2023-11-29 23:53

BRASILIA, Nov 29 (Reuters) - Brazil "has intensified defensive actions" along its northern border as it monitors a territorial dispute between its neighbors, Guyana and Venezuela, the country's defense ministry said on Wednesday. "The Ministry of Defense has been monitoring the situation. Defensive actions have been intensified in the northern border region of the country, promoting a greater military presence," it said in a statement. Brazil's push to move more military resources north comes amid rising tensions between Venezuela and Guayana over an oil-rich region known as the "Esequiba," which constitutes over two thirds of Guyana's total land mass. Venezuela's claims on the Esequiba, which have been the source of a long-running territorial dispute, were reignited in recent years after Guyana's discovery of oil and gas near the maritime border. On Dec. 3, Venezuelans will vote in a referendum on "the rights" to the Esequiba. The International Court of Justice (ICJ) is expected to rule on Friday on a request by Guyana that the referendum be called off. Venezuela's government has said it will go ahead no matter what. Venezuela protested an oil tender announced by Guyana in September, arguing that the offshore areas are subject to dispute and the companies awarded the fields will not have the rights to explore them. The Venezuelan communications ministry did not immediately respond to a request for comment on Brazil's actions. https://www.reuters.com/world/americas/brazil-increases-northern-border-military-presence-amid-venezuela-guyana-spat-2023-11-29/

2023-11-29 23:40

Nov 29 (Reuters) - Elliott Investment Management has taken a $1 billion stake in Phillips 66 and is urging the U.S. oil refiner and pipeline operator to revamp its board to boost lagging performance. The activist investment firm in a letter to the Houston energy company's board on Wednesday said Phillips 66's stock, recently trading at around $118 per share, could hit $200 with improvements. It said management had laid out sensible performance targets but could use help achieving its full potential. Phillips 66 (PSX.N) has lagged its U.S. refining rivals at a time when fuel demand and margins have soared for the industry. Its second-quarter earnings missed Wall Street estimates, but executives have laid out a plan to boost returns by cutting costs and assets. It may sell or spin off $3 billion in assets next year, executives said. Phillips 66 Chief Executive Mark Lashier acknowledged discussions with Elliott but did not say whether the company was open to adding two Elliott-recommended directors to its board. The refiner said it "plans to continue a constructive dialogue" with Elliott Investment, and that it believed it had "the right management team and board in place to deliver long-term, sustainable value". Phillips 66 welcomes "their perspectives and the perspectives of other shareholders on our strategy and actions we are taking to drive long-term sustainable growth and value creation," Lashier said in a statement. "We remain committed to acting in the best interests of our shareholders." Shares of the refiner, which has a market value of $52 billion, were up 3.3% to $121 per share. Prior to the letter's release, Phillips 66 stock was up 8.3% from a year ago, compared to a 21.5% gain at larger rival Marathon Petroleum (MPC.N) during the same period. INVESTORS 'LOST CONFIDENCE' "Given the company's history of failed execution, we believe shareholders would welcome the appointment to the board of two new directors with refining-operating experience," Elliott partner John Pike and portfolio manager Mike Tomkins wrote in the letter, which was made public. Elliott criticized Phillips 66's refining operations, writing that management had taken its "eye off the ball" by letting operating expenses soar. Investors have lost confidence amid "underperformance in refining, as well as poor execution on its cost-reduction efforts," the letter said. The hedge fund said it had found director candidates who could enhance a board "that has limited refining-operations expertise." It did not identify the candidates. Phillips 66 currently has 13 board members. Energy companies have been targeted in the wake of shareholder activist Engine No. 1's success in its fight with Exxon Mobil (XOM.N) that won three seats on the company's board in 2021, said Garfield Miller, head of investment firm Aegis Energy Advisors. "Activist investors brought focus and change to these refiners," Miller said, referring to a 2019 campaign that ushered in changes at Marathon Petroleum. Elliott, which earlier this week signaled that it was ready to push out a majority of directors and top executives at cell tower and fiber provider Crown Castle International (CCI.N), offered some support for the Phillips team, including Lashier, who became CEO last year. "Lashier and the rest of the management team deserve investor support so long as they demonstrate meaningful progress against these targets," the letter said, adding that it also understood market skepticism. https://www.reuters.com/markets/deals/elliott-acquires-1-bln-stake-phillips-66-cnbc-2023-11-29/

