Institutional investors upped share in major miners in 2023 as metal prices fell

Institutional investors increased their holdings in 10 of the world's biggest miners by 710 million shares in 2023, a period of high volatility for industrial metals markets, an analysis of S&P Global Market Intelligence data shows.

Their holdings in the 10 miners increased by an average of 2.1% during the year.

Newmont Corp. had the largest percentage increase in total shares owned by institutional investors in 2023, rising 20.9% despite its share price falling 12.3% during the year. Global asset managers Vanguard Group Inc., BlackRock Inc. and Van Eck Associates Corp. all took large chunks in Newmont, which increased its lead as the world's biggest gold producer and increased its copper output by acquiring Newcrest Mining Ltd. during the year.

The S&P GSCI Industrial Metals Index largely reflected lower nickel, lithium, zinc, lead, cobalt and aluminum alloy prices during 2023, while soaring gold prices were reflected in the S&P GSCI Precious Metals Index's positive performance over the year.

"It makes sense that the cleverer people would be buying at the lows, while the weak-willed people are selling at the lows. Those big institutions have a lot of firepower," Barry Dawes, executive chairman of mining research firm Martin Place Securities, told S&P Global Commodity Insights.

'Attractive in times of uncertainty'

Southern Copper Corp. enjoyed the biggest positive change in the value of institutional investor ownership, up $19 million, having lifted copper production in 2023 after output had fallen for two consecutive years.

"The ~5% dividend yield makes it relatively attractive, especially in times of uncertainty," Timna Tanners, managing director of equity research at New York-based Wolfe Research LLC, said in an email interview regarding Southern Copper's ability to lure institutional investors.

CFRA Equity Research likes Southern Copper's "best-in-class cost profile and EBITDA margin," which provides "strong justification" for the miner historically trading at a significant premium to its peers, according to a March 2 note. Still, it cautioned that heightened geopolitical risk in Peru could hurt growth.

The London Metal Exchange copper cash price ended a very volatile 2023 up over a year prior, and CFRA believes that an "appreciation in the copper price is highly likely in the short to medium term and is a potential positive catalyst" for Southern Copper.

Inflows among volatility

Fortescue Ltd. had the biggest decline in the value of institutional investor holdings on its share registry, down $12.1 million in 2023 despite its Australian share price soaring by over 41% during the year. This was despite being heavily leveraged to the iron ore price, which rose through 2023 amid record imports by China.

BHP Group Ltd. had the largest net decrease in number of shares held by institutional investors at 63.7 million shares. Rio Tinto Group, Freeport-McMoRan Inc., Saudi Arabian Mining Company (Ma'aden) and Vale SA also saw lower net shares in 2023.

Swiss trading house Glencore PLC had the largest influx of shares held by institutional investors, 520.5 million shares, for an 8.7% increase in total ownership, according to the analysis. The company is now refocusing its metals business on "long-life, low-cost copper units" on prospects of strong margins, CEO Gary Nagle told a Feb. 21 analyst call.

Institutional investors increased net holdings in China's Zijin Mining Group Co. Ltd. by 220.9 million shares for a 1.5% increase in total ownership, according to the data.

Zijin posted the largest year-over-year growth in zinc production by volume and the biggest increase in gold production by volume in the fourth quarter of 2023, according to an analysis of Market Intelligence data.