Commodities prices may stay high for decades as mining companies struggle to keep up with demand from the energy transition, according to BlackRock Inc.’s Evy Hambro.
Raw materials, and shares of some companies that produce them, hit record highs last year as massive global stimulus measures underpinned consumption.
At the same time, the switch toward a greener world is creating fresh demand for metals such as copper, lithium and nickel.
That trend’s unlikely to change anytime soon, Hambro, BlackRock’s global head of thematic and sector-based investing, told Bloomberg TV on Wednesday.
His bullish comments echo those of banks including Goldman Sachs Group Inc., which last week said 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.
Commodities such as coal, copper and lithium reached records in the past year, helping miners deliver huge profits and dividends. 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.”