Pakistan copper mine could offer leverage in US tariff talks, says operator
Barrick says strategic metal resource could help Islamabad as it faces 29% levy
A remote gold and copper mine beneath a volcano in south-west Pakistan could provide key leverage for trade talks with the US, according to its operator, as Islamabad tries to reduce “reciprocal” tariffs originally set at 29 per cent.
“When you think about what [the Trump administration] are trying to achieve with these tariffs, this project actually ticks a lot of boxes,” Tim Cribb, project director of Barrick’s Reko Diq mine, told the Financial Times this week.
“For us, we have lending coming from the US . . . we’re going to spend money in the US . . . it’s copper concentrate, a strategic metal . . it could be more a positive than a negative,” he said.
The $9bn mine, which has just begun construction, will be one of the world’s largest copper-gold mines once fully developed. It is 50 per cent owned by Toronto- and New York-listed Barrick, with the other half owned by three federal state-owned enterprises and the government of Balochistan.
In a call about tariffs on Monday with Pakistan’s foreign minister Ishaq Dar, US secretary of state Marco Rubio “raised prospects for engagement on critical minerals and expressed interest in expanding commercial opportunities”, according to a US state department readout.
The US has recently discussed “minerals deals” with Greenland and the Democratic Republic of Congo as the Trump administration expands its focus on access to minerals overseas. It also signed a mining deal with Uzbekistan last week.
Donald Trump announced 29 per cent tariffs on Pakistan on April 2 as he took action against US trading partners. He paused them for 90 days a week later, allowing time for negotiations.
To finance the $4.5bn first phase of the project, Barrick is seeking up to $1bn in loans from the Export-Import Bank of the United States, the official export credit agency of the federal government. With Pakistan’s government, it is also pursuing investment and loans from Saudi Arabia’s Manara Minerals, export credit agencies in Canada and Japan and multilateral development banks.
The International Finance Corporation, an arm of the World Bank, confirmed a $300mn loan to the mine this week.
A fifth of the mine will be powered by solar energy, with Barrick sourcing panels “primarily from the US”, Cribb said, despite prices in Pakistan for Chinese-developed solar panels plummeting in recent years.
“When . . . you look at the lending pool and commitments we make in terms of responsible investment, we will end up going US,” he said.
Cribb added that the mine’s output would be shipped through Pakistan’s Port Qasim near Karachi, as opposed to Balochistan’s Chinese-backed Gwadar port, which he said would pose greater security risks in transit.
On the sidelines of the Pakistan Minerals Investment Forum in Islamabad, Cribb and Barrick chief executive Mark Bristow told the FT they hoped to raise $500mn to $800mn by the second half of this year to build railways and other transport logistics to get the gold and copper to the port.
Lenders in Europe and Japan are among those seeking the copper output from the giant mine, they said.
“Right now, offtake is substantially dedicated to the lenders . . . or directly to people who are investing because they need the metal,” Bristow said.
Reko Diq is set to begin operations in 2028, with Barrick predicting it will produce copper and gold for 42 years.
Manara Minerals is in talks with the Pakistani government to buy a 10 to 20 per cent stake in the mine, the FT reported in January. “The Saudis would like . . . the offtake, more than anything else,” Bristow said, adding he did not know when or if the deal would go through.
The mine sits on Pakistan’s borders with Afghanistan and Iran in Balochistan province. A train hijacking, in which about 400 people were held for a day by separatist militants last month, highlighted a wave of violence that has gripped the province in recent years.
In a speech on Tuesday, Pakistan’s Prime Minister Shehbaz Sharif implored investors in Pakistan’s mining sector to bring refining to the country. “We will not allow raw materials to be shipped out of Pakistan,” Sharif told the conference.
Cribb and Bristow said refining copper in-country was “not in the current plan” as the mine would not produce the 600,000 tonnes of copper concentrate needed to justify refinery investments. Pakistan also lacked the cheap and reliable power necessary, they said.
This month, Barrick proposed changing its name from Barrick Gold to Barrick Mining to reflect its more expansive mining footprint and growing focus on copper.
