Interactive Investor

My favourite FTSE 100 mining stock for 2022

29th December 2021 16:46

Lee Wild from interactive investor

After getting his large-cap mining tip right yet again in 2021, we asked broker SP Angel’s mining analyst John Meyer to give us his tip for the year ahead. He believes this high-flier will report phenomenal results in 2022.

Lee Wild, Head of Equity Strategy, interactive investor: Hello. With me today I’m lucky to have John Meyer, mining analyst at broker SP Angel. Every year, we ask you to pick your favourite large cap miner for the year ahead, and you’ve picked the top stock for the past two years.  Now, 12 months ago, you went for Glencore (LSE:GLEN). Well, I’m pleased to say that Glencore outperformed the other London-listed miners by miles.  At the time of writing, it’s up 85% in one year. Next best is Anglo American (LSE:AAL) – up a more modest 33%. Now, you also liked Antofagasta (LSE:ANTO), which is up 29%, but we’re all eager to know which one you think would do better than the rest in 2022.

John Meyer, mining analyst at broker SP Angel: I still like Antofagasta. It’s a good stock and it’s the purest copper play in the London market, but it’s pretty well-valued, if you see what I mean. The stock I would go for this year is Glencore again. And the reason for that is that Glencore has the better mix of battery-style metals than the other companies. Rio Tinto (LSE:RIO) and BHP (LSE:BHP) are still making lots of money out of their iron ore businesses, but iron ore prices have more than halved since their peak a few months ago. Yes, they’re earning billions of dollars out of those businesses, but I just think the market is going to start to write them down a bit as iron ore prices continue to fall.

Now, we’ve still got an issue of coal within some of these mining businesses. Rio’s and others have jettisoned certain carbon businesses that they don’t want to carry anymore. Anglo American recently got rid of their coal business as well. But I think the critical thing here is that Glencore, at least half of their business, is their trading business. And this has been a fantastic environment for trading companies to operate in, and I think Glencore are going to report extraordinary earnings out of the trading part of their business. Never mind the high-level earnings coming out of the industrial mining business that they run, but I think the trading business is going to see phenomenal results.

Lee: John Meyer at SP Angel, thanks very much for joining me today.

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