BlackRock World Mining Trust plc (LON:BRWM) is the topic of conversation when Kepler Partners’ Head of Investment Companies Research Thomas McMahon caught up with DirectorsTalk for an exclusive interview.
Q1: BlackRock World Mining Trust, it’s reported exceptional results for 2025, benefiting from strong tailwinds for commodities and its nimble virtual mining company approach to portfolio construction. What were some of the notable drivers of its performance?
A1: It was an excellent year for the Trust, quite a few things came right at one moment. So, copper demand has been, in particular, very strong and this is the position that the managers have had high conviction in for some time. It really came good, particularly towards the end of the year.
Copper is in high demand for energy transition reasons, electrification reasons, but also for data centres and power grid build outs to power artificial intelligence. Also gold has been a particularly strong area and again another area of high conviction for the managers. So, we’ve seen very strong gold prices, and this started to see very strong demand for gold miners as the year went on. Some of the single stock positions that benefited the best were some quite small gold miners that delivered some really good returns.
There was also a windfall, a sale from a royalty, which the managers had bought back in 2015 and has delivered a return of 840% over that time frame. Obviously, not all in the final year, but a very big gain on the sale of that position too. That is an example of what BlackRock World Mining can add to the beta, if you like, from the sectors, just the pure commodity exposure, getting into some unlisted, some private investments which are quite hard to access otherwise.
Q2: Now whilst the rally in precious metals, particularly gold, has dominated headlines recently, how are structural themes like the demand for AI infrastructure and the energy transition shaping the long term opportunities set for BlackRock World Mining?
A2: Copper is one of the key metals behind all of these structural factors because of its demand for electrification, both in artificial intelligence and in renewables.
There’s been a change in copper demand from very cyclical, highly dependent on the global economy and therefore on Chinese demand to something that’s a little bit more stable. Now, we can’t overstate this, China’s demand is still important, but that cyclicality has been moderated somewhat.
So, it’s very interesting that copper did so well, even though the Chinese economic recovery has been modest and not very heavily weighted towards real estate, where a lot of the domestic copper demand comes from.
There are also other issues around reshoring of investments and the realignment of supply chains. Obviously, we’ve got global geopolitical tensions which have come to a head in the Middle East, but more broadly tension between China and the US and rethinking of a lot of international relations. You’re simply seeing construction of facilities, factories, ports and roads and the like, which are starting to reshape these supply chains.
Another thing to bear in mind is a huge increase in infrastructure spend. So, it seems that really a lot of the world is getting to the end of the life of some key infrastructure, transportation and so on. So, the managers expect a very high level of investment in infrastructure over the coming years, which should be good for a lot of the base metals, copper, but also iron ore and the like.
Q3: The trust delivered a 4.3% increase on dividend payments in 2024. How sustainable is the ongoing dividend growth?
A3: BlackRock World Mining, it has historically produced a very high yield at certain times. That yield has fallen in recent years. What we saw really was in the reopening after the pandemic, a big boom in sales by commodity companies as economies reopened and this led to some massive, massive special dividends and the like. That has moderated somewhat so it was very good to see increase in the natural revenue on the portfolio in 2025.
Now, one reason to be optimistic about the outlook for yield is what’s happened with gold companies. Gold companies clearly have much higher revenues when the gold price is high and we’re now starting to see that feed through into their economics, into their profits and free cash flow and the money that’s available for dividends.
So, I think higher dividends from gold miners is a very good reason to be optimistic that we might see dividend growth this year.
That said, the royalty from BHP, which has been sold, did deliver quite a significant chunk of the income. The managers made a really good gain on that. So, it was understandable why they took the opportunity to sell it for a far higher price than they bought but they need to replace that with income from elsewhere.
So, I think the outlook is looking positive but unlikely to go back to the high yields that we saw in 2022/2023 too quickly.
Q4: You mentioned earlier the current geopolitical situation with the war in Iran. How is that impacting the outlook for commodities and how would the trust fare in an increasingly volatile macro environment?
A4: Well, you need to bear in mind that the trust doesn’t own energy directly, so it won’t be directly affected by what’s happening in the oil and energy markets.
Of course, there’ll be knock on effects down the chain, in particular, if the Straits of Hormuz remain closed for a long period of time, that will stop a lot of shipping and there’ll be knock on impacts on the costs of a lot of companies.
Now, the energy costs will be a major part of the costs for a lot of commodity producers. So we’ve seen gold miners have taken a bit of a hit. Obviously, they did fantastically well last year so they were right for a bit of a pullback but the worry with miners and gold miners in particular is that free cash flow will be lower because the cost of energy will go up.
I think it’s important to remember that with gold miners, when they were really in the doldrums, it wasn’t really the energy costs that were the issue, it was the wage inflation coming through from Australia in particular, where a lot of them are located. So, I think at the margin, this is negative for gold miners, but it seems unlikely that it’s a game changer, if you like.
Beyond that, I think taking a step backwards, the geopolitical volatility just adds to the case for reshoring production, for energy security and for transportation and energy infrastructure. All this should really support demand for a number of the commodities that BlackRock invests in.
I think there’s no escaping the fact that if we see equity markets sell off, then BlackRock World Mining should probably also sell off in the short term. I think in taking a medium-term outlook, sad to say, there are some positive implications from a financial perspective for commodity investment.
