Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
South African mining stocks haven’t had it this good since 2008.
Thanks to surging iron ore, gold and platinum-group metals, a Johannesburg index of mining equities has climbed 30% this year. Miners account for seven of the market’s 10 best-performing stocks in 2019.
Morgan Stanley analysts raised their share-price targets for African Rainbow Minerals Ltd., Assore Ltd., Exxaro Resources Ltd. and Kumba Iron Ore Ltd. in a note on South African diversified miners dated June 24, citing the 12% increase in iron-ore prices for 2021 forecast by the bank’s commodities team. The analysts said they favor Anglo American Plc, Exxaro, Glencore Ltd. and South32 overall for South African investors.
Concerns about iron-ore supplies after shutdowns in Brazil and storms in Australia have pushed prices to five-year highs this month. Bullion has rallied to the highest since 2013 as geopolitical tensions prompt investors to seek safer assets. South African platinum companies have benefited from soaring prices for palladium and rhodium, mined alongside their main product. The 5.3% decline in the rand over 12 months has also helped miners that have their costs in local currency but produce dollar-priced commodities.
The FTSE/JSE Africa Mining Index rose 1.2% as of 2:24 p.m. to the highest since July 2008. Global giant BHP Group Plc’s Johannesburg-traded stock was the biggest contributor to Tuesday’s gains, advancing as much as 1.8% to the highest on record.
(By Adelaide Changole)
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