EV demand prompts T. Rowe to back Oz Minerals
T. Rowe Price believes mining firm Oz Minerals “ticks all our boxes” as it expects Australia’s commodities rally to continue in light of the trend for electrification and electric vehicles.
The share price of the minerals company had risen by 89% over one year to 27 January compared to losses of 1.6% by the ASX 200 and the company said it was one of the best contributors to performance for its Australian Equity fund.
The firm said there would be demand for copper and nickel as well as lithium thanks to the trend for electric vehicles as well as in batteries.
Last year, electric vehicle manufacturer Tesla became one of the most valuable companies in the world as its market cap passed $820 billion.
Tom Shelmerdine, investment analyst at T. Rowe Price, said: “Oz Minerals ticks all our boxes, its share price has been outperforming and it is aligned to copper and nickel which will be used in the electrification trend which we think is a key advantage for it.
“Located in Western Australia, we expect it to double its output to 300,000 tonnes by 2030. Oz Minerals is a rare investment proposition on a global level and that is yet to be fully appreciated in the share price.”
Describing the commodity needs as a “secular bull story”, the fund also held exposure to BHP which was the fund’s largest weighting at 9.5%.
The stock was also held by Aberdeen Standard Ex-20 Australian Equities, VanEck Vectors S&P ASX MidCap ETF and Vanguard MSCI Australian Small Companies Index ETF with the largest weighting being 3.9% in the Aberdeen Standard fund.
The T. Rowe Price Australian Equity fund lost 0.8% during 2020, according to FE Analytics, versus returns of 1.4% by its ASX 200 benchmark.
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Laura Dew
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