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Updated 02 Jun 2023
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This is a non-independent marketing communication commissioned by BlackRock. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Mining was a rare bright spot in an otherwise gloomy year in financial markets. The energy transition has brought demand for mined commodities, at a time when low capital investment has left supply constrained. These patterns are likely to continue into 2023, with the energy transition picking up speed and companies maintaining spending discipline.

In the year ahead, we see little shift in the supply and demand dynamics that governed commodity markets in 2022. Increased global infrastructure spending1 is supporting demand, with significant commitments from the US, Europe2 and China,3 particularly on green energy infrastructure. The war in Ukraine has demonstrated the need for energy independence, which is galvanising global governments to take action.

The mining sector will continue to play a critical role in supplying materials for the energy transition. Lower-carbon technologies such as wind turbines, solar panels and electric vehicles are dependent on mined materials - including lithium for batteries, or copper for electric cars. These commodities are becoming increasingly precious as countries compete for scarce resources.

Yet, we still see management teams being careful on their capital spending commitments. Companies continue to increase supply only very gradually. In the longer-term, it may be that capital spending increases, but this is likely to take years to feed through into new supply. In the meantime, supply will remain constrained, supporting prices.

Mining companies are generally in robust financial health.5 This will be very important in the year ahead, when rising interest rates will test those companies with high debt levels. They are also generating significant cash, which – we believe - is likely to come through to shareholders as dividends. At a time when inflationary pressures are still rife, these high and growing cash flows are likely to be highly prized by investors. In our view, mining equities are an effective way to hedge portfolios against persistent inflationary pressures.


The BlackRock World Mining Trust currently has around 12.7% invested in gold.4 This is low relative to the trust’s history and a reflection of the strength of the outlook for mining. Nevertheless, we still see a strong argument for holding gold and gold equities for diversification benefits. Gold proved an important ballast for portfolio in 2022.

Diversification: Diversification and asset allocation may not fully protect you from market risk.

The Russia Ukraine crisis, higher energy costs, and rising interest rates put much greater uncertainty around global economic growth. Recession is forecast for most major economies in the year ahead. This is usually a compelling backdrop for gold, which has appeal for investors as a safe haven.

Persistent inflation is a risk. While inflationary pressures are easing, there is a long way to go until they dissipate completely and most central banks expect inflation to be structurally higher from here. Meanwhile, we could see interest rate expectations start to decline should global economic growth deteriorate severely. A real interest rate is a nominal interest rate minus the rate of inflation. This suggests to us that real interest rates are more likely to move lower rather than higher, which should be supportive for gold.

Pricing power

Against this backdrop, we are focusing the portfolio on those companies that are likely to be least vulnerable to any inflationary pressures – where costs are under control, for example, or that have significant pricing power. Encouragingly, we have seen a marked change in behaviour in the sector with companies returning this capital to shareholders in the form of dividend increases and share buybacks.6

Across our holdings in gold equities and other mining companies, we continue to manage the portfolio with a quality bias i.e. investing in companies with stronger-than-average balance sheets and lower than average costs. We gravitate towards those companies we believe have capable management teams and those we think are managing ESG risks effectively. We believe this will be particularly important in the year ahead, where economic pressures and uncertainty are likely to remain.

1 ICE - 20 December 2022
2 - Pinsent Masons, December 2021
3's%20net%2Dzero%20transition%20pathway,of%20the%20country's%20transition%20pathway UNPRI – 20 June 2022
4 BlackRock - 31 December 2022
5 Reuters - 3 March 2023
6 S&P Global – 13 June 2023

Risk warnings

Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.

BlackRock World Mining Trust specific risks

Description of Fund Risks

Counterparty Risk

The insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Fund to financial loss.

Currency Risk

The Fund invests in other currencies. Changes in exchange rates will therefore affect the value of the investment.

Emerging Markets

Emerging markets are generally more sensitive to economic and political conditions than developed markets. Other factors include greater 'Liquidity Risk', restrictions on investment or transfer of assets and failed/delayed delivery of securities or payments to the Fund.

Gearing Risk

Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.

Gold / Mining Funds

Mining shares typically experience above average volatility when compared to other investments. Trends which occur within the general equity market may not be mirrored within mining securities.

Important Information

In the UK and Non-European Economic Area (EEA) countries: this is issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.

This document is marketing material. The Company is managed by BlackRock Fund Managers Limited (BFM) as the AIFM. BFM has delegated certain investment management and other ancillary services to BlackRock Investment Management (UK) Limited. The Company’s shares are traded on the London Stock Exchange and dealing may only be through a member of the Exchange. The Company will not invest more than 15% of its gross assets in other listed investment trusts. SEDOL™ is a trademark of the London Stock Exchange plc and is used under licence.

Net Asset Value (NAV) performance is not the same as share price performance, and shareholders may realise returns that are lower or higher than NAV performance.

The investment trusts [listed below/above/in this document] currently conduct their affairs so that their securities can be recommended by IFAs to ordinary retail investors in accordance with the Financial Conduct Authority’s rules in relation to nonmainstream investment products and intend to continue to do so for the foreseeable future. The securities are excluded from the Financial Conduct Authority’s restrictions which apply to non-mainstream investment products because they are securities issued by investment trusts. Investors should understand all characteristics of the funds objective before investing.

For information on investor rights and how to raise complaints please go to available in local language in registered jurisdictions.

Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.

This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.

© 2023 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS and iSHARES are trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.


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