UBS Mining Strategy: Mining Sector Impacts from Iran Conflict
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UBS assesses the short-term impact of the Iran conflict on the mining sector through higher energy prices, a stronger US dollar, and reduced risk appetite.
Gold remains the primary beneficiary as safe-haven demand offsets dollar strength, with prices near historic highs. UBS prefers gold equities including Newmont, Barrick Gold, AngloGold, Endeavour Mining, SSR Mining, and Franco-Nevada, noting that rising energy costs (5-20% of unit costs) should be absorbed by revenue growth.
Industrial metals maintain a neutral stance given minimal direct exposure to Middle East and North Africa demand (under 5%). However, prolonged conflict could negatively impact global economic growth. Aluminum faces potential supply disruptions, as the Middle East accounts for 9% of global primary aluminum supply. Copper faces headwinds from economic uncertainty and dollar strength.
Thermal coal benefits directly from rising global natural gas prices. UBS favors Glencore, Peabody Energy, and Core Natural Resources. The steel sector remains more influenced by regional demand trends and protectionist trade policies than the conflict itself, though rising defense spending could offer partial support for stocks like SSAB.
For industrial mining stocks, UBS prefers liquid, lower-risk majors such as BHP, Antofagasta, Southern Copper, and Rio Tinto. Top picks include Anglo American and Freeport-McMoRan for copper exposure.