CIBC Fears Base Metal Miners to Take a Earnings Hit

SEATTLE (Scrap Monster): CIBC Capital Markets warns that base metal miners are feared to take a earnings hit during the initial quarter of the current year, despite higher commodity prices. This is mainly on account of the ongoing volatility in prices triggered by the recent geo-political events.

In the research note, Bryce Adams, Mining Analyst at CIBC said that the reduced earnings projection is mainly due to the economic sanctions imposed by the rest of the world, especially the West, following that country’s invasion of Ukraine. Accordingly, he foresees a dip of around 14% in average quarterly EBITDA.

The report says that Russia is a big player and that other countries may not be able to easily fill the gap. The disruption of supply chains on account of the war may likely dampen consumption of many base metals. Consequently, the impact on base metal earnings could be significant.

However, Adams sees some positivity within the sector, particularly for copper, as well as metallurgical coal, and uranium. Some copper companies are likely to witness continued growth this year. CIBC foresees 17% surge in average cash costs per pound, with copper prices up by almost 3% over the prior quarter. It must be noted that the uranium market has been gaining strength before the Russia-Ukraine war.

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