News

April 15, 2008

Big Mining Companies Seeking London Listings Are A Strong Indication Of High Demand For Metals For Many Years To Come

By Charles Wyatt

We have had a spate of big Kazakh mining companies listing in London, and now we have Fresnillo from Mexico and New World Resources from Slovakia. Both these companies are worth well over £5 billion so they could qualify for the FTSE 100 Index. If that proves to be the case the number of mining companies in it would rise to eleven and the mining sector would amount to close to 20 per cent of the total value of the Index. Quite a change from the days in the 1990s when the Financial Times decided that mining, and commodities in general for that matter, weren’t its bag, and decided to reduce its coverage from small to minimalist. The thinking, which has certainly not changed under the last three editors, was that the production of basic raw materials comes in below the FT’s radar screen, while gold is anathema to any intelligent investor.

The banking system, which the FT’s economics-oriented journalists worshipped, is in shreds, but the cynicism towards commodities lingers on. The most likely response at Number One Southwark Bridge to any comment about the growing importance of the mining sector to London would be a negative statement to the effect that the cycle will not last much longer and these companies that have recently secured listings are trying to get hold of funds before metal prices start to fall back. Ask Jaime...