Natural Resources
3 May 2022
Comment
A Short Burst of Inconsequential Information
On April 25th the board of Twitter Inc (NYSE:TWTR) accepted Elon Musk’s $44bn offer for the company. After initial scepticism over Musk’s approach it appears that he has managed to secure the financing required for the board to take it seriously, reportedly consisting of $25.5bn in debt and $21bn in equity, which may or may not require him to sell some of his Tesla shares.
Musk has stated that the principal reason for making the acquisition is because Twitter wasn’t living up to it’s potential as a platform for free speech and having such a platform was important to the future of civilisation. Somewhat ironically Musk himself has blocked Twitter users who were less than enthusiastic about Tesla or his other activities in the past.
The acquisition will be one of the largest take-private deals in history and who would bet against him ? After all his last attempt at a private deal, valuing Tesla at $72bn in 2018, would have been another ten-bagger if he had managed to pull it off. It’s worth noting that reportedly he can still walk away this time if he chooses, having negotiated an unusually low termination fee for the size of this deal of $1bn.
Whether you think Twitter is the upholder and defender of something quite so important as free speech or an echo chamber for the deaf, it makes one wonder what else you could get for $44bn dollars.
In the mining world the answer is quite a lot.
It would get you 23Moz’s of gold, almost a quarter of annual global production and make you one of the top 10 holders of bullion worldwide, though shipping it to Mars might be quite expensive.
Alternatively, it would buy you 20% of current global annual copper production or 50% of Nickel or 60% of Lithium’s projected 2025 supply. More than enough to deal with any ‘range anxiety’ generated by driving your Tesla.
On the other hand, if you were looking for something that might generate some income, you could take your pick from Fortescue, Norilsk (though the neighbourhood is a bit rough at the moment), Zijin, Barrick or Ganfeng Lithium.
We all know diversification of risks is key for long term performance so, in order to deal with any supply chain issues for your electric vehicle manufacturing operations, perhaps a portfolio of companies would be of more use to Mr Musk. What about taking Lynas for its rare earths, SQM for lithium and South32 for some nickel and copper?
That way Mr Musk wouldn’t have to spend so much time on Twitter demanding the world produces more metals for his car factories, or perhaps for the ultimate benefit of us all he will double down and the energy transition will happen in bursts of 280 characters at a time.
NB “A short burst of inconsequential information was original Twitter CEO Jack Dorsey’s definition of “Twitter”