Continued weakness in gold prices over the coming months will put further downward pressure on gold mining equities into 2015. Meanwhile, subdued valuations will encourage merger and acquisition (M&A) activity within the gold sector as larger, better-capitalised miners with lower operating and financing costs seek to expand their asset base and project pipeline.
We expect the Bloomberg World Mining Index to trade within the 200-250 range over Q414. Persistent oversupply in the coal, iron ore and copper markets will continue to tame the recovery in mineral prices following significant declines over recent quarters. For instance, Newcastle steam coal prices have fallen 25% in the year-to-date, while iron ore prices collapsed 40% over the same period. Loo...
We expect mining equities to stage a relief rally in the coming weeks, albeit within the confines of a longer-term downtrend. A break higher by the Bloomberg World Mining Index illustrates that several factors are aligning that should temporarily boost sentiment towards mining equities after three years of decline.
Cost-cutting in the global mining sector will continue over 2014-2016 as major miners come under pressure in a post commodity price boom environment. Below, we highlight the key growth strategies of Anglo American, GlencoreXstrata, BHP Billiton, Rio Tinto and Vale over the coming quarters.
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