TheChek News Flow

OpenAI Hires Three AI Researchers From Murati’s Thinking Machines Lab

OpenAI has rehired prominent AI researchers Barret Zoph, Luke Metz, and Sam Schoenholz, who had been working at rival Thinking Machines Lab, according to an X post from OpenAI applications chief Fidji Simo.

The three researchers left OpenAI in late 2024 to help establish Thinking Machines, a high-profile startup led by former OpenAI Chief Technology Officer Mira Murati, who left around the same time. Zoph was CTO at Thinking Machines and will now report to Simo, who oversees ChatGPT. Previously, Zoph led post-training, or techniques the company uses to improve AI performance after their initial development.

When the three researchers left OpenAI more than a year ago, OpenAI was facing adversity because of a string of departures from its vaunted research organization.

Murati on Wednesday said in a post on X that Soumith Chintala, a well-known AI researcher hired in November, will be the new CTO of Thinking Machines.

Thinking Machines is looking to make a name for itself in an increasingly crowded field of so-called neolabs, startups that hope to use new approaches to developing AI models they say major firms such as OpenAI and Anthropic may have overlooked. Thinking Machines, which was last valued at $10 billion, was in talks at the end of last year to raise between $4 billion and $5 billion in new funding at a valuation of at least $50 billion.

White House sets tariffs to take 25% cut of Nvidia and AMD sales in China

Levies designed to enact deal Donald Trump cut with chipmakers to allow shipments of AI processors

US President Donald Trump has announced new tariffs on Nvidia and AMD as part of a novel scheme to enact a deal with the technology giants to take a 25 per cent cut of sales of their AI processors to China.

In December, the White House said it would allow Nvidia to start shipping its H200 chips to China, reversing a policy that prohibited the export of advanced AI hardware. However, it demanded a 25 per cent cut of the sales.

The new US tariffs on certain chips, announced on Wednesday, were designed to implement these payments and protect the unusual arrangement from legal challenges, according to several industry executives.

The move enacts the latest element of Trump’s transactional trade policy and allows the government to profit from a change to its export controls.

“We’re going to be making 25 per cent on the sale of those chips, basically. So we’re allowing them to do it, but the United States is getting 25 per cent of the chips in terms of the dollar value. And I think it’s a very good deal,” Trump said in the Oval Office on Wednesday.

A White House factsheet said the new tariff would apply to chips such as the H200 and rival AMD’s MI325X that were first imported into the US and “transshipped” back to customers around the world. It would also cover other US companies seeking to send AI chips abroad.

Nvidia and most of its US peers rely on Taiwan Semiconductor Manufacturing Company to manufacture the chips they design, including the H200, an advanced AI processor that belongs to an older generation of Nvidia hardware.

Chips that are imported to the US to build out the country’s domestic AI infrastructure would not be subjected to a levy, according to a presidential proclamation released on Wednesday. 

The new duties are part of a sweeping national security probe launched by the Trump administration last year as the president kicked off a trade war against major US partners, roiling global markets.

These so-called Section 232 tariffs rely on a different legal basis from the emergency powers invoked by Trump to impose other global levies, which face a looming Supreme Court challenge.

However, Wednesday’s proclamation warned a second phase of the national security probe could result in “broader tariffs on imports of semiconductors and their derivative products”.

Trump has threatened to hit chips with tariffs of up to 100 per cent but over the past year has offered carve-outs and exemptions to companies who pledge to build more manufacturing capacity in the US.

Early last year, Nvidia committed to spending $500bn over the next four years on manufacturing its products in the US, while TSMC has been building facilities in Arizona as part of a $165bn investment project. The new TSMC plant started producing Nvidia’s most advanced Blackwell chips for the first time in October.

The vast majority of the world’s most advanced chips, however, are still manufactured in Taiwan before being shipped to other locations to be packaged or installed inside servers and devices.

Despite Trump’s decision to allow H200 exports, it remains unclear whether China will grant access. Beijing has been pushing tech companies to use domestic chips in a bid to achieve self-sufficiency in semiconductor production.

The FT previously reported that regulators were discussing ways to permit limited access to H200 chips, which tech giants such as Alibaba, ByteDance and Tencent prefer because of their higher performance and easier maintenance.

Two people with knowledge of the matter said Chinese customs officials had recently told logistics companies at the country’s ports not to submit clearing requests for H200 chips, though it was unclear whether the directive was temporary. China’s General Administration of Customs did not respond to a request for comment.

Nvidia on Wednesday welcomed the US move, saying Trump’s policy “strikes a thoughtful balance that is great for America”. AMD said it complied with all US export laws and policies.

The White House on Wednesday also unveiled the results of an investigation into critical minerals, concluding that US dependence on imports posed a national security threat.

Trump directed commerce secretary Howard Lutnick to negotiate deals with trading partners that included “trade-restricting measures” such as price floors for metals including gallium, germanium and rare earths.

The order stopped short of imposing tariffs on the materials, which are broadly used in industries from technology to energy and defence. But the White House said the president might take other action to address the risks, including if deals were not done within 180 days.

