BlackRock World Mining Trust discloses heavy exposure to Rio Tinto

The BlackRock World Mining Trust has published a portfolio update disclosing heavy exposure to the Anglo Australian mining group Rio Tinto.

The BlackRock World Mining Trust has published a portfolio update disclosing heavy exposure to the Anglo Australian mining group Rio Tinto.

The Trust, which reported that the portfolio had a net asset value (NAV) undiluted for one year of -15.1%, stood by its holding in the company saying that the mining sector had the potential to deliver strong returns over the medium term.

Over three years, the NAV of the BlackRock World mining Trust was 16.6% and over five years it was -1.7%.

A breakdown of the portfolio showed a heavy weighting towards the diversified mining sector, with this accounting for 39.2% of total assets followed by base metals, which accounted for 20.3% and industrial minerals, which represented 10.4% of total assets.

The portfolio's largest investment was Rio Tinto, with shares in the company accounting for 10.2% of total assets, followed by BHP Billiton, accounting for 9.0%.

Rio Tinto posted a net loss of $3.0bn in the year to December today, down from a net profit of $5.8bn a year ago.

View on Rio Tinto holding: ComfortableCommenting on the markets, Evy Hambro, representing the Investment Manager, said: "2013 began with both global equities and mining equities rising as improving economic data and the averted fiscal cliff provided momentum to the market.

"While global equities continued their upward trajectory, mining equities paused slightly before weakening at the end of the month as the market took profits following their strong run since the market low in September."

Commenting on the mining sector, he said: "Mining companies provided a number of updates in January, Rio Tinto announced $14bn of write downs from their acquisitions of Riversdale and Alcan. These were combined with the news that Tom Albanese would be replaced with Sam Walsh, who was previously head of the iron ore division as Chief Executive Officer.

"While this news initially appeared to concern the market, we remain comfortable with our holding as the write downs reflect poor investments made in the past which the market has already largely taken into account and the new CEO has been a long standing member of the management team at Rio Tinto."

Describing the outlook and strategy going forward, Hambro added: "Mining company valuations continue to trade below historical averages and there is in our view the potential for strong returns over the medium term. We remain focused on companies with balance sheet strength and high asset quality as we believe these factors will be key differentiators.

"In addition, the market is becoming increasingly discerning about capital allocation by mining managements. Companies must show themselves to be highly disciplined in their approach to costs and management of their assets."

The BlackRock World Mining Trust's share price was down 1.31% to 604p at 14:00 on Thursday.

MF

Recommended

Which assets will benefit as the “jam tomorrow” bubble pops?
Investment strategy

Which assets will benefit as the “jam tomorrow” bubble pops?

With tech stocks, cryptocurrencies and many other “long duration” investments crashing hard, the “jam tomorrow” bubble looks to be bursting. John Step…
24 Jan 2022
Three innovative Asian stocks to buy now
Share tips

Three innovative Asian stocks to buy now

Professional investor Fay Ren of the Cerno Pacific Fund highlights three of her favourite Asian stocks to buy now
24 Jan 2022
Share tips of the week – 21 January
Share tips

Share tips of the week – 21 January

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
21 Jan 2022
Seven cheap defence stocks to buy now
Share tips

Seven cheap defence stocks to buy now

We’ve got used to a world without war between major powers, but that era is coming to an end as Russia threatens Ukraine and China eyes Taiwan. Buy de…
21 Jan 2022

Most Popular

Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Three innovative Asian stocks to buy now
Share tips

Three innovative Asian stocks to buy now

Professional investor Fay Ren of the Cerno Pacific Fund highlights three of her favourite Asian stocks to buy now
24 Jan 2022
Temple Bar’s Ian Lance and Nick Purves: the essence of value investing
Investment strategy

Temple Bar’s Ian Lance and Nick Purves: the essence of value investing

Ian Lance and Nick Purves of the Temple Bar investment trust explain the essence of “value investing” – buying something for less than its intrinsic v…
14 Jan 2022