Mining's $1.4 Trillion Plunge Like Losing Apple, Google, Exxonby and
Value of stocks in 80-member mining index dropped since 2011
Shares have plunged as investors spooked by China's slowdown
The $1.4 trillion lost in global mining stocks since 2011 exceeds the total market value of Apple Inc., Exxon Mobil Corp. and Google’s parent Alphabet Inc.
When you’ve spent a decade building new mines from the Andean mountains to the West African jungle, it’s bad news when a downturn in China, your biggest customer, shows no signs of stopping. Investors have been unforgiving and concerns that it will only get worse pushed the Bloomberg World Mining Index to an 11-year low.
“It’s terrible, there are no two ways about it,” said Paul Gait, a mining analyst at Sanford C. Bernstein Ltd. in London. “A lot of people were hoping at the start of 2016 to see at least some stabilization in the commodity performance in these stocks. Essentially people were looking to close the consensus short that has characterized 2015. This has clearly not happened.”
BHP Billiton Ltd. and Rio Tinto Group were once among the world’s largest companies. Shares of the biggest commodity producers trading in London are now at least twice as volatile as the U.K.’s benchmark stock index.
Raw-material prices slipped to the lowest since 1999 on Thursday, with China’s stock market suffering its worst start to the year in two decades after the central bank cut the yuan’s reference rate by the most since August. A weaker currency encourages exports from the nation and makes it costlier for it to import commodities, hurting those that supply them.
Anglo American Plc, worth almost 50 billion pounds ($73 billion) in 2008, is now valued at 3.1 billion pounds. The 99-year-old company, which is the world’s biggest diamond and platinum producer and owns some of the best copper and coal mines, is now worth less than mid-tier Randgold Resources Ltd. and copper miner Antofagasta Plc.
Apple, the world’s most valuable company, is worth about $549 billion. Alphabet is valued at $510 billion and Exxon $321 billion.
The Bloomberg mining index of 80 stocks slumped as much as 4.1 percent on Thursday to the lowest since 2004. Anglo closed down 11 percent in London to the lowest since it started trading in 1999. BHP tumbled 5 percent and Rio retreated 3.4 percent. Glencore Plc settled down 8.3 percent.
China’s economy is set to expand 6.5 percent this year, the slowest pace in more than two decades, according to economists surveyed by Bloomberg. They expect growth to weaken through 2017.