THE manager of the world's largest mining mutual fund says copper stocks are good value and the outlook for the metal is strong.
Evy Hambro, the managing director of BlackRock Investment Management's natural resources equity unit, said copper companies were cheap compared to the price of the commodity.
The copper price has surged to about $US8300 a tonne after plunging to less than $US300 in late 2008 amid the global financial crisis.
''We like the outlook for copper,'' Mr Hambro said. ''We think copper prices are likely to stay strong over the medium to long term. As a result, we don't think that view is reflected in the valuation of the equities of the companies that produce copper.''
BlackRock had spread its risk by investing in the full gamut of copper companies, from producers to explorers. In the mid-cap range, BlackRock holds interests in First Quantum Minerals, which is mining copper and gold in Africa, and the Perth company Equinox Minerals.
Equinox unveiled yesterday a friendly $1.25 billion takeover of the Melbourne company Citadel Resource Group to give it control of a Saudi Arabian copper project.
The BlackRock-managed Global Mining Investments, which is listed on the Australian Stock Exchange, said it was favouring commodities with the most severe supply-demand imbalances such as copper, coking coal, iron ore and platinum.
It was investing lightly in aluminium, where there was overcapacity.
Mr Hambro said the federal government's proposed mineral resource rent tax had been badly handled and had dented the valuations of Australian miners.
''Australia has raised its risk profile as a place for capital to work because of the uncertainty that it [the tax] has generated,'' he said. ''These kinds of changes, if they're needed by a country, obviously should be done in the least disruptive and least unsettling way possible.''
Source: http://www.smh.com.au/business/investment-fund-puts-money-on-copper-20101025-170v4.html