China dominates the market for a host of critical minerals, including rare earths, an advantage it has leveraged in recent months by cutting off access.

Prediction market providers strive to boost liquidity so they can take on gambling giants with multi-leg bets

Kalshi and Polymarket are racing to build enough liquidity to offer lucrative multi-leg sports bets, as the fast-growing prediction market providers intensify their efforts to upend the $14bn US sports gambling industry.

The bets, known as “parlays” in the US and “accumulators” in the UK, deliver bettors a big payout if a series of wagers come good. But while they form a cornerstone of the mainstream sports gambling market, parlays are difficult for prediction markets to facilitate.

Prediction markets allow gamblers to bet on binary outcomes of future events, such as the result of a football match, with the prices and implied odds determined by how participants bet.

To offer parlays, prediction markets have to establish liquidity pools for each individual bet, whereas traditional gambling groups, such as DraftKings and FanDuel owner Flutter, can simply bundle preset odds.

“The current downfall [of prediction markets] is their inability to offer the same range of exotic bets that US gamblers love so much, like same-game parlays . . . but the market is beginning to find a way to serve certain sports,” said Adam Rivers, a managing director at consultancy Alvarez & Marsal.

In a research note, Bank of America Merrill Lynch analyst Shaun Kelley hailed parlays as the “killer app” of sports betting, saying they have “structurally changed” the industry’s win rates and economics.

While parlays are unlikely to be as lucrative for prediction market providers, which charge per transaction, as they are for conventional sportsbooks, they are still an opportunity to lure gamblers from conventional gambling companies.

Polymarket and Kalshi are offering incentives to traders who help build liquidity on their exchanges — which has become a strategic goal.

Kalshi, which offers individual liquidity providers payments of up to $1,000 per day, last year signed a partnership with Susquehanna International Group as its “first institutional market maker”.

Controversially, the company also operates an in-house unit, Kalshi Trading, which makes bets on the exchange. The practice has prompted a proposed class-action lawsuit from critics alleging it creates conflicts of interest and puts customers at a disadvantage. Kalshi co-founder Luana Lopes Lara has dismissed the lawsuit as “baseless”.

The popularity of prediction markets has exploded since they rose to prominence in the run-up to last year’s US presidential election.

Americans can use prediction markets to bet against each other on everything from the frequency of Elon Musk’s X posts to the likelihood of the US government announcing this year that aliens exist (current implied odds: 13 per cent).

Kalshi, which counts Donald Trump Jr as a strategic adviser, achieved an $11bn valuation in a $1bn funding round last month. Polymarket, where he is an investor, has recently been in talks to raise money at a valuation of between $12bn and $15bn.

In November Bank of America analysts estimated that prediction markets accounted for between 3 and 8 per cent of the US online sports betting market.

Sports betting giants DraftKings and Flutter have also launched their own prediction markets, although both companies only plan to offer such trading in US states where conventional online sports betting is prohibited.

In New Jersey, one of the few states that breaks down gambling revenues by type of bet, parlays accounted for 63 per cent of all revenues from online sports betting in the year to October.

Kalshi rolled out its first customisable parlay-style feature — called “combos” — to all users in December. In a post on LinkedIn, chief executive Tarek Mansour said these bets delivered more than $100mn in volume in a single week.

Polymarket, meanwhile, offers preset bundles of bets, largely outside of sport, but does not yet facilitate customisable parlays. On the social network Discord the company has offered a $50 bonus for the first user to submit any multi-leg bet that is launched on Polymarket.

Gambling bosses have been dismissive of these efforts. Flutter chief executive Peter Jackson said in an interview in November that punters will always prefer traditional sportsbooks because “you don’t have anywhere near the same breadth of choice [on a prediction market exchange]”.

DraftKings chief Jason Robins told investors in November that prediction markets were “structurally limited”, highlighting parlays in particular: “Just having to have individual liquidity pools makes it hard because then you spread out your liquidity.”

Inside the race to build the next generation of jet engines

Radical ‘open-fan’ design part of proposals to help meet Boeing and Airbus demands for lower fuel consumption

Engineers at GE Aerospace, one of the world’s biggest aircraft engine makers, have become among the heaviest users of two of the world’s fastest supercomputers over the past three years. Access to the machines at the US Department of Energy has helped them model the behaviour of a new kind of engine concept they believe could be a future mainstay of commercial air travel.

GE and its partner Safran, the French engine maker, are working on technologies for a revolutionary design called the “open fan” — an engine whose fan blades spin uncovered, rather than housed in a casing.

The pair’s joint venture, CFM International, thinks the open fan is the key to powering the next generation of narrow-body aircraft — the workhorses of the world’s airline fleets used for short- and medium-length flights. Both Airbus and Boeing are exploring plans for successors to their best-selling A320 and 737 Max jet families. 

The stakes for the industry are high: climate change poses a serious threat to commercial aviation and the next generation of aircraft will need to consume significantly less fuel if the industry is to meet its target of net zero emissions by 2050 while continuing to expand. 

