Mining Sector: Location is Irrelevant

Nothing makes the arbitrary separation of foreign/domestic or developed/emerging markets look more ridiculous than the mining sector. Amazingly, people still think this way. Bloomberg points out that emerging market mining shares sell for a 23% discount to US-based peers, despite much, much better fundamentals.

Olivier Eugene, a fund manager at AXA sums it up nicely:

"It is totally irrelevant to pick up a commodity producer because of its location," said Eugene, who owns shares of Vale and Russia’s OAO Novolipetsk Steel and doesn’t hold any steelmakers in the U.S. or Japan. ""Where the companies are listed and where they are headquartered is irrelevant."

Indeed.

Comments

[pansyed:]

I wonder if Mr Eugene has looked at companies operating in Africa and a number of Eastern European countries???? Maybe he should have a second look.

2008 Mar 10 11:00 AM

[iman:]

Look at South Africa, they are going to have power problems for the next 5 years. How about countries that nationalize assets? What a waste of an article.

2008 Mar 10 01:46 PM

[Golden Oxen:]

Tell it to the shareholders of Crystallex in Venezula or Apex Silver in Bolivia. A totally absurd article!

2008 Mar 10 08:00 PM