North Sea oil deals allow companies to offset billions in tax liabilities
In three recent arrangements, operators with significant tax losses have merged with rivals with profitable assets
North Sea oil and gas companies have agreed a series of mergers that will allow them to offset billions of pounds of tax liabilities against future profits.
In three deals in the past six months, companies with significant tax losses have merged with rivals with profitable assets.
Ithaca, which had $4.5bn of tax losses at the end of 2023, merged its assets with Italian company Eni in October. Equinor, which was carrying approximately $7.6bn of tax losses in the North Sea, is merging its portfolio with Shell UK, and last month, Neo, which reported a tax loss position of $3.7bn at the end of 2022, announced a merger with Repsol’s North Sea business.
While the deals were driven by strategic reasons including building larger and more flexible companies in a declining oil and gas basin, a number of investment bankers, lawyers and accountants cited the potential for lower taxes as a significant attraction.
“If you are Group A and you have lots of tax losses and some oilfields at the end of their life and not making much money and Group B has lots of oil coming online, by moving the assets around, and subject to various anti-avoidance rules, you can offset Group A’s losses against Group B’s profits,” said a senior North Sea tax adviser at a big four accounting firm.
“There are tried and tested mechanisms and most people understand how the rules work,” they added.
The oil industry has complained repeatedly about high and volatile taxes on North Sea production. Companies currently face a headline tax rate on their profits of 78 per cent, made up of corporation tax, supplementary tax and the Energy Profits Levy, a windfall tax brought in after the sharp rise in energy prices at the start of the Ukraine war.
Although the price of oil has slumped to a four-year low of under $60 a barrel, producers in the North Sea are still liable for the EPL because gas prices remain well above the 59p-a-therm threshold for the current tax year.
“I have clients who feel more secure in the tax regime of sub-Saharan Africa than they do in the UK, which is frankly astonishing,” said Nick Davis, an energy partner at law firm Haynes Boone. “These [deals] give scale, which possibly guards against it, but I don’t think you can get any comfort on the tax regime.”
He added that merger activity may also be increasing because many companies feel they are at the bottom of the market — the current government has banned new exploration licenses — and that the outlook for North Sea production can only improve.
Tax revenues from the North Sea are in decline. Last month, the UK’s Office for Budget Responsibility forecast a 22 per cent drop in tax receipts for the 2024/25 year, compared with £5bn in the year before, as oil prices have fallen. By 2029/30, the OBR forecasts tax revenues will have dropped to £2.3bn because of dwindling North Sea resources.
Gail Anderson, research director at energy consultancy Wood Mackenzie, said she expected more M&A activity in the North Sea in the months ahead. “There are still big risks in the industry and companies are trying to think about how they mitigate those risks,” she said. “I think its probably more likely than not that we will see more deals before the year is out.”
Sports sector can cope with Donald Trump’s tariffs, says AC Milan owner
Redbird founder Gerry Cardinale predicts clubs and leagues will prove ‘resilient’ even if consumer spending falls
The founder of the private equity owner of AC Milan football club has predicted the sports sector can cope with the new US tariff regime but warned that if the trade war escalated it would not be immune to a damaging decline in consumer confidence and spending.
Gerry Cardinale, managing partner and chief investment officer of RedBird Capital Partners, acknowledged that escalation in the trade war sparked by US President Donald Trump would hit sport indirectly through its effect on consumers. But he said sports operations had proved “resilient” in past downturns, including the 2008 global financial crisis and the coronavirus pandemic.
Cardinale, a former partner at Goldman Sachs, was one of a series of figures associated with sports businesses who said the sector was in a good position to withstand the challenges of the US president’s tariff regime.
Trump on April 9 imposed tariffs of 125 per cent on all Chinese exports to the US, prompting Beijing on Friday to impose similar levies on US exports to China. The president has delayed many tariffs on other countries but has retained a 10 per cent levy on most goods from countries other than China — and special, higher duties on imports of cars, steel and aluminium.
