Market value of metals, mining companies dips 2.4% in July

The median market value of the largest metals and mining companies dipped by 2.4% through July, declining for a second consecutive month.

Nevertheless, market capitalizations for the largest 25 metals and mining companies stayed 40.5% above the year-ago value, according to an analysis by S&P Global Market Intelligence.

The cumulative market capitalization of the top 25 companies totaled $1.23 trillion at the end of July, moving up from a cumulative $1.16 trillion a month prior. Of the total market value, about 35.2% was held by three companies: BHP Group, Rio Tinto Group and Vale SA.

Market Intelligence analysts determined each company's ranking after converting values into U.S. dollars. Market capitalization percent changes were calculated using reported currencies.

Rare earths producer China Northern Rare Earth (Group) High-Tech Co. Ltd. recorded the largest market gain in terms of percent change among the selected companies, surging 130.4% month over month as of the end of July. The company's $26.69 billion market value catapulted it up the ranks among metals and mining companies to 17th from 50th year over year.

China Northern Rare Earth is the world's largest producer of light rare earths. The company booked a net profit of 832.6 million yuan for 2020 after achieving record production of certain products despite disruptions related to the pandemic.

A global push to transition away from fossil fuels and adopt clean energy technologies has increased demand for rare earth materials such as neodymium, which is needed to manufacture magnets used in wind turbines and electric vehicle motors. The International Energy Agency forecasts demand for rare earth elements could increase about 40% by 2040 if the world achieves the goals set out in the Paris Agreement on climate change. China refines approximately 90% of rare earth elements, according to the agency.

China-based lithium producer Ganfeng Lithium Co. Ltd. also recorded significant gains over the month, with its market capitalization surging 57.9%. Demand for lithium has been increasing, as the metal is used to produce several types of EV batteries. The IEA estimated global demand for lithium could increase nearly 90% within 20 years if Paris Agreement goals are achieved, while the London Metal Exchange recently launched a new lithium futures contract.

Market Intelligence analysts predict global passenger plug-in EV sales could reach 6.2 million units in 2021, more than doubling total sales in 2020.

"The focus on improving supply chain resilience for strategic or critical raw materials, such as lithium, cobalt, copper and rare earth, will support mining project progression and investment in those sectors," according to a July 14 metals and mining outlook published by Fitch Solutions.

Ganfeng Lithium has been on an acquisition blitz in 2021, having signed seven deals worth an aggregate US$933.8 million as of July 19. In one of its most recent moves, the company agreed to acquire Toronto-listed Millennial Lithium Corp. for about C$353 million.

Robust sales also led Ganfeng Lithium to revise its forecast for attributable net profit for the first half of 2021 to between 1.30 billion yuan and 1.60 billion yuan, increasing from a previous outlook ranging from 800.0 million yuan to 1.20 billion yuan.

Out of the 25 top companies assessed by Market Intelligence, five companies lost market value in the period: Vale, Newmont Corp., Grupo México SAB de CV, PJSC Polyus and Hindustan Zinc Ltd.

As of Aug. 11, US$1 was equivalent to 6.48 Chinese yuan.