CENTRAL ASIA METALS’ acid cisterns at its Kounrad copper plant, Kazakhstan. Last week the company published direct cash costs at Kounrad of $770 per tonne. The group is debt free, with cash of $34m.

CENTRAL ASIA METALS’ acid cisterns at its Kounrad copper plant, Kazakhstan. Last week the company published direct cash costs at Kounrad of $770 per tonne. The group is debt free, with cash of $34m.

Clive Burstow: Barings Global Mining Fund

Issue 37, April 2013

“I’m a natural optimist,” says Clive Burstow, manager of Baring’s $15m Global Mining Fund. “I’m a mining fund manager and I think you have to be. There are bright spots out there.”

Mr. Burstow’s investment approach is very much thematic, centred on urbanisation in emerging economies. “We are increasingly thinking about themes of not just urbanisation, but urban regeneration. China has a policy where it doesn’t want to widen the footprint of cities because it uses arable land. They are tearing down four-storey buildings and putting twenty-storey buildings in place.” Chinese annual growth of 8 per cent he points out is equivalent to its 10 per cent growth of the past.

China is only part of the trend. The flatlining economies of Europe and the US could also spur metal demand, he says, as governments try to construct a recovery. “If you’re trying to stimulate the economy, one of the easiest ways of doing it is to invest in infrastructure.”

Rio Tinto and BHP Billiton account for 19 per cent of the fund. Burstow welcomes their shift in emphasis this year, under new leadership, from rising capital costs to sustainable returns.

Trading house Glencore, the fund’s third largest holding, he concedes has had a “difficult time” transitioning to a public company since listing in 2011. The flipside he says is an entrepreneurial way of thinking and management interests “very closely aligned” to those of shareholders. He is nonplussed by ongoing delays, extended this week, to its laborious takeover of FTSE 100 peer Xstrata. “It’s bureaucracy running its course. We believe it will go through.”

Burstow, who studied engineering at the Camborne School of Mines, sees site visits as a valuable part of the investment process, narrowly escaping a helicopter collision in Russia. “There’s no substitute for getting on site and looking at a Cat-797.”

Half the fund is allocated to small and midcaps, where Burstow believes investors can outstrip the market in stocks “not known by generalist investors.” Central Asia Metals, which processes copper tailings in Kazakhstan, he touts as an example, alongside Petra Diamonds and Duluth Metals. “We like what we’ve seen in the core sheds.”

Having added to his cash position in recent weeks, Burstow is poised to capitalise on any volatility. “We are on the hunt,” he says.

“We like what we’ve seen in the core sheds.”
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