Airbus and Boeing are not expected to bring new aircraft into service until the end of the 2030s but given the long development times needed, engine makers are battling to find ways to deliver significant improvement in fuel efficiency. Executives from GE and Safran believe the open-fan design offers the greatest potential reduction in fuel consumption with a 20 per cent improvement. 

“The industry and the world requires a step change in the performance of the engine,” said Arjan Hegeman, GE’s future of flight vice-president. “You can choose to pursue that while evolving current [engine] architectures, but it’s very limited in what it can achieve.”

Open-fan engines lack the conventional nacelles, or casing, that surround the fans of traditional turbofans, meaning less weight and drag — allowing for larger fans that help to improve fuel efficiency.

They are not new, with GE itself testing designs in the 1980s, but technical challenges including noise, hampered progress. Access to supercomputing had helped GE to optimise the design of the fan blades to reduce noise, said Hegeman.

“The physics are very clear: an open fan brings significant fuel burn reduction over any conventional ducted architecture,” said Olivier Andriès, chief executive of Safran, during a visit to London in December. 

CFM is working with Airbus on a prototype of its open-fan engine, with the world’s largest planemaker preparing to run test flights on a modified A380 superjumbo towards the end of this decade. The flights will inform an eventual decision on how best to power the next generation of aircraft. 

Executives at Airbus insist that the group has yet to make a final decision on what kind of engine to choose. It is also talking to other engine manufacturers Rolls-Royce and RTX’s Pratt & Whitney about their proposals, which are focused on more conventional enclosed-fan designs.

Rolls-Royce, which only builds engines used on larger wide-body aircraft, hopes to begin ground testing of a scaled-down prototype of its new UltraFan engine in 2028. The company said it was in talks with “all players” and was “seeking to form strong partnerships to deliver this once in a lifetime opportunity”.

Alan Newby, director of research and technology at the FTSE 100 group, said it was “very familiar with open rotor engines” but had concluded it was not the right technology for the next generation of aircraft.

Despite the efficiency promised by open fan, “when you consider the additional safety requirements needed for aircraft fitted with [these] engines, it negates much of that advantage”, he added.

Pratt & Whitney, meanwhile, is working on a second generation of its ducted geared turbofan engine for the next narrow-body planes. Rick Deurloo, president of commercial engines, said P&W had concluded that the “installation, integration, noise and industrial challenges associated with an open rotor architecture would increase the overall executional risk and reduce the potential fuel burn benefit”. 

Aviation experts said the industry needed to incorporate the lessons learned from today’s engines, which have been dogged by durability issues, leading to higher maintenance costs for airlines. Airbus said this week that it expected engine supplies to remain constrained this year after suffering acute shortages over the past two years.

“For the next generation of engines, the airlines are saying: we want you to keep maintenance costs in check and offer 15 per cent better fuel consumption,” said Bjorn Fehrm, aeronautical and economic analyst at Leeham News and Analysis. 

GE’s Hegeman said the company was already incorporating such lessons with early trials for durability including dust ingestion tests. 

For the open fan, CFM will need to address specific challenges around the design, including safety, given the absence of the engine casing. Shielding is likely to be added to an aircraft’s fuselage to reinforce areas that could be susceptible to any damage from a fan blade breaking off.

If Airbus does partner with CFM this will influence the design of the plane itself, with complexities around the positioning of the engines. Airbus is studying different installations of the open-fan engine, including a traditional wing-mounted configuration and a rear fuselage-mounted option. 

Simply hanging the open-fan engines under the wing of a “conventional tube and wing” aircraft would be “difficult to make work from a certification point of view and from an efficiency point of view”, said Nick Cunningham, analyst at Agency Partners. 

He believes one solution will be a design with more of a “blended wing body”, where the wings merge into the fuselage, and mounting the engines at the rear. That would address noise and safety concerns.

Both GE and Safran stress that they are focused on refining the technologies for a possible open-fan engine rather than being ready to start development.

“Most of the technologies we are developing for open fan could apply for a ducted fan as well,” said Safran’s Andriès. Any decision, however, would be up to Airbus and Boeing, he added, as neither can afford to lag significantly in terms of fuel consumption.

Hegeman believes the industry and passengers will accept open-fan engines once manufacturers can demonstrate their safety and efficiency: “Yes, it looks different . . . but I think it looks different for a reason. It’s a different product. It doesn’t compare. We want this to become the new industry standard.”

Susquehanna may find that having an edge in one market does not automatically translate into another

Turning a hobby into a business is harder than it sounds. Just ask Jeff Yass, the billionaire co-founder of trading firm Susquehanna International Group. As a young man, Yass was such a successful gambler that he was banned from some racetracks. Decades on, he is trying to create a sports betting business inside his giant investment firm, but so far the venture has been much less reliable.

The return to Yass’s sporting roots is one of the few expansion plans that the secretive trading firm has publicly discussed. Susquehanna has spent almost a decade building up a transatlantic team of statistics nerds and sports buffs to trade on sports and political events, via betting exchanges such as Betfair.

