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The most influential investor in the mining sector expects the industry to step up its cash returns over the next 24 months.
BlackRock’s Evy Hambro told the Mines and Money conference in London there was a “window of opportunity” to get some big returns from big mining houses.
“Mining companies as they eat through their ore bodies will need to invest again,” Mr Hambro told the conference. “But they have a window of opportunity of at least 24 months to give some big cash back.”
The mining industry is emerging from the worst downturn in a generation. Aided by higher commodity prices and cost cutting, miners are now generating lots of cash.
Mr Hambro said boosting dividends and share buyback programmes could help “heal the relationship between companies and investors” and lead to higher stock market ratings.
During the so-called commodity super cycle the industry squandered billions on ambitious projects and acquisitions to feed China’s seemingly insatiable appetite for raw materials. As a result many companies managed to deliver negative returns even though commodity prices soared to record highs.
“That will help restore trust and bring capital back to the sector,” said Mr Hambro. “That’s what we need to see.”