geraldton port to take 10mtpa from gbg, page-3

BULK commodities such as iron ore, coal, copper and platinum and related mining companies are the current top picks for BlackRock's Australia-based Global Mining Investments fund.

Out of favor are explorers and developers, as well as aluminum and zinc, both markets that are well supplied at present, fund's manager Evy Hambro said, who also manages the World Mining Fund, the world's largest commodities fund with just under $US32 billion under management.

Mr Hambro tipped iron ore prices for the 2010-11 contract year to rise strongly by 30 per cent-35 per cent, after falling by an average 33 per cent this year after demand buckled during the global financial crisis.

Spot market iron ore prices trading above contract prices pointed to "a better year for iron ore demand" during 2010, Mr Hambro told reporters during a conference call.

The huge contraction in demand across markets last year and funding crisis have also sowed the seeds for the next bull market, Mr Hambro said, given that expectations for capital expenditure on new projects for 2010, though slightly improved, still remain significantly below 2008 forecasts.

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After the massive price drops during the fourth quarter of last year, commodity markets have strongly rebounded on the back of strong restocking across the board in China, the key growth market for resources demand growth.

Copper prices have more than doubled since the start of the year, prompting concerns that a new price bubble was forming.

But while restocking in Asia has "now been done" and "no major restock event in the US or Europe has taken place," price corrections would be temporary only, Mr Hambro said.

"We've seen good buying on the dips."

In Europe, "we'll be watching the level of new commitment to sectors such as construction," he added.

Turning to the gold market, he said rising gold prices in a number of currencies, and not just as a proxy for the weak dollar, indicated a strong outlook for bullion.

Aside from the weak dollar, central banks likely becoming net buyers of gold this year and falling mine supply accounted for fundamentally supportive price drivers, Mr Hambro said.

BlackRock's GMI fund focuses on diversified miners with high margins, high barriers to entry and consolidated supply ownership, and is "positioned to benefit" from a continued recovery in demand for commodities, Mr Hambro said.

GMI is up 43.8 per cent year-to-date, compared with a 36.8 per cent year-to-date rise for the benchmark HSBC Global Mining Index

http://www.theaustralian.com.au/business/mining-energy/blackrock-targets-bulk-commodities-copper-platinum/story-e6frg9df-1225798252166