BlackRock-managed Global Mining Investments Ltd is keeping BHP Billiton and Rio Tinto among its top stock picks despite a new Australian mining tax, GMI's top executive said on May 03. "It won't lead us to re-adjust our holdings," GMI Chairman John Robinson told Reuters. "We take a commodity view and then we look within these commodity sectors for the best option."
BlackRock manages the world's largest mining mutual fund with about $30 billion invested in international stocks. GMI holds about 9.5 percent of its portfolio in BHP shares and 9 percent in Rio shares. Last year it beat the HSBC Global Mining Index benchmark by 7.8 percent.
Its No. 1 investment is in diversified Brazilian miner Vale, which makes up 10.7 percent of its portfolio.
BHP and Rio stock fell 2.7 percent and 3.2 percent, respectively on May 03, matching declines in most Australian mining shares after the government slapped a 40 percent tax on mining profits, sparking fears of an investor exodus from the resources sector.
"We've long had a view that the bulk commodity sector is where we should focusing our attention," Robinson said. "So that reflects a commodity view rather than a country-specific view."
Prices for bulk commodities, which include iron ore and coking coal, have soared thanks to demand from China's modern-day industrial revolution and recoveries in other economies which have left mining companies racing to keep up with demand. Iron ore has more than doubled in price this year, while coking cost is up by more than half.
Rio and BHP this year expect to produce a total of 360 million tonnes of iron ore alone in Australia and hope to merge operations to streamline operations. Both companies also separately hold investments in bauxite mining, aluminium making and other projects in Australia.