Citi has decided the mining sector is not quite as apocalyptic as recent trading suggests. The bank is openly bullish on base metals and quietly upbeat on precious metals, arguing that copper remains the star attraction.
Supply disruptions, it says, give the metal a credible shot at all time highs in 2026. Precious metal byproduct credits also provide a useful earnings cushion for diversified miners, a welcome change in a sector where good news usually arrives pre-covered in caveats.
The bearish mood around bulk commodities, Citi argues, has gone too far. Iron ore and coal prices are likely to stay range bound rather than collapse, supported by current cost levels, although neither is expected to do enough heavy lifting to rescue the big iron ore houses.
That leaves BHP Group Ltd (LSE:BHP, ASX:BHP) and Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF) dependent on a tailwind that is not part of the base case.
Glencore PLC (LSE:GLEN)is the preferred name into 2026, largely because it offers what the rest of the sector does not: a free cash flow yield above 8% at spot prices and the best risk-reward profile among the diversified miners. Anglo American is the only stock the market is willing to love, and Citi thinks that affection might even be justified once copper from the pending Teck deal begins to roll through.
On current spot pricing, the sector trades at around six times enterprise value to EBITDA. Investor positioning remains cautious, which, for once, might be the most rational stance in the room.