2023-11-29 23:36

Nov 29 (Reuters) - U.S. health insurer Cigna (CI.N) is in talks to merge with peer Humana (HUM.N), a source familiar with the matter said on Wednesday, a deal that could exceed $60 billion in value and would be certain to attract fierce antitrust scrutiny. The discussions come six years after regulators blocked mega-deals that would have consolidated the U.S. health insurance sector. After U.S. courts upheld antitrust challenges in 2017, Cigna gave up on a $48 billion deal to acquire Anthem -- now known as Elevance Health. Losing the legal battle also caused Aetna -- now owned by pharmacy chain operator CVS Health (CVS.N) -- to abandon a $37 billion deal to acquire Humana. Cigna and Humana are discussing a stock-and-cash deal that could be finalized by the end of the year, according to the Wall Street Journal, which first reported on the potential deal earlier on Wednesday. Humana declined to comment, while Cigna did not respond to requests for comment. A merger would give the combined company more scale to rival bigger U.S. health insurance players UnitedHealth Group (UNH.N) and CVS Health. Cigna and Humana, which have market values of $77 billion and $59 billion, respectively, currently have limited business overlap, concentrated in Medicare plans for older Americans. Humana's Medicare business is much bigger and more profitable than Cigna's. Reuters reported earlier this month that Cigna was exploring a sale of its Medicare Advantage operations, whose performance has disappointed investors. This divestment could boost the chances of a combination with Humana surviving antitrust challenges, regulatory lawyers said. "It would be smart to do it even before announcing the deal," said Andre Barlow of Doyle, Barlow and Mazard PLLC. Limited overlap between the companies, however, typically also means there are limited cost and revenue synergies. Cigna's shares ended trading on Wednesday down 8.1%, amid investor concerns that the company could overpay for Humana, which trades at higher valuation multiples. Humana is trading at 18.2 times price-to-earnings, while Cigna is trading at 11.6 times, according to LSEG data. Humana's shares also traded down, dropping 5.5% for the day, as investors question the ability of Cigna, which carries $21.5 billion in net debt, to come up with a premium for the deal. "The regulatory burden, dilutive impact, and long time to close will impact the market's reaction to the deal," Oppenheimer analysts said in a note to clients. The limited synergies will also add pressure on Cigna CEO David Cordani to deliver value by running Humana better than its current management. Humana is in the midst of a leadership transition after CEO Bruce Broussard announced in October he will step down in the second half of 2024 after more than a decade at the helm. Humana has tapped Jim Rechtin from Envision Healthcare, a U.S. provider of physicians where he is CEO and president, as successor. HIGHER MEDICAL COSTS Cigna has a large pharmacy benefit unit, Express Scripts, which manages prescription drug plans and has strength in commercial insurance. Humana is the second-biggest player in the fast-growing market for Medicare Advantage plans, under which private insurers are paid a set rate to manage healthcare for people age 65 and older or with disabilities. Health insurers have been facing higher medical costs as people return for procedures they had put off during the pandemic. They are also feeling pressure on reimbursement from the U.S. government. Humana in February said that it would sell its commercial business but keep its Medicare Advantage products. Assuming Cigna does sell its Medicare Advantage business, Bernstein analyst Lance Wilkes said in a research report that antitrust authorities may look at the impact on pharmacies and suppliers of combining their pharmacy drug benefit management (PBM) businesses. Humana manages drug benefits for Medicare, while Cigna's Express Scripts is one of the country's biggest PBMs. Craig Garthwaite, a healthcare economist at Northwestern University, said he expects antitrust authorities to challenge the merger, but that a sale of Cigna's Medicare Advantage (MA) business would improve the deal's prospects. "If you are going to try to prepare to be a better match with Humana from a regulatory standpoint, them dropping MA would make it a lot easier," he said. https://www.reuters.com/markets/deals/us-health-insurers-humana-cigna-talks-merge-wsj-2023-11-29/