Betting exchanges work much like stock and options exchanges, with punters betting against each other rather than a traditional bookmaker. Susquehanna figured, therefore, that it could do the same thing it does on financial exchanges: using algorithms and complex risk analysis to make a huge volumes of short-term bets.

However, corporate filings show winnings at SIG Sports Analytics — Susquehanna’s Irish gambling subsidiary — have been extremely volatile. A bumper year in 2020, yielding $60mn in winnings on $1.5mn of trading expenses, has not been replicated since. Net trading losses in 2021 and 2024 more than offset the profit in between, with little significant change in trading expenses. The company, for its part, doesn’t comment on performance.

This kind of volatility is the opposite of what market makers traditionally seek. Virtu Financial, one of the only listed trading firms, suffered only one daily loss in five years in the run-up to its 2015 initial public offering. The record was so remarkable that it exacerbated concerns about bad behaviour, but the reality is more mundane: as long as market makers win slightly more often than they lose, the sheer volume of trades should lead to reliable profits. 

Susquehanna’s bumpy ride provides a useful reminder that there are few easy wins. That bears repeating given the rapid growth of so-called prediction markets including Kalshi and Polymarket, which offer binary contracts on everything from election results to Spotify streams. 

Trading volumes on such platforms multiplied 130-fold over the past two years, encouraging several proprietary trading firms to go on a hiring spree. But SIG’s sports experience shows having an edge in one market — in this case its success in options, equities and the like — doesn’t automatically translate into another.

It may take serious staying power, and enough funds to keep taking risks, to reach the point of consistent profits. On that score, Yass is well-placed — as analysts at Alphacution point out, Susquehanna can easily afford to keep investing through any teething pains, and it doesn’t have any external investors to appease.

Still, he and any would-be rivals eyeing the sports market should remember the advice he recently gave a teenage YouTuber in a rare interview: “If you can’t make money, you may want to consider being quiet.”

Number of leases signed for space priced at $100 or more per sq ft reached all-time high in 2025

New York’s luxury office market is booming as flourishing financial services, legal and technology companies seek comfort and space for their employees, according to data from real estate brokers.

The number of leases signed for Manhattan office space priced at $100 or more per sq ft rocketed to an all-time high last year, according to data from brokerages JLL and CBRE.

The move to snap up luxury office space is being driven by a fierce desire to attract talent and pull more employees back to the office. “We’ve never seen such a commitment to high- end real estate as a personnel decision,” said Mary Ann Tighe, chief executive of CBRE’s New York tri-state region. 

“Everything is catering to the employee . . . it’s not just like . . . ‘Here’s your little four-foot section, here’s a water filter, go have fun’,” said Alexander Erdos, senior vice-president of leasing and development at luxury office developer SJP Properties.

“It’s like ‘Here’s our coffee offering for today, here’s your room service dining’, . . . really, really high-end offerings that are encouraging people to spend more time in the space.”

There were 313 office leases signed at prices of at least $100 per sq ft last year, according to JLL data, up from 212 in 2024. CBRE reported 196 similar transactions in 2025.

Real estate group Cushman & Wakefield said that leasing property it would consider luxury reached nearly 6.8mn sq ft in 2025, up almost 50 per cent on the previous year and the highest level since 2019. 

Senior brokers across the city emphasised that JPMorgan Chase’s new headquarters, which the bank owns and unveiled to much fanfare in October, has set a new standard for professional service companies in New York.

“Folks who compete with JPMorgan for business have taken note,” said Hilary Spann, New York region executive vice-president of real estate investment trust BXP.

From amenities to location, the changes companies were making to heighten the luxury office experience had been “spearheaded by JPMorgan’s deep commitment to the city”, said Bruce Mosler, chair of global brokerage at Cushman & Wakefield. 

The bank’s headquarters on Park Avenue — which hosts a state-of-the-art health and wellness centre and 19 dining options — is a two-minute walk from Grand Central Terminal in midtown Manhattan, an area that Mosler said had seen a “resurgence” as companies make an effort to shorten their employees’ commutes. 

“New York . . . particularly the Park Avenue submarket is the best leasing market in the country,” said Spann.

The offerings at luxury offices are growing in variety and sumptuousness. At 520 Fifth Avenue, one of the properties represented by JLL, employees working in the building can spend time at a golf simulator, a pickleball court and a spa with hot and cold plunge pools. 

Back-to-the-office policies have also had an impact. While finance companies have been pushing a physical return to the office for the past couple of years, tech and creative groups have become “more stringent” about in-office attendance recently, according to JLL’s vice-chair Cynthia Wasserberger.

A constricted construction pipeline in the city had also helped lift rent prices in already expensive buildings, said brokers.

The top three largest leases by square foot secured in New York in 2025 were signed by New York University, Jane Street and Deloitte, according to real estate data group CoStar. 

Banks and Crypto Clash Over Tokens That Pay More Than Deposits

Fight is one factor delaying Senate Banking Committee effort to advance bill defining crypto market rules

WASHINGTON—The cryptocurrency and banking industries are locked in a lobbying battle over digital tokens that yield annual payouts, a fight that threatens to derail legislation intended to bring crypto into mainstream finance.

