2016 saw a change of fortune for many ASX mining and energy companies. Cannings Purple’s Investor Insight team explain.
After a few years in what can politely be called the doldrums, 2016 saw a change of fortune for many ASX mining and energy companies.
The year started with a few nervous wobbles, with many MDs looking at share prices in late January and wondering if it could get any worse.
Thankfully, for most of the resources sector, the beginning of February saw the first green shoots that continued to grow throughout the year.
Over the course of the year, while the S&P/ASX200 index grew by 7.2%, the materials sector climbed by a whopping 39.1%.
At the big end of town, Resolute Mining was a stand-out performer with its share price up 420% for the year, Fortescue Metals Group rocketed up 215% and South32 ramped up by 160%. For companies with multi-billion dollar market caps, movements of this size are truly impressive.
The gains were not only restricted to the big end of town. Mineral sands miner, Base Resources, recorded a 363% gain for the year, with an even more impressive gain of 720% from the doldrums of late January 2016. Galaxy Resources climbed 357% during 2016 as it turned a fashionable lithium story into real production.
All of these gains came on the back of a pretty stellar turnaround in the price of a lot of commodities. Coking coal doubled in price, iron ore increased by 84% to US$80/t with other gains seen in zinc (up 112%), copper (up 25%), lead (up 23%) and nickel (up 18%).
The oil price increased by just over 50% during the period and while there were gains in the energy sector (average gains of 12.9% for the year), the share price gains haven’t jumped to the same degree as their hard rock cousins.
As we start another year, there will be a few more relieved MDs than this time last year, all hoping for further price gains for the year ahead.
