BlackRock: Commodity prices remain high

According to BlackRock Inc.'s Evy Hambro, commodity prices could remain high for decades to come as miners fail to keep up with demand from the energy transition.

Commodities and the shares of some of the companies that produce them hit record highs last year as massive global stimulus measures supported consumption. At the same time, the transition to a greener world is creating new demand for metals such as copper, lithium and nickel.

That trend is unlikely to change anytime soon, Hambro, BlackRock's global head of thematic and sector investing, told Bloomberg TV on Wednesday.

"We've had heavy investments in infrastructure for decades as the world strives to decarbonize. That's a widely shared view," he said. "What we're likely to see is strong demand that will keep prices for producers at very good levels for many years into the future, and that could be decades."

His optimistic statements echo statements from banks like Goldman Sachs Group Inc., which said last week that a commodity super cycle has the potential to last for a decade. While infrastructure spending will require large amounts of materials like steel and cement, the green revolution will also require more metals like cobalt and nickel for products like batteries.

Commodities like coal, copper and lithium hit record highs last year, helping mining companies to post strong profits and dividends. Nonetheless, Hambro still thinks the mining sector is undervalued given its importance in providing the materials needed to decarbonize the global economy.

"It seems like this core element of the energy transition is being completely ignored by many investors," said Hambro. "Eventually, people will realize how important these companies are to the transition and capital will flow into them, which should change valuations.