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MARKET REPORT: Mining investors strike gold as dividends surge

Mining giants promised bumper payouts to investors after a surge in commodity prices that has fuelled talk of a new ‘supercycle’.

BHP will pay shareholders a record half-year dividend of 72p per share after a rally in iron ore prices helped profits rise 17 per cent to £7billion. It means that the world’s biggest miner and the largest firm on the FTSE 100, will hand out £3.7billion in total.

Glencore, too, pleased its backers by reinstating payouts with an 8.6p per share full-year dividend, worth £1.2billion, after it slashed debts built up last year when it poured money into its trading arm to take advantage of seesawing markets. 

Pay out: Mining giant BHP Billiton will pay shareholders a record half-year dividend of 72p per share after a rally in iron ore prices helped profits rise 17 per cent to £7bn

Savers, pensioners and retail investors will be celebrating the returns after a dividend-starved 2020, when companies went into Covid crisis mode.

The big miners could dish out about £13.5billion of dividends next year, according to AJ Bell’s investment director Russ Mould. The driving forces include booming demand in China and hopes of a major spending spree in the US under President Biden.

Analysts believe a post-Covid economic bounceback, low supplies and the push to invest in renewables could mean recent rallies are only the beginning of a new supercycle that will see commodities rocket in value.

Stock Watch – Safestore 

Revenues jumped 11 per cent to £44million at Safestore as more businesses and students put items into storage.

It had 6.9m square feet of storage available by the end of the quarter to January 31, and about 80 per cent of it in use.

It has 159 branches, which can keep documents and stock for companies as well as personal possessions. 

But Covid disruption has led to a surge in business and it is plotting to open more branches.

Shares in the FTSE 250 group rose 3.8 per cent, or 29.5p, to 810p.

Opinions are mixed on whether this will include oil but there is a consensus that metals will soar.

For example, copper – a key material for wind turbines and car batteries – has hit eight-year highs above $8,400 (£6,035) a ton.

Citigroup believes it could hit $10,000 (£7,184) ‘sooner rather than later’. And iron ore prices have leapt as China has frantically bought stocks of it to make steel.

All this to say: yesterday’s numbers are good, but the City hopes there is still far more to come.

BHP shares rose 1.5 per cent, or 32.5p, to 2260.5p last night, while Glencore added 2 per cent, or 5.7p, to 288p, while peers Antofagasta (up 2.8 per cent, or 44.5p, to 1636p) and Rio Tinto (up 1.2 per cent, or 74p, to 6260p) also rose. But it wasn’t enough to keep the indexes in the black.

The FTSE 100 fell 0.1 per cent, or 7.25 points, to 6748.86, while the FTSE 250 was almost flat, down 0.01 per cent, or 2.53 points, to 21,416.37.

There was another bounce for holiday stocks including British Airways-owner IAG, which rose 1.5 per cent, or 2.45p, to 162p and Tui, up 4.5 per cent, or 15.6p, to 361.6p.

But cruise operator Carnival lost ground for much of the day before finishing 0.3 per cent higher, climbing 4p, to 1367p, after it faced more delays for its tours around the Canary Islands.

Its Aida cruises, popular with German travellers, will cancel trips between March 6 and 19 after the German government extended its lockdown.

Elsewhere, the expansion of UK-listed gambling groups into the US continued apace as Playtech inked a deal with casino and sports betting group Greenwood Racing. 

Playtech products will be licensed to Greenwood companies, starting with the launch of an online casino in Michigan.

Mor Weizer, Playtech’s chief executive, described the partnership as a ‘major milestone’ for the gambling software group. Shares rose 0.9 per cent, or 4.5p, to 489.5p.

So far, 2021 is shaping up to be a float bonanza, with companies such as Virgin Wines among firms eyeing listings this week alone. But it was a mixed day for two joiners to the market yesterday.

Shares in mining company Cornish Metals rose 43 per cent, to 10p, from a subscription price of 7p. It follows growing excitement about the prospects of the county entering a new Poldark era of mining.

But investment trust Cordiant Digital Infrastructure was 99p, down from a start price of 100p.

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