Deutsche Bank's latest Global Mining & Commodities Survey reveals a shift in investor preferences, with gold taking center stage in the short term and copper remaining a favorite for the medium term.
While decarbonization remains a key driver for commodity demand, Deutsche Bank Research notes concerns about a slowing Chinese economy are rising.
They explain that this has led to a decrease in investor conviction for the energy transition's impact and a growing preference for earlier cycle commodities like iron ore and coal.
Deutsche Bank feels that despite remaining the consensus long-term pick for copper, investors are wary of potential slowdowns in electric vehicle and renewable energy adoption, and the threat of substitution. As a result, they state that gold has emerged as the preferred metal for the near future.
The survey also highlights a growing belief that supply constraints may be easing, with 20% of respondents anticipating sufficient supply to meet future decarbonization needs. Additionally, 73% are said to expect an increase in major project approvals for metals like copper in the next year.
Deutsche Bank says ESG remains a focus, with decarbonization efforts driving a more positive perception of the mining sector for some investors. However, local environmental concerns persist, with water stress, community relations, and carbon emissions gaining importance.
The report concludes with a prediction of continued M&A activity, with Anglo American (JO:AGLJ) and Teck Resources (NYSE:TECK) seen as potential takeover targets in the next three years.