RBC Capital Markets analyst Kaan Peker reports that Australian mining equities are largely adhering to guidance as they approach the December quarter. The assessment indicates limited volume risk, with cost and capital expenditure pressures remaining generally under control within the sector.
According to RBC’s analysis, valuations within the Australian mining sector, while no longer inexpensive, are still considered acceptable. This perspective follows a period where coverage rose by more than 20 per cent over the preceding three months. RBC has expressed a continuing preference for base and battery metals over bulk commodities. Within the major players, BHP is favoured over Rio Tinto.
The upcoming quarter is expected to offer insights into several key areas. These include the behaviour of iron ore pricing amid increasing pressure from China Minmetals Rare Earth Co., Ltd (CMRG), the ability of lithium producers to maintain production levels and cost discipline given current high prices, and the extent to which copper margins are being captured, taking into account provisional pricing and by-product credits.
RBC Capital Markets is a global investment bank providing a wide array of services in capital markets, investment banking, and global markets. BHP Group is a leading global resources company that explores for, develops, and produces natural resources.
