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Australia weighs price floor for critical minerals

Saudi Aramco Q2 net profit drops

22% on lower revenue DUBAI: Saudi Arabian oil company Aramco reported a 22% drop in second-quarter profit yesterday, mainly on lower revenue, while it racked up more debt. The world’s top oil exporter reported a net profit of US$22.7 billion (RM96 billion) in the three months ended June 30, missing a company-provided median estimate from 17 analysts of US$23.7 billion. Aramco’s average realised crude oil price was US$66.7 a barrel in the quarter, down from US$85.7 in the second quarter of 2024 and US$76.3 in the first quarter of this year. Total borrowing rose to US$92.9 billion at June 30 from US$74.4 a year prior. Gearing, a measure of indebtedness, rose to 6.5% from minus 0.3% a year earlier and 5.3% the previous quarter. The company, long a cash cow for the Saudi state, confirmed a previously outlined US$21.3 billion in total dividends for the second quarter, roughly US$200 million of which is per formance-linked dividends, a mechanism intro duced after a windfall from oil prices in 2022 following Russia’s invasion of Ukraine. Aramco in March outlined total dividends of US$85.4 billion for 2025 – a 37% drop from its payout of over US$124 billion the previous year. The performance-linked component is set to plunge 98% to US$900 million as the company’s free cash flow dwindles. Free cash flow dropped nearly a fifth year-on year in the second quarter to US$15.2 billion. Reuters reported last month that Aramco is close to a deal to raise around US$10 billion in investment from a group led by BlackRock and is considering selling up to five of its gas-powered power plants to raise up to US$4 billion, as Riyadh presses the company to increase profit and payout. For the Saudi government, which owns 81.5% of Aramco shares directly and another 16% through its sovereign wealth fund PIF, dividends are a critical source of income, parti cularly as it spends on efforts to diversify the economy away from oil. Oil generated 62% of the government’s revenue last year. The International Monetary fund estimates the kingdom needs oil at more than US$90 a barrel to balance its 2025 budget. – Reuters SINGAPORE: Singapore’s CapitaLand Inte grated Commercial Trust said yesterday that it would buy the remaining 55% stake in CapitaSpring from CapitaLand Development and Mitsubishi Estate on an agreed property value of S$1.05 billion (RM3.33 billion). CapitaLand Integrated estimates the total acquisition outlay for the office and retail components of the 51-storey integrated development in Singapore’s prime central business district at about S$482.3 million. CapitaLand Development will sell its 45% stake, while Mitsubishi Estate plans to divest its 10% interest. Both CapitaLand Integrated and CapitaLand Development are part of the FRANKFURT: German logistics giant DHL reported a higher than expected second quarter operating profit yesterday, as strict cost controls helped to overcome currency headwinds and slower trade volumes momentum. The company posted quarterly earnings before interest and tax of €1.43 billion (RM6.99 billion), above analysts’ forecast of €1.33 billion in a company provided consensus. Despite the profitability beat, DHL’s quarterly revenue fell 3.9% from a year earlier to €19.83 billion, below analysts’ forecast of €21.01 billion. – Reuters CAPITALAND INTEGRATED TO ACQUIRE REMAINING STAKE IN CAPITASPRING broader CapitaLand Group. – Reuters DHL QUARTERLY PROFIT EXCEEDS EXPECTATIONS

King said. “The focus will be on creating national offtake agreements,” she said, referring to purchase deals. “These will be voluntary.” The agreements will focus on critical minerals with demonstrated end-uses in defence and strategic technologies and minerals where Australia is especially well placed to provide supply amidst supply chain issues, particularly heavy rare earths. Rare earths are a group of 17 elements. They include a subset of heavy rare earths, such as terbium and dysprosium, which are categorised by their higher atomic weight, are less plentiful and command higher prices than others. Shares in Australian producer Lynas Rare Earths, which started producing heavy rare earths earlier this year, rallied more than 6% to the highest in 13 years. Shares of Iluka Resources and Arafura Rare Earths were both up close to 10% yesterday. “I think the market is now viewing rare earths miners and processors as strategic assets given the (Australian) government involvement,” said Luke Winchester, portfolio manager at Merewether Capital. – Reuters

