Despite the dire warnings of economic downturn that followed Brexit, the UK mining industry appears to be growing, according to recent data.
The value of seven UK mining companies has doubled since the end of 2015. One company, Anglo American, illustrates the turnaround well. Last year Anglo American was on the verge of dropping off the FTSE 100, but the “dramatic turnaround in the industry” in recent months has seen the diversified mining group recover significantly.
The slowing of economic growth in China and the fall in commodity prices had been badly affecting mining companies, but one recent development appears to have given the sector a boost. Because mining firms don’t make their profits in sterling, they have benefited from the persistently weakening post-Brexit pound.
According to RBC Capital Markets, the weak pound has definitely helped the industry. Many UK investors have been looking to companies that earn in dollars, and mining companies are among the beneficiaries of this investment trend.
Precious metal prices rising
As investors increasingly switch to commodities in the search for a safe financial haven, precious metal prices have continued to rise, and many mining companies have indicated that they will increase dividend payments this year, in a further encouragement to investors.
The London Stock Exchange is the home of many of the biggest diversified mining houses, including BHP, Rio Tinto, and Glencore, and according to industry experts, it is likely that UK mining will remain at the heart of this resurgence.
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