Mining special: shares to own in the second half of 2022

TL;DR

Economic uncertainties, liquidity shortages, and inflation-driven interest rate hikes are impacting mining stocks and commodity prices. The global mining industry may experience a technical recession, but recovery is expected in the second half of 2022.

Transcript

hello with me today i have john mayer mining analyst at sp angel hi john hi there look six months ago you told me that the argument for investing in mining stocks was the best that we've seen in the last 20 years but the 5350 mining index is falling sharply as has the price of copper seen as a bellwether of economic output now there's a lot going o... Read More

Key Insights

• ☠️ Liquidity shortages and inflation-driven interest rate hikes impact mining stocks and commodity prices.
• 💰 The US dollar's strengthening and potential Western recession affect the prices of commodities for countries like India and China.
• 0️⃣ China's struggle with COVID-19 and the dynamics of its zero COVID policy create uncertainties for the mining industry.
• ❓ Glencore, Atlantic Lithium, Rainbow Rare Earths, Cornish Metals, and Rambler Metals and Mining are recommended mining companies for investment.
• 🍉 Lithium prices have doubled in 2022, driven by demand in battery-related industries; however, the long-term outlook suggests a potential pullback.
• 🏪 Gold continues to be a haven asset during uncertain economic times and serves as a secure store of wealth.
• 😆 Copper, tin, and rare earth metals are expected to outperform in the mining industry, with potential recovery in iron ore as well. However, finding a good nickel stock in the UK is challenging.
• 🫢 Coal remains a viable option for Western power generation, given the choice between Russian oil and gas or coal.

Questions & Answers

Q: What is currently driving sentiment in the mining industry?

Liquidity shortages in the market and unexpected inflation, leading to interest rate hikes, impact sentiment in the mining industry. Additionally, China's COVID-19 situation and Western lockdowns contribute to uncertainties.

Q: What is the outlook for the global mining industry in the second half of 2022?

There is a high risk of recession, but it is expected to be more of a technical recession rather than a prolonged economic downturn. Factors such as Russia's invasion of Ukraine and supply chain disruptions also influence the outlook.

Q: Which mining companies are recommended for investment?

Glencore, Atlantic Lithium, Rainbow Rare Earths, Cornish Metals, and Rambler Metals and Mining are regarded as potential investment opportunities due to their respective strengths and promising projects.

Q: Will lithium prices continue to rally?

While it is difficult to determine the direction of lithium prices in the short term, over the next decade, prices are expected to remain relatively strong due to demand for lithium in battery-related industries. However, new sources of lithium, such as brine processing, may affect future pricing dynamics.

Summary & Key Takeaways

• Overall sentiment in the mining industry is driven by liquidity shortages and unexpected inflation, leading to interest rate hikes by the Fed.

• The strengthening US dollar and potential Western recession impact the prices of commodities like copper, nickel, and tin.

• China's ongoing struggle with COVID-19 and lockdowns adds further uncertainty to the mining industry.