The two sides are clashing about what crypto firms call rewards, or annual payments to investors based on a percentage of their total holdings. They are commonly used for stablecoins, popular tokens typically pegged to the U.S. dollar and used for trading, overseas payments and money transfers.

To banks, rewards on stablecoins from companies such as Coinbase Global COIN 1.25%increase; green up pointing triangle that pay out 3.5% resemble high-yielding deposits—but without the regulations they face for holding customers’ cash. Bank-industry groups have flooded lawmakers with letters and phone calls arguing the rewards would decimate Main Street lenders. The national average interest rate for a standard interest-bearing checking account is below 0.1%.

“We are hearing every day from community bankers who are worried about the impact stablecoins offering yield will have on their deposit bases and their ability to lend and support their local communities,” said Brooke Ybarra, senior vice president for innovation and strategy at the American Bankers Association, an industry group. Thousands of bankers have sent senators letters through the organization in the past week.

The fight is one of the forces that delayed an expected vote Thursday by the Senate Banking Committee to advance crypto market-structure legislation. Sen. Tim Scott (R., S.C.) postponed a markup of the bill Wednesday night about 12 hours before it was slated to start, saying bipartisan negotiations are continuing. The bill would represent the industry’s first regulatory framework for all digital assets. The House already passed its version of the bill, but Republicans likely need to win support from nearly everyone in their party and some Democrats to get 60 votes and pass it in the Senate.

The rewards fight has muddied the process by giving pause to some Republicans on the Senate Banking Committee who are loyal to banks, such as North Carolina Sen. Thom Tillis. It also has concerned some Democrats, who are also pushing for ethics restrictions in the bill to address President Trump’s crypto activity and have other questions that could hamper the effort.

JPMorgan Chase, Citigroup and other big banks are pushing back on stablecoin rewards while simultaneously developing their own plans for cryptocurrency products and partnerships. Some, including Bank of America, are weighing whether to launch their own stablecoins.

Crypto leaders are accusing the American Bankers Association and other groups of making local lenders the face of their campaign when the effort is driven by the nation’s biggest banks, which don’t want crypto firms disrupting their established business. The incumbent financial firms argue that the loss of deposits will hit smaller banks especially hard.

“This is probably one of their biggest lobbying efforts we’ve seen in a long time,” said Summer Mersinger, chief executive of the Blockchain Association, a crypto-industry group. The organization’s advocacy helped lead last year to a new stablecoin law and an executive order by Trump establishing a new crypto-regulatory framework. “They are using the community banks to deliver a message that’s really a much bigger deal for some of these larger banks,” she said.

Members of Stand With Crypto, one of the industry’s biggest grassroots organizations, have also flooded Congress with calls to pass industry rules. Brian Armstrong, chief executive of Coinbase, which started Stand With Crypto, said Wednesday in a social-media post that the company couldn’t support the bill as written, citing issues including “draft amendments that would kill rewards on stablecoins.”

The largest U.S. crypto exchange pulling its support could put the future of the bill in jeopardy even though other crypto firms said they still support it, analysts said.

The fight highlights the tension between crypto upstarts flexing their newfound lobbying muscle in Washington and established banks that have decadeslong relationships with Congress.

The Treasury Department estimated last year that stablecoins might drain as much as $6.6 trillion in deposits from the U.S. banking system, in part because of rewards. Total deposits in all U.S. commercial banks stood at about $18.7 trillion as of early January, according to the latest Federal Reserve data.

The U.S. government insures deposits of up to $250,000 but also imposes regulations on banks’ business activities and financial strength.

The crypto clash comes as America’s banks are waging other battles in Washington. Lenders are responding to Trump’s call for a temporary cap on credit-card interest rates, endorsement of a bill that would aim to reduce the swipe fees merchants pay banks and credit-card companies for processing payments and a proposal to ban institutional investors from owning single-family homes. Those initiatives are all part of an administration push to address the high cost of living for consumers.

In a bid to find a compromise, a recent draft of the market-structure bill seeks to prohibit some rewards simply holding stablecoins, but allows them if they are tied to other activities such as using stablecoins for payments or receiving incentives or rewards.

“Dear banks, now might be a good time for you to take the deal being offered on stablecoin rewards and yield,” Patrick Witt, head of Trump’s Council of Advisors for Digital Assets, wrote Tuesday on X. He was referencing a post about potentially including the swipe-fee bill as an amendment to the market-structure bill.

The proposed language is still seen as inadequate by banking-industry groups that continue to push for a total prohibition of rewards and yield payments, people familiar with the discussions said. Many involved in the process are bracing for a messy amendment process Thursday, featuring proposals to expand and restrict rewards.

The bill’s current language, for example, is unlikely to deter Coinbase from continuing to offer its 3.5% reward for consumers that participate in its Premium program and hold Circle stablecoins at the exchange, according to people familiar with the matter.