Earlier this year, Nyrstar put its troubled Port Pirie lead smelter in South Australia and Hobart zinc processing operations in Tasmania under strategic review, citing high energy prices and lower processing fees. The support comes as prices for some metals like rare earths have been too low to fund processing capacity in Western nations, meaning that China has remained the world’s dominant supplier. There was a strategic shift last month when the US government offered a pricing floor in a landmark deal with its largest rare earths producer intended to support a viable US rare earths industry. “Pricing certainty means companies and investors are less exposed to volatile markets and prices, which are opaque and prone to manipulation,” King said in a statement first reported by The Australian newspaper on Monday evening. Australia aims to provide price certainty for emerging critical minerals projects through its role as a buyer, after it pledged A$1.2 billion to build a strategic critical mineral reserve earlier this year. “Mechanisms for an appropriate price floor are under active consideration,”

MELBOURNE: Australia is considering setting a price floor to support critical minerals projects, including rare earths, Resources Minister Madeleine King said, in comments that led to a rally in share prices for Australian-listed rare earths miners. Australia has been positioning itself as an alternative source of critical minerals to dominant producer China for use in sectors such as the automotive industry and defence. It offered yesterday an A$135 million (RM368.6 million) lifeline to Trafigura unit Nyrstar’s metals processing operations. Nyrstar is assessing the potential to produce antimony, bismuth, germanium, indium at its smelters in Port Pirie and Hobart. o Government will prioritise strategic projects such as rare earths, Lynas shares hit highest in 13 years

A Lynas worker walks past sacks of rare earth concentrate waiting to be shipped to Malaysia, at Mount Weld, northeast of Perth, Australia. Shares in Lynas Rare Earths rallied more than 6% to the highest in 13 years yesterday. – REUTERSPIC

BR I E F S

BP pledges to do better for shareholders LONDON: BP will review its portfolio of assets and consider more cost cuts as part of a drive to do better for shareholders, the oil major said yesterday, as it reported a second-quarter profit that easily beat expectations.

making a further US$750 million of purchases by the time of its third-quarter results, it said. BP’s shares have underperformed rivals since its 2020 shift towards renewables under former CEO Bernard Looney. Since Auchincloss’s strategy overhaul in February, BP’s shares have fallen by around 3.5%, contrasting with gains of around 2.4% for rivals Shell and ExxonMobil, as of Monday. Global benchmark Brent crude prices averaged around US$67 a barrel during the April-to-June quarter, compared with US$75 a barrel in the first quarter and US$85 a year earlier. At first-quarter results, Auchincloss said that in the event of sustainably lower oil prices a further US$2.5 billion might be shaved off BP’s spending plans to cover per-barrel price moves of around US$10. This would hit the group’s long-term growth, he said at the time. BP’s net debt, which it has vowed to slash to between US$14-$18 billion by end-2027, fell by around US$1 billion to US$26 billion in the quarter. – Reuters

of BP’s ill-fated foray into renewables. BP already has a target to cut costs by US$4- $5 billion from 2023 levels by the end of 2027, of which it has achieved US$1.7 billion, it said. The company posted a second-quarter underlying replacement cost profit, or adjusted net income, of US$2.4 billion, down 14% from last year’s US$2.8 billion, but easily beating the average US$1.8 billion in a company-provided poll of analysts. The quarterly performance benefited from a 33% increase in profit at BP’s customers and products business, driven by strong oil trading results, higher volumes, and a 20% rise in earnings at its Castrol lubricants unit, which the company plans to sell. Profit at its gas and low carbon division also beat expectations, coming in just above last year’s. BP said it had made US$3 billion in divestments out of its US$3-$4 billion target for 2025. Its quarterly dividend will rise to 8.32 cents from 8 cents in the first quarter and it will keep the pace of its share buyback programme,

Under pressure to improve profitability, not least from activist investor Elliott, CEO Murray Auchincloss earlier this year announced plans to sell US$20 billion (RM84.6 billion) of assets through to 2027, as well as to cut spending, debt and costs. Yesterday, he signalled further action might follow, without giving details. “We will conduct a thorough review of our portfolio of businesses to ensure we are maximising shareholder value moving forward – allocating capital effectively. We are also initiating a further cost review,” Auchincloss said. “BP can and will do better for its investors.” Auchincloss said the decision was taken in tandem with Albert Manifold, who will replace Helge Lund as chair of the board next month. Lund had come under pressure for his backing