Miners 'compelling' despite macro meltdown: Jefferies

By Staff reporter / August 23, 2021 / www.mining-journal.com / Article Link

Analysts noted the "macro meltdown" with commodity prices sharply declining recently and sentiment deteriorating on the back of weak macro data, along with the prospect of the US Fed tapering soon.

However in an August 21 note, Christopher LaFemina said in terms of the weaker than expected macro data, Jefferies analysts believed the issues were transitory.

He also said the evidence of copper supply constraints had become "abundantly clear", pointing to recent results including Antofagasta trimming guidance due to water shortages in Chile. 

The analysts recommended buying Freeport-McMoRan, First Quantum Minerals, Glencore, and reiterated a buy rating for Antofagasta, for leverage to the recovery.

They also reiterated a hold rating for both MMG, in light of operational, geopolitical and M&A risks, and South32, after the miner missed consensus

They also noted a near-term overhang on BHP shares, which have tumbled almost 14% in Australia in the past five days since its transformative plans to unify the company, exit from petroleum, approve the Jansen potash project and deliver a higher dividend than expected.

"We believe BHP will seek acquisitions over the medium term," LaFemina said.

"These developments are mostly positive for the long run, in our view, but the added complexity due to risk of shareholders voting down the unification is a near-term overhang."

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