Cardinale said it was necessary to “look through the value chain” to understand the impact of a tariff war on different segments of the sports ecosystem.
“The pressure point in the sports ecosystem is going to be really around the consumer first and foremost,” Cardinale said.
Cardinale acknowledged there would be problems because consumers would have less money to spend on tickets and media subscriptions. But he predicted wealthier customers would still be willing to pay for high-end hospitality packages and to use VIP suites.
“At the very high premium end, I think that’s relatively income inelastic,” Cardinale said. “People that can afford those premium prices pre-tariff are going to be able to afford the prices post-tariff.”
For other consumers, however, their discretionary income formed a vital part of their finances, Cardinale added. “They’re likely to cut back,” he said. “That’ll be an issue that will ripple through the value chain.”
Cardinale’s assessment reflects a widespread view within the sports sector that it is relatively insulated from the direct effects of tariffs, which are imposed on physical goods.
There have been some concerns about the effects of the new levies on clubs’ and leagues’ merchandise sales and warnings about the potential effect of tariffs on projects to build new stadiums and other infrastructure. But the sector largely depends on lengthy media rights and sponsorship contracts, as well as revenue from ticket sales.
Vasu Kulkarni, a partner at early-stagesports-focused fund Courtside Ventures, said the sector had weathered past economic downturns because of the loyalty of fans.
“Nobody stops watching sports, no matter how bad things get,” Kulkarni said.
Private investment firm Arctos Partners last week wrote in a report that sport enjoyed a “lack of correlation”, meaning teams’ fortunes did not move in step with the wider economy. The firm has built up a portfolio of shares in sports teams.
“With long-term contracts, domestic supply chains and a uniquely loyal customer base, the business of sport continues to offer something that is in short supply elsewhere: predictability, resiliency and a lack of correlation,” it wrote.
Kulkarni predicted that professional sports investors and very wealthy individuals would continue pouring capital into sport. That trend has become particularly pronounced since the pandemic wrecked the finances of many sports operations, leaving them needing new capital.
“We believe there’s always five billionaires who are in line to purchase the next sports team that comes up,” said Kulkarni.
Cardinale has previously warned of “massively inflated” valuations in sport. While he believes valuations will generally hold up, he said he expected some lessening of rich investors’ appetite for the sector. He said that would be “a positive cleansing”.
“Guys who jump in because everything keeps going up — they’re going to be the first to leave,” Cardinale said.
Arctos’s report, meanwhile, warned of the elevated risks facing sports operations undertaking big physical investments.
Arctos owns minority stakes in the Los Angeles Dodgers baseball franchise, the Golden State Warriors basketball team and the French football club Paris Saint-Germain, among others.
Problems for stadium developments could hit teams’ finances because such projects are often intended to help the operation increase its revenues.
The report said projects already under construction were unlikely to suffer “material budget shocks”.
But it added: “Those in early planning stages — where supply chains are not yet locked in — could face cost pressure depending on the tariff regime in place.”
Trade war could put the frown back on Botox users’ faces
Fears that pharmaceuticals could yet be hit by tariffs have sent shares sharply lower
The tariffs ruckus of the past week has etched extra frown lines on foreheads. For those who like to use “injectable aesthetics” to smooth out their crows’ feet — for which read Botox and similar products — there could yet be another wrinkle.
Pharmaceuticals were not included in the so-called reciprocal tariffs announced by Donald Trump. But that hasn’t stopped investors and countries that host medicine manufacturing from worrying. Even after the US president announced his 90-day pause on the reciprocal tariff scheme, Ireland — where Botox, among other products, is made — expressed concern that pharmaceuticals could yet be caught up in trade wars.
Investors, too, are concerned. Shares in pharma companies on both sides of the Atlantic are nursing wounds. Groups with exposure to the aesthetics market are among the worst hit, with specialist Galderma and Botox owner AbbVie both down roughly one-fifth since April 2. Galderma, which was spun out from Nestlé in 2019 and whose initial public offering was one of the biggest in Europe in 2024, has lost more than 35 per cent of its value since peaking in February.
