Mining companies facing a tricky juggling act in 2023 as price rises tail off while costs continue to rise.
That’s the view of analysts at US bank Citigroup after reviewing the latest results and updates from the big mining sector.
Earnings estimates at the bank have come down by between 2-10%, though its analysts said a lot of this stems from a lower coal price assumption.
Two key takeaways from the numbers were the potential for a production pickup in copper (Quellaveco and Los Pelambres ramp up) but only a moderate year-on-year decline in unit cost inflation, implying that comparable unit costs will still go up in 2023.
On the upside, the potential for a release of working capital remains a possible sector cash flow boost.
Glencore and Anglo-American remain the bank’s preferred picks.
Shares in Glencore were down a touch at 492.3p and Anglo was up a shade at 2,853p.