Q & A
Can you provide an overview of the mining financial climate in 2016 ? Who would have thought it ? Less than a year after the Federal Reserve started raising interest rates and which is the best performing sector on the UK market ? Mining ! The Industrial Metals & Mining index , if one wants to be strictly accurate – which has risen 89 % so far this year . But that is anyway followed by the pure Mining Index , which is up a still impressive 53 %, beating out Tech Hardware (+ 49 %), software (+ 23 %) and oil (+ 22 %) and eons ahead of sectors such as mobile telecoms , banks , food producers and general retailers ( all of which have fallen ). In fact , with zinc up 40 % in US dollar terms , year to date , silver up 37 % and iron ore up 31 %, most metals have outperformed these other sectors . Even the laggards , such as lead (+ 5 %) and copper ( -2%) have outperformed the FTSE 100 ( -8%) index in US dollar terms . Not surprisingly therefore , four of the FTSE 100 ’ s index ’ s top five performers so far this year are miners – Anglo American (+ 172 % in sterling terms ), Fresnillo (+ 128 %), Glencore (+ 102 %) and Randgold Resources (+ 76 %) – and , with BHP Billiton (+ 31 %) coming in at number nine , five of the top ten . In fact , the only companies missing in this tier of UK industry are Rio Tinto and Johnson Matthey .
Why has mining been the best performing sector on the UK market ? Much of the performance can be attributed to the macro-environment . Nine months ago , the Federal Reserve had just raised interest rates and was confidently predicting four more rises during 2016 . And while the market continues to expect one rate rise this year , the bare facts of the matter are that , to date , precisely none of those interest rate rises have yet come to fruition . Partly , this is to do with economics .
What does the industry look like across the world , in the U . S and China for example ? The US is growing , but it ’ s hardly the sort of robust growth that the world was conditioned to expect in the years before 2008 / 09 . By contrast , conditions in the rest of the world look distinctly parlous , with Europe reaping the pain of its erstwhile strong currency strategy and China trying to
10 November 2016