Deutsche Bank’s latest Global Mining & Commodities Survey shows a shift in investor preferences, with gold taking center stage in the short term and remaining the favorite in the medium term.
While decarbonization remains a key driver of commodity demand, Deutsche Bank Research notes that concerns about a slowing Chinese economy are growing.
They explain that this has led to a decline in investor conviction about the impact of the energy transition and a growing preference for earlier cycle raw materials such as iron ore and coal.
Deutsche Bank believes that while investors remain the consensus long-term buyer choice, they are wary of potential delays in electric vehicle and renewable energy adoption, as well as the threat of substitution. As a result, they argue that gold has emerged as the metal of choice for the near future.
The research also points to a growing belief that supply constraints may ease, with 20% of respondents expecting there will be sufficient supply to meet future decarbonisation needs. In addition, 73% expect an increase in approvals for major projects for metals such as copper in the coming year.
Deutsche Bank says ESG remains a focus, with decarbonization efforts driving a more positive perception of the mining sector among some investors. However, local environmental challenges remain, with water stress, community relations and carbon emissions becoming increasingly important.
The report concludes with a forecast of continued M&A activity, with Anglo American (JO:) and Teck Resources (NYSE:) seen as potential takeover targets over the next three years.
