Please ensure Javascript is enabled for purposes of website accessibility

Mining Is Feeling the Pinch

By Motley Fool Staff – Feb 24, 2016 at 1:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One of the world’s largest mining companies is halting two of its big operations. What does this mean for the sector?

Last week, Anglo American (AAL -5.94%) -- one of the largest mining companies in the world -- announced that it is halting iron ore and coal operations.

In this video segment, Sean O'Reilly, Tyler Crowe, and Taylor Muckerman talk about how this follows in the trail of the biggest players in this space recently, and what all this debt and trouble might mean for the industry.

A transcript follows the video.

This podcast was recorded on Feb. 18, 2016. 

Sean O'Reilly: So, moving on to our next story, out of oil and into mining, it looks like the big guns in the mining space are basically feeling the pinch right now. A report just came out yesterday -- Anglo American is going to stop all iron ore and coal operations. What else do they do?!

Tyler Crowe: Well, Anglo, that's not their big thing. Anglo American is more of a diversified miner.

O'Reilly: Okay.

Crowe: They have a lot in platinum and copper, a couple other precious ... well, not precious, but more precious than iron ore and coal.

O'Reilly: Right, which is apparently everywhere or something. (laughs) 

Crowe: And they're not a huge, huge contributor to the iron ore market, but they are one of the five largest mining companies in the world. And to see them ...

O'Reilly: Throw in the towel on two big commodities, yeah.

Crowe: And, what was it, just a few months ago, we watched Glencore (GLEN -5.81%) almost look like they were going to go through the kind of death throes of the debt spiral. So, it's really, as we see these bigger and bigger companies starting to get into these debt issues and asset sales and to stop production and a lot of things, it's really telling as to what's going on. I mean, Rio Tinto (RIO -5.76%) just also mentioned that they're cutting their dividend.

O'Reilly: Who were the two --

Taylor Muckerman: And they were one of the strongest balance sheets in the business.

O'Reilly: Yeah.

Muckerman: So, that's a surprise.

Crowe: Yeah, and BHP Billiton (BHP -4.57%), who has the strongest balance sheet in the business, actually had their credit rating downgraded.

O'Reilly: Wow!

Crowe: So, when you have the largest companies, the most profitable companies, seeing that, then you really know that we're ... somewhere, we have to be close to some sort of market turn on this, right?

Sean O'Reilly has no position in any stocks mentioned. Taylor Muckerman has no position in any stocks mentioned. Tyler Crowe owns shares of BHP Billiton Limited (ADR). The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

BHP Group Stock Quote
BHP Group
BHP
$48.87 (-4.57%) $-2.34
Rio Tinto plc Stock Quote
Rio Tinto plc
RIO
$52.16 (-5.76%) $-3.19
Glencore plc Stock Quote
Glencore plc
GLEN
$461.55 (-5.81%) $-28.45
Anglo American plc Stock Quote
Anglo American plc
AAL
$2,670.00 (-5.94%) $-168.50

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.