BlackRock sees lucrative opportunities emerging in the mining sector, in the days to come. The global investment management firm has urged investors to look out for more mergers and purchases in the sector, over the course of the coming year.
BlackRock stated that with commodity prices at levels higher than what most management teams had expected, there is a possibility of surplus cash being generated.
The manager of BlackRock World Mining Trust, Evy Hambro explained that the excess cash would possibly prompt companies to invest into readily available projects than indulge in capacity building.
Hambro detailed that figures for January show a sharp reduction in the prices for base metals and precious metals as against that the levels that existed in the end of 2009. Hambro believes that this reduction in prices have made the valuations more attractive, and created opportunities for market entry. He added that while the short term instability in the metals sector is expected to prevail, commodity selection and stock selection will continue to be the factors critical to optimising the opportunities offered by the sector.
