Mining Profits Are Super-Charged and BlackRock Wants to Get Paid – by Thomas Wilson, Anna Edwards and Manus Cranny (Bloomberg News – January 11, 2018)

The world’s mining sector is firing on all cylinders again, and one of it’s biggest investors can’t wait to get paid.

After five years of under-performance, a combination of synchronous global growth and under-investment in new supply has driven up commodity prices, increasing cash flow and profit margins for the world’s biggest mining companies, according to BlackRock Inc.’s Evy Hambro.

“When those things converge you get a pretty explosive price response, and that’s what we’ve seen,” Hambro, who manages BlackRock’s $6.4 billion World Mining Fund, said in a Bloomberg TV interview on Thursday.

“Margins and cash flows for the sector are going to continue to be very robust, and we are really looking forward to getting rewarded for our patience with the companies handing back cash to us.”

Mining companies were forced to shed assets to cut debt and reassure investors during a 2015 collapse in commodity prices that threatened the survival of some of the biggest names in the industry. The slump wiped out more than $1.4 trillion of shareholder value and revealed years of profligate spending by mining executives on ambitious projects to feed inflated forecasts for Chinese demand.

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