Mining Executives Extol Donald Trump’s Policies
But some worry that the president’s protectionist bent could do more harm than good for the sector
CAPE TOWN, South Africa—When Donald Trump won the presidential election in November, it was a thrilling moment for Ivan Glasenberg.
The chief executive of Glencore PLC, one of the world’s biggest mining companies, believes that a $1 trillion infrastructure program proposed by Mr. Trump would boost prices for the commodities that the firm, based in Switzerland, mines and trades, according to people familiar with the matter.
Mr. Glasenberg’s enthusiasm for President Trump’s proposal is widely shared in the international mining industry, based on interviews with more than a dozen executives and experts at this week’s Investing in African Mining Indaba conference. The Trump administration has been a running topic of conversation here—the mining industry’s biggest annual gathering—infusing panel discussions with a dollop of politics and stirring buzz at cocktail receptions.
Mining stocks have rallied sharply since Mr. Trump’s election. BlackRock Inc.’s BlackRock World Mining Trust, among the biggest owners of mining stocks, and the S&P Metals and Mining Index are both up more than 20% since the election. That compares with a 9.4% gain by the Dow Jones Industrial Average.
Mr. Trump’s spending goals, as well as plans to dial back regulations of carbon-emitting resources such as coal, should benefit the global industry, mining executives say.
“The [Trump] policies sound mining-friendly to me,” said Neal Froneman, chief executive of South African miner Sibanye Gold Ltd.
Sibanye made its first push into the U.S. after Mr. Trump’s election, announcing plans to buy American palladium and platinum miner Stillwater Mining Co. for $2.2 billion. The acquisition was set in motion before Mr. Trump’s election, Mr. Froneman said.
Mr. Trump’s plans to spend $1 trillion to rebuild roads, bridges, airports and other infrastructure haven’t taken shape in the form of legislation yet. Infrastructure spending has been embraced more heartily by Democrats than the Republicans in power and is one piece of a sweeping, complicated agenda that includes a tax-code overhaul and a potential repeal of the Affordable Care Act.
“As the president continues to pursue his ‘Buy American, Hire American’ agenda, which includes significant investment in infrastructure, we will continue to see results,” said White House deputy press secretary Lindsay Walters.
During his campaign, Mr. Trump said he is the “last shot for the miners.” The administration’s “America First Energy Plan” states that its goal is to “maximize the use of American resources” and revive “America’s coal industry, which has been hurting for too long.”
The fortunes of American coal miners have waned drastically in the past decade as cheap, abundant natural gas replaces coal as the U.S.’s fuel of choice. More broadly, miners remain bruised by a sharp decline in commodity prices in 2015 as demand in China slowed. Prices picked up last year, and executives here said they expect commodity prices to remain stable in the near term.
There are reasons beside Mr. Trump’s victory for the global mining industry’s newfound optimism—and share-price gains. Most notable is China’s government stimulus, which has lifted demand in the world’s most voracious market for commodities.
And Mr. Trump’s support alone isn’t enough to put the mining industry back on solid footing. The American coal sector’s struggle to stay competitive goes beyond the environmental regulations Mr. Trump intends to roll back.
But some executives say Mr. Trump could hurt, not help, the sector. They are worried about Mr. Trump’s protectionist impulses, including his threats to raise taxes on imports from China and elsewhere. Such moves could spark a trade war, hurting growth and demand for natural resources, they said.
Mark Cutifani, chief executive of London mining giant Anglo American PLC, said the Trump administration needs to be clearer about its trade policies and goals.
“At the moment, the message is confused,” he said. His advice for Mr. Trump: “Don’t push the world toward protectionism.”
Another worry is the U.S. dollar. A pickup in U.S. growth would raise the value of the dollar, which is used to price most commodities around the world. A strong dollar generally depresses demand for greenback-denominated commodities and hurts miners.
Heightened U.S. import taxes would likely have sweeping implications for commodity prices world-wide and could cause the dollar to rally by as much as 10% against other currencies, said Robert Ryan, vice president at BCA Research.
Some gold miners, in particular, are worried. When the dollar rises, the price of gold often falls.
“His whole policy looks inward, toward beefing up the U.S.,” which would push the dollar up, said Mark Bristow, chief executive of Randgold Resources, an African gold miner.
Others said uncertainty over Mr. Trump’s policies could be good for gold.
“All we need is a good weekend tweet every week” to keep the gold price up, said Srinivasan Venkatakrishnan, chief executive of AngloGold Ashanti Ltd., referring to the president’s prolific use of Twitter to address a wide range of topics—often using blunt language.
“Uncertainty normally helps fuel the gold price,” Mr. Venkatakrishnan added.