Commodity prices may be high for decades, says BlackRock’s Hambro

Evy Hambro, Blackrock

INVESTORS were not yet fully aware of the importance of mining companies to global decarbonisation which may see commodity prices remain high for decades, said Bloomberg News citing BlackRock’s Evy Hambro.

“We’ve got decades worth of high rates of investment into infrastructure as the world seeks to decarbonise. That’s a widely held consensual view,” said Hambro who is BlackRock’s global head of thematic and sector-based investing. “What we’re likely to see is strong demand that will keep prices at very very good levels for the producers for many years into the future, and that could be decades,” he said in an interview with Bloomberg TV.

Commodities such as coal, copper and lithium reached records in the past year, helping miners deliver huge profits and dividends, said Bloomberg News.

Yet Hambro still sees the mining sector as remaining undervalued, given its importance in providing the materials needed to decarbonize the global economy. “It seems as though this core element of the transition has been completely ignored by many investors,” Hambro said. “At some point people will realize how essential these businesses are for the transition and capital will flow into them, and that should change the valuations.”

Goldman Sachs said last week that a commodities supercycle has the potential to last for a decade. While infrastructure spending will require large amounts of materials like steel and cement, the green revolution will also need more metals including cobalt and nickel for products like batteries, it said.