The big miners are taking a breath. In sports terms they would be in the rebuilding phase, with Glencore (GLEN) counting its Champions League-style winnings from the coal price boom of 2022-23 and thinking about how best to play the energy transition, while Rio Tinto (RIO) and (off-index) BHP (BHP) are getting the best out of their veterans while putting serious resources into the future. Anglo American (AAL), though, looks as though it might be relegated.
But let’s blow the whistle on the tortured metaphor. Last year ended with an uptick in iron ore prices, setting up Rio and BHP for a boost to full-year and interim profits, respectively. Metallurgical coal prices are also up, helping BHP. The iron ore price strength – it had climbed to over $140 (£111) a tonne by the start of this year – was a surprise because of the generally downbeat market views on China. Levels of industrial activity there determine pricing.
Those with an eye on income will see the impact of the wider market slowdown in the dividend payments and buybacks. The big miners don’t offer the kind of yields seen in the other extractive industries (once energy majors’ buybacks are factored in, at least) but hit new shareholder return records in 2022 thanks to the pandemic rebound. Even Anglo American, whose share price has collapsed in the past year, has seen its yield fall, as payouts have dropped by half in the same period.