer more than the Italian private sector, reaching the attention threshold (here shown as a red circle, and corresponding to a ‘b-’ level).
    • While it is hard to do an exact like-for-like comparison, it is worth noting that our conclusions are broadly aligned with the findings from the 48 banks participating in the 2018 stress-testing exercise, as recently published by the EBA:10 the major share of 2018-2020 new credit risk losses in the stressed scenario will concentrate among counterparties in the UK, Italy, France, Spain, and Germany (leaving aside the usual suspects, such as Greece, Portugal, etc.).

Figure 7: “Hard Brexit” impact on the median credit risk level of EU private companies, by country.

Source: S&P Global Market Intelligence. As of October 2018.

In conclusion: In Europe, the private companies’ credit risk landscape does not yet signal a distinct turning point, however Brexit may act as a pivot point and a catalyst for a credit cycle inversion, with an intensity that will be dependent on the Brexit type of landing (i.e., soft versus hard).

1 S&P Global Ratings does not contribute to or participate in the creation of credit scores generated by S&P Global Market Intelligence.
2 Lowercase nomenclature is used to differentiate S&P Global Market Intelligence credit scores from the credit ratings issued by S&P Global Ratings.
3 Not shown here.
4 Measured via Gross Domestic Product (GDP) Growth, Long-term / Short-term (L/S) European Central Bank Interest Rate Spread, and FTSE100 or STOXX50 stock market growth, respectively.
5 Macroeconomic forecast for 2018-2020 (end of year) by economists at S&P Global Ratings; the baseline case assumes the UK and the EU will reach a Brexit deal (e.g. a “soft Brexit”).
6 When the credit cycle deteriorates (improves), default rates are expected to increase (decrease).
7 Source: “2018 EU-wide stress test – methodological note” (EBA, November 2017) and “Stress Testing the UK Banking system: 2018 guidance for participating banks and building societies”. (Bank of England, March 2018).
8 Source: “EU withdrawal scenarios and monetary and financial stability – A response to the House of Commons Treasury Committee”. (Bank of England, November 2018).
9 As a hard Brexit scenario, we adopt the stressed scenario included in the 2018 stress testing exercise and defined by the EBA and the Bank of England.
10 See, for example, Figure 18 in “2018 EU-Wide Stress Test Result” (EBA November 2018), found at:

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2019 Credit Risk Perspectives: Is The Credit Cycle Turning? A Market-Driven View

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