Mining is as important today as it was at the dawn of civilization. Our modern lifestyle depends on commodities extracted from the earth’s crust, whether that is the hydrocarbons that go into the plastics that are found in the consumer items that surround us, the copper in the wires that carry around electricity, or the plethora of metals and minerals that go into our computers, ‘phones and cars.
The BlackRock World Mining Trust [LON:BRWM] is an investment trust that seeks to profit from society’s insatiable appetite for metals and minerals. The trust’s investment policy is to provide a diversified investment in mining and metal securities worldwide. The fund’s managers have the flexibility to invest not only in the quoted securities of mining companies but can also invest in royalties derived from the production of metals and minerals as well as physical metals. The fund has an allocation of up to 10% of gross assets in physical metals and up to 20% in unquoted investments.
- Minerals & Financial Investments: flexibility to take advantage of global trends
- Ormonde offers high-potential mining
- Corcel focusing on high-potential O&G assets
The trust is managed by Evy Hambro and Olivia Markham. Hambro has been with BlackRock since 1994 and saw the fund management firm evolve from Mercury Asset Management, through its Merrill Lynch days and was still incumbent when the firm was acquired by BlackRock in 2006. Markham has been part of BlackRock since 2011 and is a member of the Natural Resources team. Prior to BlackRock, she was head of the European Mining team at UBS and was part of BHP Biliton’s M&A team.
Performance
The fund had GBP1.3bn assets under management and is referenced against the MSCI ACWI Metals and Mining 30% Buffer 10/40 Index, is sterling-denominated and is a closed-ended investment company. Launched in December 1993, the trust has (to the end of May in terms of NAV) beaten the reference benchmark over five years on a cumulative basis by 24.4 percentage points to return 67.7%. The fund also outperformed the reference benchmark over three years by 22 percentage points, to return 72.6% on a cumulative basis. However, over one-year the fund underperformed the reference benchmark by 1.5 percentage points to return -12.2%.
On an annual basis, to the end of 1Q23 the share price outperformed the reference benchmark (Net Total Return) four-out-of-five years running, only falling behind in 2018/19, when the fund returned 4% and the reference benchmark returned 5%. The fund’s best year in the last five years was 2020/21, when the fund returned 122.1% and the reference benchmark returned 74.1%
At the end of May the trust had a diversified holding in terms of geography and commodity, investing 64.1% of assets in big, global miners and that were multi-commodity (34% of assets). On a discrete basis the next biggest geographical location was Australasia at 10.8% and copper at 21.6% of assets.
The Top Five Holdings of BlackRock World Mining Trust (as at end of May 2023) were:
| Company | Location | % Holding |
| Vale [NYSE:VALE] | Brazil | 8.9% |
| BHP [LON:BHP] | Australia | 8.3% |
| Glencore LON:GLEN | Switzerland | 7.4% |
| Teck Resources [NYSE:TECK] | Canada | 4.3% |
| Freeport-McMoRan NYSE:FCX | US | 3.5% |
Source: BlackRock
Hambro noted that the global economic slowdown would affect the mining sector in the same way that it would affect the rest of the economy. He said in a letter to clients: “We do not expect the mining sector to be immune to deteriorating global economic growth.”
China growth
Although he did sound a note of caution – especially as the slowdown has most-affected developed markets – he was optimistic about the short-to-medium-term given China’s strong emergence from lockdown and Covid-19 restrictions.
Hambro also noted that mining companies were light on inventory, and following the Coronavirus pandemic the sector was under-invested. That said, Hambro believed: “Mining companies are in an excellent financial position, in our view, with high levels of free cash flow, rock-solid balance sheets and a continued focus on returning capital to shareholders.”Longer-term, Hambro’s prognosis for the sector was bright. The energy transition from hydrocarbons to renewables had mining at front and centre, given the importance of mined materials in wind turbines, solar panels and electric batteries.
The investment trust’s shares closed trading on 18th June at 613p. The BlackRock World Mining Trust has offered a -12.6% year-to-date return, a 9.9% one-year return with its shares ranging between 538p and 775p over a 52-week period.
The trust’s ongoing charges, including any performance fee is 0.95% and BlackRock receives an annual management fee of 0.8% of the fund’s net assets. However, in the event that the NAV per share increases on a quarter-on-quarter basis, the fee will be paid on gross assets for the quarter.
