* Miners could return more capital to shareholders
* Copper, iron ore producers tipped to make handsome returns
By Maytaal Angel and Clara Ferreira-Marques
LONDON, Oct 12 (Reuters) – Mining firms, already cutting
back after years of rising costs, could do more to tighten their
belts and should use the proceeds to increase payouts to
yield-hungry investors, BlackRock, the world’s largest fund
manager said on Friday.
As demand weakens, BHP Billiton, Rio Tinto
and others are reviewing tens of billions of dollars of new
projects and cutting back staff, from office workers to mine
engineers, particularly in high-cost regions like Australia.
Over years of cranking up production to catch high prices,
many investors complained that the need to increase volumes had
pushed companies into ever costlier projects, at the expense of
returning cash to shareholders through dividends and buybacks.
“The trends we are seeing in the industry are ones where
capital is being cut and costs are being cut, that’s obviously
going to free up cash flows,” said fund manager Evy Hambro,
BlackRock’s investment chief for natural resources and one of
the sector’s best known names.
“It’s a question of what the companies do with their cash
flows. We’re hoping that some of that cash flow comes back to
investors in the form of higher payouts.”
Hambro called for a better balance in capital allocation by
miners, which are traditionally keen to put money into new
projects and acquisitions, and only after that hand it back to
investors.
Continued…
