Contents
A view towards renewed growth prospects 2
With the prospect of renewed growth activity from Central and Western China, and
with increased ODI from China, we are positive on the mining outlook into 2011.
Our commodity price upgrades and earnings upgrades are big. Rio, Xstrata and
Vedanta remain in focus.
2
Raising base and bulk profiles 3
We raise our base and bulk metals price forecasts through 2012 after a sustained
price recovery over the past six months and on improving demand fundamentals.
We also raise our long-term price assumptions.
3
China this time around 4
We think the outlook for the mining sector remains positive, on the prospect of
renewed growth activity from Central and Western China, continued focus on the
manufacturing sector and our expectation of significant ODI from China in coming
years.
4
A broadening growth profile 4
FDI sector efficiency focuses strongly on manufacturing 8
Sovereign wealth growth should boost mining ODI 10
FX a key focus this time around 13
Earnings upgrades of c45% through 2011F 16
With a nearly 50% mark-to-market upgrade to copper price in 3Q09, we make
significant upgrades to our commodity price profiles, excluding aluminium. Cost
support in the recent downturn has also led us to upgrade our longer-term price
forecasts.
16
Revised commodity price profile 16
EPS forecasts up by 45% on average through FY09-11F 20
Valuation changes 21
Valuation upgrades are significant as we push through commodity price upgrades
and focus on top-half-of-the-cycle valuations. Spot valuations are not cheap, but the
prospect for higher prices in the next year has us shifting back to Buy for several
stocks.
21
Company profiles 23
Anglo American 23
Antofagasta 31
BHP Billiton Plc 39
ENRC 47
Rio Tinto Plc 55
Vedanta Resources 76
Xstrata 88