BlackRock World Mining Trust: April 2025 update

• The fund’s manager Evy Hambro is an industry veteran, clocking up three decades of investment experience

• The trust aims to provide long-term income and capital growth by investing in mining and metal assets worldwide

• Whilst commodity prices were relatively strong in 2024, the companies mining those commodities generally struggled.

How it fits in a portfolio

BlackRock World Mining Trust aims to maximise returns to investors through a combination of capital growth and consistent dividends. The managers achieve this by investing in mining and metals assets across the globe, including some higher risk emerging markets. While they mainly invest in shares, they’ll also look at other assets including mining royalties, bonds and some physical metals to help with diversification.

Investing in the trust could help boost a portfolio’s long-term growth potential but this is a specialist area so adds risk. We think funds and investment trusts investing in a specific sector should usually only form a small part of a well-diversified investment portfolio. Investors in investment trusts should be aware the trust can trade at a discount or a premium to its net asset value (NAV).

Manager

The trust is co-managed by Evy Hambro and Olivia Markham.

Hambro has been in the industry since 1994, spending time with Mercury Asset Management and Merrill Lynch, before they merged with BlackRock in 2006. Some other responsibilities include being Head of Global Thematic and Sector Investing and Head of the Natural Resources Equity Team.

Markham became co-manager of the trust in 2015. She’s a member of the Natural Resources team and her coverage spans an array of sectors including gold, mining and the circular economy. Markham started her career at BlackRock in 2011, having previously held the position of Head of the European Mining Team at UBS. She also co-manages the BGF World Mining Fund and the Commodities Income Investment Fund.

Both managers can draw upon the resources available to them at BlackRock, including access to the broader Natural Resources Team, seven of whom are dedicated to the mining and gold sectors.

Process

Hambro and Markham closely monitor around 400 mining companies, a number which has been growing as the industry aligns with the energy transition. They’ll invest in companies with strong cash flows, healthy balance sheets, high-grade reserves and high-quality management teams.

While adopting a blended style of top down and bottom-up research is crucial to the process, they place more emphasis on bottom up, individual company analysis. Combining this work with onsite company meetings enables them to speak to employees, not just management. This provides an opportunity to physically assess the sites or mines they invest in. This is particularly important within this sector because of the impact that things such as poor health and safety standards can have at such sites.

As at the end of December 2024, the trust had around 92% invested in mining and metals shares, including diversified mining groups like BHP and precious metals producers like Agnico Eagle Mines. Over the year the managers increased their holdings in some of the diversified mining companies like Rio Tinto and Anglo American as these tend to be a bit cheaper than the specialist mining companies, but still give exposure to the more attractive metals like copper. They also increased exposure to gold producer Agnico Eagle Mines.

The rest of the trust is invested in bonds, debentures (a type of bond or debt instrument), and royalties to provide a higher and more diversified yield. The investments that make up this part of the portfolio include Vale Debentures, BHP Brazil Royalties, and some unlisted companies including Jetti Resources and MCC Mining. Vale Debentures offers a return linked to iron ore prices. BHP is the main royalty investment, offering a share in revenues from a specific mine in Brazil.

Investors should be aware these unquoted assets are higher risk and tend to be more difficult to buy and sell than listed shares. The trust can also borrow money to invest with the intention of increasing returns (known as gearing) and use derivatives. These could magnify losses in a falling market and increase risk. As at 31 December 2024 the trust had gearing of 11.6%.

In terms of underlying commodity exposure, the trust’s biggest exposure is to copper, which made up 38.6% of its assets as at 31 December. Gold accounted for 25.0% and iron ore 20.5%. There was also a small amount of exposure to steel, uranium, aluminium and other commodities.

Culture

BlackRock is currently the largest asset manager in the world, with around $11.6 trillion of assets under management globally as of December 2024. The company was founded in 1988 by eight partners including current CEO Larry Fink and is known for both active and passive strategies across the world. Employees at BlackRock are encouraged to hold shares in the company so that they are engaged with helping the company perform well and grow.

The culture within the teams across BlackRock is also strong. At all levels, debate and challenge is encouraged. Managers make good use of the overlap between other teams, which helps with idea generation but also spurs conversation around industry trends.

ESG integration

BlackRock has offered ESG-focused funds for several years, however, it only made a company-wide commitment to ESG in January 2020. BlackRock’s Investment Stewardship Team aims to vote at 100% of meetings where it has the authority to do so. They also engage with companies, in conjunction with fund managers, and the results of proxy votes can be found on the BlackRock website’s ‘proxy voting search’ function.