JPMorgan Chase finance chief Jeremy Barnum told analysts this week that banks faced some risk of losing customers to stablecoins and would be advocating that any laws opening up stablecoins come with regulation.

“I think we always embrace competition,” Barnum said. “So, this is not about saying that we don’t want to compete, but it’s about avoiding the creation of a parallel ecosystem that has all the same economic properties and risks without appropriate regulation.”

“Clearly, there is some risk for some firms, maybe for many firms, and some version of a threat to the business model.”

First ore is expected to be produced early next decade, if the projects are approved

Rio Tinto and BHP Group have agreed to work together on some new projects at neighboring iron-ore mines in Australia that could help bolster their future production of the steel ingredient.

The companies said that by collaborating on new projects at their neighboring Yandicoogina and Yandi iron-ore operations in Australia’s Pilbara region, they could extract up to 200 million metric tons of iron ore, some of which might have otherwise been stranded.

“By working smarter, we can better leverage existing infrastructure to unlock additional production with minimal capital requirements,” said Matthew Holcz, the head of Rio Tinto’s iron-ore operations.

Rio Tinto and BHP are, along with Brazil’s Vale, the world’s largest producers of iron ore, used to make steel. BHP is the world’s biggest miner by market value, and Rio Tinto the second-biggest.

The companies on Thursday said they have signed nonbinding agreements that will explore ways of collaborating on the development of Rio Tinto’s Wunbye deposit, which butts up to the boundary of BHP’s Yandi operations.

They will also look at whether BHP can supply ore from its Yandi Lower Channel deposit to Rio Tinto for processing at its existing wet plants. BHP doesn’t have the infrastructure to process the kind of ore it would produce there.

“This is a clear example of productivity in action—unlocking new opportunities by making the most of our existing resources,” said Tim Day, who leads BHP’s Western Australian iron-ore mines.

First ore from both deposits is expected to be produced early next decade, if the projects are approved, the companies said.

BHP shares were 2.9% higher by midafternoon on Thursday in Sydney, while Rio Tinto was up by 0.8%.

The alliance comes as the companies work to safeguard their lucrative Australian iron-ore operations against a more-assertive China, which has sought to gain greater control over pricing of the raw material it needs for steel-intensive infrastructure projects. China buys seven in every 10 tons of iron ore traded globally.

BHP has for months been locked in iron-ore contract negotiations with China, which in 2022 established a state-run buyer to help the country get more influence over prices. That entity now oversees purchases for most of China’s steel mills.

Rivals BHP and Rio Tinto have collaborated before. In 2023, they agreed to mine the Mungadoo Pillar, also unlocking ore from a shared boundary that the companies said was previously inaccessible.

At a BHP shareholder meeting in October, the miner’s chair and chief executive told reporters that BHP would always consider the best way of using infrastructure, even that owned by others, to improve its operations.

Those remarks followed a research note by RBC Capital Markets analyst Kaan Peker, who questioned whether the iron-ore giants should consider some kind of alliance to help safeguard future profits from their massive operations as China’s pricing influence grows.

Both Rio Tinto and BHP rely on iron ore for more than half of their earnings, although they have been investing heavily in expanding in copper, a metal they expect will be at the heart of the next commodities boom given it is essential to electric vehicles, power grids and data centers, among other things.

The two companies considered an iron-ore joint venture in the Pilbara roughly 16 years ago, but the proposed deal was scrapped, with the miners citing regulatory hurdles. More than half of all iron ore shipped globally comes from Australia’s Pilbara region.

Putting Saks Fifth Avenue and Neiman Marcus together was supposed to create a luxury powerhouse. Just over a year later, unpaid debts triggered its bankruptcy.

Chanel’s tab is $136 million. At Kering, the company behind Gucci, Yves Saint Laurent and Balenciaga, the bill is nearly $60 million. And those are just two of the many brands owed money by Saks Global—a list so long it stretched more than three pages in the bankruptcy filing that landed in a Houston court early Wednesday morning.

Even though the parent company of Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman was plainly veering toward bankruptcy in recent days, the filing was stunning in its sweep and scale. And it made clear why Saks Global’s executive chairman, Richard Baker, couldn’t convince bondholders that he should be the one to lead it through its restructuring.

For weeks, Baker—the architect of the $2.7 billion deal that put the two luxury retail heavyweights together just over a year ago—was scrambling to keep his creation afloat.

He appealed to equity investors in the deal, including Amazon.com AMZN -2.45%decrease; red down pointing triangle and private-equity firm Rhône Group, to kick in more capital. His finance team tried to persuade executives at Bank of America and other lenders behind a $1.8 billion asset-based loan to loosen some borrowing restrictions. Amazon, Rhône and BofA declined to comment.

Everyone turned him down.

He sold the land beneath a Neiman Marcus store in Beverly Hills and another in San Francisco for a combined $100 million, almost enough to cover a December interest payment. But it wasn’t enough to persuade vendors who hadn’t been paid in months to keep shipping merchandise.

