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3 Non-Ferrous Metal Mining Stocks to Consider Amid Industry Concerns
CDECoeur Mining(CDE) ZACKS·2024-12-20 19:16

Industry Overview - The Zacks Mining - Non Ferrous industry is facing challenges due to weak demand in China, which is impacting metal prices, alongside inflated costs, labor shortages, and supply-chain issues [1][4][5] - The industry includes companies producing non-ferrous metals such as copper, gold, silver, cobalt, molybdenum, zinc, aluminum, and uranium, which are essential for various sectors including aerospace, automotive, and construction [3] Current Market Conditions - Copper prices have been negatively affected by China's property crisis, with economic uncertainty leading to concerns about future demand [4] - Uranium prices have decreased by 18.9% this year, currently around 73perpound,duetoanticipatedsupplyincreases[4]−Goldhasincreasedby2673 per pound, due to anticipated supply increases [4] - Gold has increased by 26% year-to-date, while silver has risen by 21%, driven by geopolitical tensions and central bank purchases, although manufacturing sector contraction may impact silver demand [4] Demand and Future Prospects - Demand for non-ferrous metals is expected to remain strong, particularly due to the rise in electric vehicles and renewable energy, as well as infrastructure upgrades under the U.S. Infrastructure Investment and Jobs Act [6] - The industry is projected to face a future deficit in metal supply, which could eventually lead to higher metal prices, benefiting the industry in the long run [4] Labor and Cost Challenges - The industry is experiencing a shortage of skilled labor, leading to increased wages and potential production disruptions [5] - Escalating production costs, including energy and materials, are prompting companies to focus on improving sales volume and operational efficiencies [5] Investment Opportunities - Companies like Southern Copper Corporation (SCCO), Coeur Mining (CDE), and Energy Fuels (UUUU) are highlighted as potential investment opportunities due to their strategies in building reserves, controlling costs, and investing in technology [2][15][20][24] - CDE is expected to see a significant earnings increase of 165% year-over-year for fiscal 2024, supported by its acquisition of SilverCrest Metals [16] - SCCO anticipates a 7% increase in copper production in 2024, driven by recovery efforts and significant capital investments exceeding 15 billion [20][21] - Energy Fuels is expanding uranium production and entering the medical isotope market, despite a 28.6% decline in stock value over the past year [24][26] Industry Performance Metrics - The Zacks Mining - Non Ferrous industry has gained 1.2% over the past year, outperforming the Zacks Basic Materials sector, which declined by 10.5% [9] - The industry's current forward 12-month EV/EBITDA ratio is 8.13X, significantly lower than the S&P 500's 24.78X, indicating potential valuation opportunities [11]