Bernstein Mining Valuation Book: What's Mispriced in the Current Chaos? Three Ideas
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Bernstein updated its mining valuation handbook, emphasizing that commodity selection remains the primary driver of mining returns, followed closely by valuation. The mining sector has outperformed the broader market year-to-date, driven by dual tailwinds of EBITDA upgrades and multiple expansion. However, surging industrial metal inventories, with copper stocks tripling and aluminum nearly doubling over the past nine months, raise concerns that current high prices could trigger demand destruction and supply growth.
The report identifies three specific trading ideas amid current market dislocations. First, Vale (VALE) appears overvalued, rising 20% over the past three months while iron ore declined 6%, largely benefiting from emerging market inflows rather than fundamental strength.
Second, Barrick Mining (ABX) trades at a 1.4x discount to Newmont (NEM) despite offering higher projected EBITDA margins and stronger four-year production growth, presenting a compelling relative value opportunity.
Third, Glencore (GLEN) stands to benefit from thermal coal prices, which have risen approximately 14% due to geopolitical tensions pushing LNG prices higher. Glencore's FY27 thermal coal production of roughly 100 million tons implies about $1.6 billion in incremental free cash flow.
Bernstein maintains Outperform ratings on Barrick (target $62.50), Newmont (target $157.00), and Rio Tinto (target $77.00), while assigning Market Perform ratings to Anglo American, Antofagasta, BHP, Boliden, Freeport-McMoRan, Glencore, and Vale.