Global asset manager BlackRock backs further consolidation among large mining companies, viewing it as essential to attract generalist investors and facilitate complex new supply projects. Speaking at the Australian Financial Review (AFR) conference in Perth, portfolio manager Olivia Markham highlighted the mining industry’s scale challenges compared to sectors like technology.
US generalist investors, Markham explained, prefer large, liquid equities. Bigger companies offer better access to capital, typically trade at superior multiples, and possess the teams and expertise for intricate projects. “We’ve had a wave of M&A, but I see merit in more,” she stated. BlackRock is a global investment management corporation that provides asset management and technology services. It helps institutional and retail clients pursue their financial goals across various asset classes.
This push for consolidation aligns with accelerating commodity demand, driven by trends like electrification, artificial intelligence, and defence spending, which requires significant new supply. Markham stressed that the commodity intensity of GDP growth continues to rise, with “every exciting theme” leading back to mining. The supply side, however, remains “massively underinvested,” implying prices will rise to incentivise new supply. She added that the Strait of Hormuz’s closure is driving a push for energy independence, supporting alternative sources, including uranium.
While BlackRock holds stakes in major miners like BHP, Rio Tinto, and Glencore, its exposure to Australia has lessened over the past five years. This is attributed to a focus on copper-rich jurisdictions and Australia’s diminished cost competitiveness post-COVID.