2023-11-29 23:35

WASHINGTON, Nov 29 (Reuters) - U.S. Agriculture Secretary Tom Vilsack said on Wednesday that the Biden administration was looking for "creative" ways to sell more U.S. dairy products in Canada after a trade dispute panel ruled in favor of Canadian restrictions on dairy import quotas. Vilsack told Reuters that the U.S. Department of Agriculture and the U.S. Trade Representative's office were weighing next steps in the long-running dispute over Canada's largely closed dairy market, but declined to say whether they would bring new challenges under the U.S.-Mexico-Canada Agreement on Trade (USMCA). "What I can tell you is that we're going to continue to look for creative ways to promote and sell dairy products in Canada, and to basically get our fair share of the market up there - as the Canadians promised," Vilsack said during a meeting with Reuters reporters and editors in Washington. He did not identify specific steps, but said USDA and USTR would work to persuade Canada to provide market opportunities "in the same way they're going to basically articulate the need for more openness to some of our markets. That advocacy is going to continue." A three-person panel rejected U.S. arguments that Canada was improperly limiting U.S. access to its dairy market by allocating most import quotas to Canadian processors of powdered milk, cheese, ice cream and other dairy products based on a market-share approach The case was the second time that USTR had raised a complaint about Canada's implementation of limited market access granted in the 2020 USMCA trade deal. USTR won the first round, forcing revisions to Canada's quota practices, but argued that these prevented retailers and food service operators from purchasing cheaper finished U.S. dairy products. The USMCA agreement kept in place Canada's decades-old supply management system, which restricts domestic production of dairy, eggs and poultry to stabilize incomes of dairy farmers while protecting them from import competition with high tariffs. Vilsack said USDA and USTR would focus on enforcing the dispute panel's 2022 decision to "make sure that the acknowledgement and direction from the first decision is carried forward." In that decision, a USMCA dispute panel ruled that reserving 80%-85% of the tariff rate quotas for Canadian processors violated the agreement He said Canada's supply management system was resulting in Canadian consumers "spending a heck of a lot more for dairy products than they should." But he acknowledged that the system is entrenched in Canadian politics, with a strong advocacy system. Canada's roughly 10,000 dairy farmers form one of the country's most influential political lobbies. Most farm in Quebec and Ontario, the provinces with the most parliamentary seats. https://www.reuters.com/markets/commodities/us-ag-chief-seeking-creative-ways-sell-dairy-canada-after-trade-dispute-loss-2023-11-29/

2023-11-29 23:19

HAVANA, Nov 29 (Reuters) - Producers of Cuba's famous rum are feeling the pinch with local sugar output forecast to remain at record lows this season amid a grueling economic crisis which has dramatically reduced supplies of fertiliser, fuel and other inputs needed to grow cane. The first of 25 state-owned sugar mills is set to crank up its machinery in the coming days with plans published in seven of 13 sugar-producing provinces pointing to similar output to last season’s 350,000 metric tons of raw sugar, down from 1.3 million in 2019. Cuba produced 8 million metric tons of raw sugar in 1989, before the collapse of former benefactor the Soviet Union led to a steady decline. "In recent years sugarcane production has decreased and we have to reverse this, because we not only lose sugar but also all its derivatives, including rum,” Cuban Vice President Salvador Valdes Mesa said at the close of the last harvest in June. Christian Barre, director of Havana Club International, a state venture with French firm Pernod Ricard (PERP.PA), recently told the press that the company was in constant contact with providers and had insured supplies of cane-based alcohol for the moment. While Havana Club is the best known Cuban brand, other smaller ventures, such as Ron Santiago, a joint venture with Diageo PLC (DGE.L) and Ron Vigía with a private investor also export. One European businessman with intimate knowledge of the sector said rum makers are competing for the domestic cane-based alcohol with pharmaceutical and other industries that have the option of importing non-domestic alcohol. “One can feel the pinch and there is not always the availability there was before,” he said. Cuba has historically consumed up to 700,000 metric tons of sugar annually and exported the rest. https://www.reuters.com/markets/commodities/cuban-rum-makers-fret-another-dismal-sugar-harvest-looms-2023-11-29/