Now, after securing roughly $1.75 billion to help it restructure, Saks Global is the biggest name in high-end retail to file for bankruptcy protection since the pandemic. The filing, in the Southern District of Texas, throws into question the future of America’s last luxury department stores.

The bondholders, now in control, pushed out Baker. They have brought in a new team led by former Neiman Marcus Chief Executive Geoffroy van Raemdonck, who sold Neiman Marcus to Baker in 2024 after steering it through its own bankruptcy.

For more than a century, Saks, Neiman Marcus and Bergdorf Goodman served as a gateway for U.S. shoppers to discover coveted European brands. While consumers can now turn to the internet and many luxury brands have stores of their own, there is no experience like browsing a curation of brands all under one roof.

Now, many brands wonder whether they will ever get paid for merchandise they have shipped. Saks Global’s unsecured trade creditors reads like a who’s who of the fashion industry: Cartier parent Richemont’s tab is $30 million, while Ermenegildo Zegna and LVMH are each owed about $26 million. Some brands aren’t shipping spring clothing, handbags or shoes to Saks.

Chanel, Kering and Richemont didn’t respond to requests for comment, and LVMH declined to comment. Zegna said it expects Saks Global to “emerge stronger and continue to be a core partner for the sector.”

When Baker closed the deal for Saks to buy Neiman Marcus in December 2024, it was supposed to create a luxury powerhouse that would have more clout with suppliers and reap cost savings. Neiman Marcus was on stronger footing, but Saks had fallen behind paying suppliers. The new Saks Global brought in Amazon, Salesforce and licensing company Authentic Brands Group as investors to help. The company talked of using technology to better understand shoppers and personalize service.

But it was hurt by a broad slowdown in demand for luxury goods, inflation and tariffs. A death spiral ultimately did it in: Unpaid suppliers cut shipments. With fewer goods to sell, the company had a harder time bringing in revenue and even less money to pay suppliers.

Baker, in an interview, said he still thinks the rationale makes sense. It is the only way to counter the growing power of brands, which now compete directly with department stores, he said. The deal’s cost savings were expected to total $600 million, and the company was on track to deliver about half of those savings in the first year, well ahead of target.

Merging the brands was “the only road forward,” he said.

Saks, which started as a men’s clothing store in 1867, was inextricably linked to the glamour of New York City. Rival Neiman Marcus, which got its start in 1907, catered to the oil tycoons of Dallas and other parts of the South.

When Saks moved into its storied flagship store in 1924, the upper part of Fifth Avenue was still mainly residential, dotted with the mansions of the Astor and Vanderbilt families.

Neiman Marcus’s Christmas Book of lavish gifts—such as a private concert by Elton John for as many as 500 guests—became a holiday tradition. Bergdorf Goodman, acquired by Neiman Marcus in the 1970s, once carted over trunk loads of fur coats on Christmas Eve to the apartment of John Lennon and Yoko Ono.

Together, the stores defined luxury to generations of Americans. In the 1990s, specialty stores took off at the high end, discount chains at the low, and e-commerce changed shopping. By the 2000s, department stores were facing existential threats. Influencers were introducing young women to brands, taking over the department store’s once coveted role.

In early January, days after Saks missed a make-or-break $126 million interest payment, Baker stepped in to run Saks Global’s daily operations. He would wake up at 4 a.m. at his home in Greenwich, Conn., to talk to European suppliers. Then he would commute with his two Maltese dogs down the Hudson River in his boat to Saks’s Manhattan office.

The 60-year-old Baker came to retail through real estate. He worked at his father’s company, National Realty & Development, developing Walmart-anchored shopping centers along the East Coast.

In 2005, he formed a private-equity firm to snap up retailers with valuable real estate. A memo he wrote that year listed his targets: Lord & Taylor, Canadian chain Hudson’s Bay, Saks, Germany’s Galeria Kaufhof, and Neiman Marcus. He would go on to buy them all. Each eventually filed for bankruptcy—though not all on his watch. Even though the companies failed, Baker often made money on the real estate.

To those who paint Baker the villain, he is a destroyer of beloved retail brands. What his critics sometimes forget is that these brands were struggling before he bought them and may well have gone out of business sooner without his financial assistance.

“Richard’s intentions were good,” but the headwinds for department stores are tough, said Andrew Rosen, who founded the clothing brand Theory and is an investor in labels such as Alice + Olivia, Rag & Bone and Veronica Beard—which sell to Saks and Neiman Marcus. He added that Baker isn’t the first real-estate guru to get into retailing with disastrous results. “Richard is a genius when it comes to real estate but in retailing, the skills are different.”

Baker said he poured $1 billion in cash over the years into renovating the stores he owned, including a $300 million refurbishment of the Saks flagship that included a Rem Koolhaas-designed escalator connecting the ground and second floors.

“This narrative that I’m not an operator but rather just a dealmaker is untrue,” Baker said. He points to his acquisitions of Lord & Taylor and Hudson’s Bay. Both, he said, had been expected to be liquidated in months. “Instead, Lord & Taylor operated successfully for 14 years and Hudson’s Bay for 17 years.”

