Can gold and copper miners rally? Five stocks to watch in 2023
12:46, 6 January 2023
Mining stocks, especially gold and copper miners saw quite an average year in 2022, plagued by inflation, Fed rate hikes and falling commodity prices mainly. Several copper miners in Australia as well as South America also faced adverse weather conditions such as droughts and extreme floods, which have severely affected production in the last few months.
This has led to several miners lowering their production and revenue guidance and expectations for the last two quarters of 2022, as well as for the whole of 2023. Gold and silver miners have also been severely impacted in 2022 due to the rising interest rates announced by major central banks such as the US Federal Reserve, as well as the Bank of England and the European Central Bank. On the other hand, copper miners have suffered considerably due to slowing economic growth.
In 2023, miners are likely to see a number of encouraging signs. These include slow but tentative reopening measures in China, as the country has already reduced mass testing requirements and is resisting bringing back lockdowns despite rising COVID-19 cases.
Furthermore, a weaker US dollar (DXY) as well as speculations of the US Federal Reserve finally slowing down its aggressive monetary tightening policy in the coming months are also likely to keep supporting mining stock prices. However, the risk of sticky inflation could also mean further monetary policy tightening, if inflation does not come under control fast enough.
In addition to that, if the number of COVID-19 cases in China rises to an unmanageable number, China may be forced to delay reopening measures and bring back some restrictions. Furthermore, concerns of a mild global recession also abound, which could further hamper mining stocks.
Here are 5 miners to watch in 2023:
1. Newmont Corporation (NEM)
Newmont Corporation, based in Colorado, United States, is the largest gold miner in the world, with mines across Mexico, Ontario, Australia, Quebec, Ghana, Dominican Republic and much more. Although its key metal mined is gold, it also produces reasonable amounts of silver, zinc, copper and lead.
The company has had some ups and downs in 2022, with its share price up about 14.7% at the end of Q2 2022. However, looking at the yearly performance for 2022, shares have been down almost 16%.
In the first week of 2023, however, things are starting to look brighter with NEM inching up about 7.6%. This is likely due to increasing gold prices as the US Federal Reserve opted for a 50 basis points hike in December, a notch down from previous hikes.
Investors are hopeful that this rally may continue further as Newmont was recently named the top miner in the 2022 Dow Jones Sustainability World Index in this report. However, concerns have been raised about its high dividends, with a number of investors feeling that this may not be sustainable in the long run and the company would do better by reinvesting profits more.
Newmont Corporation (NEM) shares have inched up about 7.6% in the first week of 2023
Newmont Corporation shares have inched up about 7.6% in the first week of 2023 – Credit: TradingView
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2. Barrick Gold (ABX)
Barrick Gold is another major gold miner, headquartered in Toronto, Canada, with gold and copper as its main mining products. The company has mines across 13 countries, including Pakistan, Mongolia, Tanzania, United States, Democratic Republic of Congo and more.
Barrick Gold has also seen a turbulent year in 2022, especially in the last two quarters, with share prices dropping more than 17% in the third quarter of the year. However, in the fourth quarter of the year, shares stabilized somewhat, increasing about 15%.
In the first week of 2023 also, Barrick Gold did quite well, with shares rising about 8%. This year, the company has big plans to look for more mineral deposits in southeast Asia, between Pakistan and Papua New Guinea, with a special focus on Indonesia for gold and copper deposits.
However, there have also been concerns about possible human rights violations in Tanzania, in the north Mara area, as well as prolonged complications with their Reko Diq project in Pakistan, which could continue to throw up obstacles in the coming months as well.
Barrick Gold (ABX)'s share price edged up about 8% in the first week of 2023
Barrick Gold's share price inched up about 8% in the first week of 2023 – Credit: TradingView
Pan American Silver (PAAS)
Pan American Silver is primarily a silver miner, however also produces small amounts of zinc, gold, copper and lead. It is headquartered in Canada, with mines across Peru, Mexico, Bolivia and Argentina.
Pan American Silver did not have a very good year in 2022, no doubt due to falling silver prices as China faced multiple extended zero-COVID-19 lockdowns, impacting silver’s demand from both jewellery and industrial uses.
As a result, the company’s shares dropped about 23.7% in the third quarter of 2022, however, steadied a little in the fourth quarter, inching up about 8.1%.
In the first week of 2023, the company gained about 2.9%. Lately, Pan American Silver is in talks to purchase a number of Yamana Gold shares, as well as a few of its subsidiaries, which investors are hopeful will take the company’s interests further this year.
Pan American Silver (PAAS) shares inched up about 2.9% in the first week of 2023
Pan American Silver's shares edged up almost 3% in the first week of 2023 – Credit: TradingView
Rio Tinto (RIOgb)
Rio Tinto is an Anglo-Australian copper and iron ore miner, headquartered in London, with major operations in Western Australia. The company also produces reasonable amounts of aluminium and certain minerals, with operations in Iceland, Madagascar, Mongolia and more.
In the third quarter of last year, Rio Tinto’s shares dropped about 12%. However, in the last quarter of 2022, shares bounced back over 32%, as iron ore prices improved tremendously since the end of November 2022.
In the first week of 2023, the company’s shares inched up about 0.9%. This year, Rio Tinto plans to focus more on developing the massive Simandou iron ore mine in Guinea, in partnership with China Baowu Group.
However, the company is still dealing with repercussions from a number of employee sexual harassment claims that rocked the industry a few months back. Furthermore, if copper prices weaken further in the coming months due to the possibility of a mild recession, Rio Tinto shares may suffer a little.
Rio Tinto (RIOgb)'s shares inched up about 0.9% in the first week of 2023
Rio Tinto's shares edged up about 0.9% in the first week of 2023 – Credit: TradingView
Anglo American (AALI)
Anglo American is another major copper miner headquartered in London, also producing platinum, diamonds, iron ore and more. It has operations in South Africa, North America, Australia and more.
In the third quarter of 2022, the company’s shares dipped about 14%, however, in the last quarter of the year they surged more than 19%. In the first week of 2023, however, Anglo American’s shares rose about 4.3%.
Recently, Sanford C. Bernstein downgraded Anglo American’s rating to market performance. This year, the company will also be focusing on how to improve water use and efficiency in Chile and other parts of Latin America which have already been hit by severe droughts over the last year. This is expected to go a long way in improving their production capacity in the next year.
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