2023-11-29 23:07

PANAMA CITY/TORONTO, Nov 29 (Reuters) - For more than a month, a group of 16 fishing boats has been blocking a key port in Panama, choking off coal and essential supplies destined for First Quantum Minerals' (FM.TO) giant copper mine there, eventually forcing it to halt operations at the company's biggest revenue source. The fishing flotilla has provided a fresh jolt of marine backing to the thousands of Panamanians who have been marching daily to demand the annulment of the Canadian miner's contract, arguing its presence violates Panama's sovereignty and threatens its environment. The fishermen are angry that the company has appropriated resources, land and water, and worry about the mine's environmental consequences. Cobre Panama has said it is committed to growing more new forest than is impacted by its mine. Panama's top court on Tuesday declared First Quantum's contract unconstitutional and its president announced an orderly shutdown of the mine, but the vigils on land and sea are set to continue as protesters insist that authorities take concrete steps to close the site. "We aren't going anywhere," Sabino Ayarza, a representative of the protesting fishermen, told Reuters on Tuesday from his boat. A complete shuttering of the mine, which accounts for about 1% of global copper output and 5% of Panama's GDP, would signal a David vs. Goliath victory for Panamanian protesters. Their grassroots movement, nearly unheard of in business-friendly Panama, has wiped C$11 billion ($7.4 billion) off First Quantum's market value and raised global copper prices on supply worries. Copper is a crucial metal in electrification as the world moves to reduce reliance on fossil fuels. The protesters' victory in Panama is emblematic of the outsized and sometimes unexpected influence local communities are having on mining companies worldwide. In Portugal, for instance, Europe's biggest producer of lithium, some local activists are determined to halt mine developments. Canada's First Nation groups have also mounted fierce opposition against mining on their lands. Those hoping to halt the mine's operations have seen false dawns before. Panama's top court struck down First Quantum's previous contract in 2017, but the company was allowed to mine while a new contract was approved. So protesters aren't taking any chances this time. "If this goes on for a year, we will stay a year, there is no end-date," Ayarza said. Cobre Panama accounted for about 46% of First Quantum's overall revenue in the third quarter, according to company data. The company was "reasonably confident" last week in ships carrying supplies reaching the port soon, but failed to circumvent the fishermen's blockade, said a person familiar with the mine's developments who asked not to be named. First Quantum, said it would respect the court's ruling and on Tuesday announced the mine has suspended commercial production due to the blockades. SURPLUS THREATENED A Scotiabank report forecasts Cobre Panama's copper output in 2024 to represent about 1.6% of global supply and warned an indefinite shutdown increases risks of First Quantum potentially defaulting by the third quarter of 2024, and threaten its liquidity by early 2025. First Quantum did not immediately reply to a request for comment on the question about possible default. Together with dwindling supply from Peru, the world's No. 2 copper producer after Chile, the Panama shutdown threatens to wipe out what had been seen as global surplus in 2024, according to Macquarie. In Chile, the copper outlook for 2023 went from 5.9% growth in May to 1% in July, as state-owned miner Codelco, the world's largest producer, lowered production amid operational difficulties, though it is expected to recover in 2024. The fishermen have added muscle to a movement which blocked roads, causing daily losses of more than $90 million to businesses, according to experts, and food shortages nationwide. Protesters also hurled rocks at a bus transporting workers to the mine on one occasion, injuring eight workers. The court verdict leaves three possible outcomes: Panama could close the mine indefinitely, nationalize it, or agree to settle its differences in international arbitration by negotiating a constitutionally correct contract with First Quantum alongside a new joint-venture partner. "We believe it may be time for FM to consider bringing in a major mining partner to share the future risk of operating in Panama," Scotiabank said in a note on Tuesday. However, protesters are pushing firmly towards a ban on all kinds of mining despite warnings of economic consequences. The protesting fishermen have been posting their bank account details on social media for people to donate food and fuel. Ayarza did not detail how much they have received, but said he was confident they can outlast the mining giant. "We know our sea. We know the area in which we are waging war," said Ayarza. "We use ropes to make them back down and, well, threaten them so they have to go back." ($1 = 1.3579 Canadian dollars) https://www.reuters.com/world/americas/we-arent-going-anywhere-how-panama-fishing-boats-brought-first-quantum-its-knees-2023-11-29/