Photographer: Ian Waldie/Bloomberg

Biggest Miners Not Blue Chips Anymore as Volatility Whips Stocks

  • Anglo American is most volatile stock in the Stoxx Europe 600
  • “It beggars belief,” said Des Kilalea, analyst at RBC

They’re some of the world’s biggest mining companies with operations spanning the globe, thousands of employees and decades of history. In the market, they’re being whipped around like the latest speculative hot stock.

Anglo American Plc has become the most volatile stock in the Stoxx Europe 600 Index. Shares of the 99-year-old company surged 14 percent on Thursday, and the gain was mostly wiped out the following day. Glencore Plc recently had weekly moves exceeding 10 percent. Even BHP Billiton Plc, the largest mining company, is seeing bigger swings than anytime since 2009.

“It beggars belief,” said Des Kilalea, an analyst at RBC Capital Markets in London. “There aren’t many natural buyers of the stocks. It’s been left to people with a more trading bent.”

Most of the volatility is coming in the form of bigger losses for mining companies after the selloff was reawakened by fresh evidence of China’s slowing economy and deepening crude oil losses. The commodity collapse has left many firms in the industry trading at all-time lows, putting them in the realm of penny stocks.

Just this year, Anglo American, Glencore and BHP have all plunged at least 19 percent. The Bloomberg Commodity Index, a measure of returns for 22 raw materials, is at the lowest since at least 1991.

Mining companies are scaling back their businesses to survive in an era of lower metal prices. Glencore and Anglo have scrapped their dividends and sold assets.

BHP said on Friday it expects to take a writedown of $4.9 billion on the value of its U.S. shale assets due to the tumble in oil prices. A measure of the company’s 100-day volatility recently hit 50.6, the highest in six years, according to data compiled by Bloomberg.

“There isn’t a sector of the mining industry that isn’t struggling,” said Kilalea. “There are just so many things weighing on the industry.”

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