Fillers and neuromodulators — products such as Botox and Galderma’s rival product Dysport — could be especially hard hit if pharmaceuticals were swept up in a second round of tariff wars. More than 90 per cent of the US aesthetic injectables market by value is supplied from abroad, reckons RBC Capital. Much production is in Europe: Dysport is manufactured in the UK for instance. Several products are made in South Korea.
What is more, the US accounts for a large proportion of the industry’s revenue. In 2024, 41 per cent of Galderma’s $4.4bn in net sales originated stateside.
Shifting production, of neuromodulators in particular, is neither quick nor easy. Their manufacture is very tightly regulated. Price rises would therefore be likely should the pharma industry be targeted in Trump’s tariff campaign. But so, too, would softening US sales. Even before “liberation day” there were concerns about the US market as consumer sentiment weakened and competition increased.
There are still good reasons to believe in the growth of aesthetic injectables. One is the phenomenon of “Ozempic face” — facial sagging among users of anti-obesity drugs. Sales outside the US are also growing. While Galderma’s US sales were flat last year, elsewhere they increased 15 per cent compared to 2023. But tariff frets will first have to be smoothed over before investors are tempted back to the beauty salon.
Cover Story:
-President Donald Trump's tariff regime, which prioritizes US manufacturing and upends globalization, has sparked a stampede on Wall Street. However, the heartland region, which includes Alabama, Arkansas, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Texas, and Wisconsin, is more resilient than it has been in decades. The region's resilience will be crucial to cope with the near-term pain of a global trade war. The Trump administration's cuts to federal spending and restrictive immigration policies also threaten to slow the heartland's progress. However, the region's transformation could have surprising staying power, as business and civic leaders have done groundbreaking work to attract investment and nurture diverse industries. The region's gains may be more durable than they appear, even in the face of impending changes aimed at restoring American manufacturing.
Interview:
No update
Tech Trader:
-Tech executives have criticized the consequences of diversity, equity, and inclusion policies (DEI) as their businesses have resisted diversity initiatives. Meta Platforms CEO Mark Zuckerberg stated that corporate culture had been "neutered," and multiple tech companies, including Meta, removed diversity data from their annual disclosures. DEI gained attention a decade ago when many firms started publishing annual reports on hiring people from diverse backgrounds while promoting fair treatment for all groups in the workplace. Barron's analyzed proxy statements from the 30 largest tech companies in the S&P 500 and compared them with the same filings from a decade ago. Four of the 30 largest tech companies' CEOs are women, with three having held their positions for over a decade and none added in the last five years.
The Trader:
-Chewy's stock has seen an 11% drop to $33.29 since the stock market opened on February 19. However, the company has held up better than the S&P 500 index, which has dropped 12% since its all-time high. Chewy's fourth-quarter sales of $3.25B grew 7% year over year, beating expectations of $3.19B. The growth was partly due to the company reporting 20.5M customers, a couple million above the expected total. Average sales per customer also grew, and the company beat earnings forecasts for the 16th time in the past 20 quarters. Management's guidance was lacking, with concerns about a slowdown in pet acquisition. Morgan Stanley analyst Nathan Feather sees sales exceeding expectations again, as new pet-owning households have stabilized but still grow below the long-term trend.
-The stock market is experiencing a decline, with utility stocks experiencing losses of 11% this year due to concerns about the economic damage caused by President Donald Trump's tariffs. The Utilities Select Sector SPDR ETF has been dragged down by 1.3%, but they tend to hold up better than most stocks during a decline. Investors are paying lower price/earnings multiples across the board, including for utilities. The drop in P/Es leaves utilities trading cheaply, with the ETF trading at about 17 times the aggregate earnings that analysts covering its companies expect for 2025. Analysts expect the group's earnings to grow just over 7% every year for the next three years. Driving growth is the fact that these companies are creating new, clean energy plants faster than they're retiring older ones. As their asset bases rise, their earnings grow too, as they're allowed to earn a certain rate of return on their investments by the states they operate in. Utility companies often lift the rates they charge customers to bring their earnings higher, and American Electric Power is cheaper and has growth ahead.