Baker is known for peppering his executives with a never-ending stream of ideas. One that would have financial implications down the line was a 2021 split of Saks stores and digital businesses into separate entities. The move was designed to pave the way for a public listing of the digital business. But when the valuations of other digital pure plays collapsed, Saks had to shelve the plan. The companies ended up with duplicative costs, and the businesses were recombined around the time of the Neiman merger, people familiar with the situation said.

Baker said the split allowed him to sell stakes in the stores and digital entities, bringing in a combined $700 million. “Capital got sucked up growing the digital business, and that’s where we became tight with money,” he said.

As luxury spending slowed in 2023, Saks started to fall behind on payments to suppliers. Some complained on social media. Others filed lawsuits against the company. A number of them withheld shipments or demanded cash in advance.

Jewelry brand Phillips House, which had been selling to Saks for more than a decade, started noticing missed payments in March 2022. By June 2023, Phillips House had stopped shipping to Saks, said Derek Frankel, a director of the brand. Frankel spoke by phone to Saks’s finance chief, who told him summer sales had been challenging but that payments would happen in the fall.

Still, none arrived. In a September 2023 email to Saks’s finance chief, he wrote: “It remains unclear to me what justification Saks is relying on to leave these balances unpaid?”

Days after Phillips House filed a lawsuit that November, Frankel said, Saks agreed to pay the full amount owed: roughly $53,000.

“They kept missing their own deadlines,” Frankel said. “Then they’d say we needed to have faith in them. But we couldn’t keep blindly trusting them.”

Emails to Saks asking about owed payments often went unanswered or were met with a runaround, said Emiliano Shnitzer-Bartocci, vice president of CTE Watch Co., which distributes Timex watches and Ray-Ban sunglasses among other accessories. “It was a ping-pong ball: We’d get an answer from one person to talk to someone else in another department.”

In a Valentine’s Day memo, then-Saks CEO Marc Metrick notified suppliers that Saks was changing its payment terms to 90 days from the usual 60. Any past-due payments would be stretched out in 12 installments starting in July.

Metrick said he hoped the move would clarify and smooth things over: “To that end, we are looking forward to seeing the flow of merchandise return to normal levels,” he wrote. Instead, suppliers were livid.

Metrick, who stepped down in early January, declined to comment.

By the summer, Saks was in arrears with more suppliers. Burberry would slow shipments to Saks once it reached its credit limit and then resume sending goods when Saks paid down the balance, one of the people said. Payments owed to vendors would swell to hundreds of millions of dollars. Burberry, which didn’t respond to requests for comment, is owed $9.5 million, according to the bankruptcy filing.

As a multinational conglomerate, Baker’s holding company could move cash from one part of the empire to another. Over the years, money was funneled from Hudson’s Bay to support the U.S. businesses and then when Hudson’s Bay was struggling after the pandemic, money from the U.S. went to support the Canadian chain.

“In retrospect, would we have been better off not sending $300 million to Canada?” Baker said. “Yes. But that was a very valuable business for us in Canada and it was logical to support it.”

Alarm bells went off among suppliers and creditors when Saks Global scrambled to raise cash to meet a June debt payment. It got a $600 million infusion from bondholders. But the proceeds weren’t sufficient to catch up on payments to suppliers and restore the flow of inventory ahead of the holiday season, according to the bankruptcy filing.

On top of that, system-integration glitches disrupted inventory receipts at Neiman Marcus and Bergdorf Goodman in the critical run-up to the holiday season. In the second half of 2025, the company had $550 million less inventory to sell than it had forecast, the filing said.

For the three months that ended Aug. 2, sales fell 13% from a year earlier to $1.6 billion. The net loss widened to $288 million.

With less merchandise on its store racks and in its warehouses, the company couldn’t borrow as much under its asset-based loan, which is backed by inventory. In December, Saks’s asset-based lenders increased reserve levels and took other measures that constrained the company’s borrowing capacity. It was, the filing said, a “perfect storm.”

Hilldun, a New York financing company that backs trendy fashion brands such as Isabel Marant, L’Agence and Golden Goose advised its clients in December to hold shipments of spring merchandise to Saks because the retailer had reached its credit limit. Saks Global owes Hilldun $66.5 million, said Gary Wassner, Hilldun’s CEO.

“In most chapter 11 situations, they’ll only get paid a fraction of what they’re owed,” Wassner said. Saks accounts for as much as 40% of some brands’ wholesale business, he said.

Westport, Conn.-based stylist Lucia Gulbransen, who scours stores and the internet for new items for clients, noticed the flagship Saks location on Fifth Avenue was light on coats and party dresses during the recent holiday season compared with other retailers.

“They didn’t have the ‘wow’ pieces,” she said.

Rivals are doing well. Nordstrom and Bloomingdale’s have crept further upmarket into what was once Saks’s turf and have logged strong sales in the past year.

In a chapter 11 bankruptcy, stores keep operating, though some locations close and companies restructure. Then bondholders look to sell.

Saks—people close to Baker said—would be just the kind of asset he finds irresistible.