Blackrock has courted controversy in recent years for failing to put its significant weight behind shareholder resolutions aimed at tackling climate change. Its support for shareholder resolutions has fallen dramatically, from 40% in 2021 to just 4% in 2024. Blackrock argues that many of the resolutions were overreaching, lacked economic merit or didn’t promote long-term shareholder value, but this reasoning has been met with some scepticism.

In 2024, Blackrock announced that its US arm would step back from the Climate Action 100+ collective engagement initiative, citing legal considerations, although it suggested its international arm would remain a member.

ESG integration is extremely important in the mining sector, and the managers seek to understand the ESG risks and potential opportunities of all of the companies and industries in the portfolio. The mining sector faces several challenges such as its reliance on water, relatively high carbon emissions and the politically sensitive location of some of the assets. On the other hand, this sector is key to providing the materials needed for a transition to a greener economy, such as those needed to manufacture batteries.

The managers prefer not to invest in companies which have high ESG risks (ones which are likely to impact a company’s financial position or operating performance) unless the company has plans to address these risks in an appropriate way. The managers of the trust take a long-term approach, focused on talking to the managers of companies that they consider to have less than ideal ESG practices and trying to get them to improve.

One of the main focuses for engagement over 2024 was how companies were reducing their carbon emissions. In this regard, most companies owned in the trust are making reasonable progress. For example, BHP announced that emissions versus their 2020 baseline were already 32% lower, ahead of their stated 2030 goal.

Cost

The ongoing charge, over the trust's financial year to 31 December 2023, was 0.95%. This is slightly higher than the previous year’s figure of 0.91%. Investors should refer to the latest annual reports and accounts and Key Information Document for details of the risks and charging structure.

If held in a SIPP or ISA the HL platform fee of 0.45% (capped at £200 p.a. for a SIPP and £45 for an ISA) per annum also applies. Our platform fee doesn't apply if held in a Fund and Share Account or a Junior ISA. As investment trusts trade like shares, both a buy and sell instruction will be subject to our share dealing charges within any HL account except online deals in a Junior ISA.

Performance

Since the trust launched in December 1993, it’s delivered good returns for investors. It’s also delivered good returns under Hambro’s tenure. He took the helm in September 2000 and from that date to the end of March 2025 the trust has returned 1,116.48%*. Past performance isn’t a guide to the future.

Over the trust’s most recent financial year (December 2023 to December 2024), the total returns in NAV and share price terms were -15.9% and -18.1%, respectively. This was a little behind the reference benchmark (the MSCI ACWI Metals and Mining 30% Buffer 10/40 Index) which fell by 9.9% over the same period.

2024 was another difficult year for commodities generally. Negative sentiment towards China, and geopolitical tensions, including the Russia / Ukraine War and the conflict in the Middle East, weighed on markets. The result of the US election increased uncertainty around global trade and stimulus measures announced by China had an underwhelming effect on markets.

Commodity markets, however, are diverse and some commodities fared much better than others in this environment. The strongest performers were precious metals such as gold, which rose 27.2% and silver, up 21.5%. Unfortunately, the shares of companies that produce these commodities did not rise in line with the commodities themselves.

This backdrop proved challenging, with some of the biggest investments in the trust falling over the year. Freeport-McMoRan, a copper producer and top ten holding in the trust, fell 9.4% over the year whilst the average price of copper was up approximately 8%. In the gold sector, Newmont Corporation and Barrick Gold fell 7.9% and 12.3% respectively compared to the average gold price which was up by 23.0%. Barrick Gold is also a top ten holding.

It wasn’t all bad news though, and some of the smaller holdings in the trust performed well. Filo Mining, a copper producer which the trust held, was bought by BHP, and Centamin, a gold producer which was also held, was acquired by AngloGold Ashanti. Both these deals contributed positively to the performance of the trust.

Higher costs, as well as a desire to invest back into their businesses led to many of the companies held in the trust paying lower dividends than they did last year. This means that the income from the trust as a whole has also fallen year on year from 33.50 pence per share in 2023 to 23.00 pence per share in 2024 a fall of 31.3%. At the time of writing, the trust yields 4.80% but yields are variable and aren’t a reliable indicator of future income.

The trust traded at a discount of 7.77% at the time of writing, this compares to an average discount of 6.08% over the previous 12 months.