Features:
-Novo Nordisk's shares have fallen 58% from their June 2024 peak due to tariff troubles, competition from US rival Eli Lilly, and a decline in interest in weight-loss drugs. Goldman Sachs has reduced its total addressable market for obesity drugs by 2030 to $95B, causing investors to be nervous. Novo has already lost its crown as Europe's most valuable company, falling behind German software maker SAP and luxury goods maker LVMH Moët Hennessy Louis Vuitton. Eli Lilly's GLP-1 weight-loss drugs have led to greater weight loss than Novo's new treatments. Trump's tariff policy is causing uncertainty for Novo and its home country, with an unwinding of global trade impacting the company and its 16 production sites worldwide. Without Novo Nordisk, Denmark would likely face a recession, impacting its spending budget, interest rates, housing prices, and mortgages.
-The conflict over a proposed 124-mile natural-gas pipeline from Pennsylvania to upstate New York is shaping up to be one of the most consequential energy battles in the early days of the Trump administration. The Constitution Pipeline, which would run from the gas-rich Marcellus shale fields of Pennsylvania to population-dense regions of the Northeast, could be the physical manifestation of this idea, pumping fossil fuels into a region that had vowed to phase them out. President Donald Trump has directed Attorney General Pam Bondi to halt enforcement of state climate-change laws that she deems unconstitutional and take legal action against state and local policies that "discriminate" against energy producers from other states. The pipeline could be the physical manifestation of this idea, pumping fossil fuels into a region that had vowed to phase them out.
European Trader:
-Novartis, a European pharmaceutical giant, has announced plans to spend $23B to expand its US-based production, ensuring 100% of its key medicines for US patients are made in the country. The company, one of Europe's largest drugmakers, will invest billions to boost production and research and development in the US over the next five years. It will expand current manufacturing and create seven new facilities, creating thousands of American jobs. Novartis will also establish a new research hub in San Diego to tap into the best minds in America. The news comes as Trump announced a major tariff on pharmaceuticals is imminent. Pharma has been exempt from the Trump administration's sweeping tariffs announced on April 2. Novartis' American depository receipts rose 1.9% to $105.34 in premarket trading, while its Swiss-listed shares rose 1.5% in Europe.
Emerging Markets:
-No update
Commodities:
-Trump administration officials are considering an aid package to help American farmers cope with potential damage from the latest tariff fight. However, these aid packages may not be enough to protect farmers from the impacts of the trade war. The aid package might primarily benefit larger farms, leaving smaller players in the lurch, as seen during the 2018 trade war. One-time aid cannot offset the long-term loss of market share to competing countries like Brazil. American farmers will have to find new buyers, which would likely bring higher costs of contracting and delivering products. Last week, Trump unveiled 10% tariffs on all imports, and much higher rates for some nations. China and other countries have announced countermeasures, many of which target US agricultural exports. China has already imposed 10% to 15% tariffs on $21B worth of U.S. agricultural imports in March. The European Union has also approved its first set of retaliatory measures, imposing tariffs on €21B ($23B) of US goods, targeting agricultural products from almonds to soybeans.
Streetwise:
-Wall Street firms often issue price targets in sets of three: bull, bear, and base cases. The main complaint about price tri-targets is that bearish outcomes often lack in grisly imagination. JP Morgan's global strategy team puts the bear case for the S&P 500 index at 4000 by year's end, based on underlying earnings per share of $250 next year and a forward price/earnings ratio of 16. This scenario, published two days before the White House announced a temporary pause for its new schedule of punishing worldwide tariffs, assumes that trade upheaval results in only minimal earnings growth from last year's $240 level. A drop to 4000 would be painful, true enough, but it would still mark a nine-year doubling, hardly the equivalent of being dropped into an active volcano or strangled with bedsheets. Negligible earnings growth over two years would be disappointing relative to the 27% growth implied by the current consensus estimate.