Liberum has taken the red pen to big mining even though the broker believes that 2022 could be the year for mergers and acquisitions in the industry
Anglo American has been downgraded to 'hold', while Rio Tinto and Antofagasta are now a 'sell'.
The broker’s overarching view is that the US Fed’s next rate hike cycle will undermine demand for no-yield commodities, China’s previously intense commodity use will wane and upcoming reports and statements that will highlight the inflation risk.
Value still exists among some smaller miners such as Shanta and Gemfields, while Glencore among the majors might be a target for potential mergers and acquisitions (M&A) this year and they keep their buy status.
Robust balance sheets, declining commodity prices giving the power to the buying company and the alternative growth strategies offered by a merger or takeover are some of the reasons given as to why 2022 could be the year of buyouts in the mining industry adds Liberum.