Mine closures will accelerate in oversupplied commodity sectors in coming months, the manager of the world’s biggest mining funds says.
In a gloomy preview of the September quarter, BlackRock chief investment officer for natural resources Evy Hambro said miners were facing “tough decisions” amid modest demand and weak commodity prices.
“Looking ahead, the outlook for commodity prices remains subdued, given expectations of further US-dollar strength and a modest demand outlook. This pressure will continue to force tough decisions and mining companies are likely to remain in austerity mode,” he said in a note published by BlackRock.
Mr Hambro said analyst forecasts for the coming earning season would need to be trimmed, and miners would also need to respond to recent falls in commodity prices.
“As the year progresses, we would expect an acceleration of closures of high-cost capacity in oversupplied markets,” he said, in an apparent reference to the iron ore and coal sectors.
BlackRock is the largest shareholder in BHP Billiton, Barrick Gold, Newmont Mining, Freeport and McMoran and South32, and is among the top four shareholders in each of Rio Tinto, Peabody Energy, Fortescue Metals Group, Glencore and Anglo American.
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