Monsters of Rock: Big iron ore miners a beacon of light as gold and lithium companies tank the resources sector

Big iron ore miners and their outsized market caps keep resources sector from total flop
Lithium and gold miners were sold off, with Pilbara Minerals cutting more than a fifth of its value
Looking overseas Gold Fields announces a US$6.7 billion gold merger with Canada’s Yamana Gold

While you’re crying into your beer taking stock of what was a hideous day for believers in the lithium market, take some solace that the big miners held up their end.

Iron ore miners make up an outsized share of the materials and ASX 200 Resources index given the shear scale of the triumvirate of BHP (ASX:BHP) ($227 billion market cap after the sale of its BHP Petroleum business to Woodside) Rio Tinto (ASX:RIO) ($168 billion) and Fortescue Metals Group (ASX:FMG) ($64 billion).

With all three in the green today — Andrew Forrest’s FMG up a tasty 2.79% — they have proven the trusty anchor preventing the whole god damn market from floating off to sea.

What was behind this, we hear you asking?

In short iron ore prices have had a good run over the last three days as Shanghai residents have been allowed out to greet the sun following weeks in lockdown.

China’s manufacturing PMIs continued to roll out today with the independent Caixin Index joining official NBS figures in showing the slowdown in Chinese productivity is easing as anti-virus measures unwind.

62% iron ore prices for product arriving in north China lifted 0.3% to US$136.15/t yesterday.

That followed a series of winning days for the commodity of the Dalian futures exchange, where the most traded September contract was up another 1.6% today.

“Construction on certain key projects in the steel-making hub of Tangshan resumed on Tuesday, in a positive sign for demand,” said ANZ head of Australian economics David Plank.

Analysts are watching to see if China’s economic growth target spurs accelerated efforts to revitalise its economy amid its Covid-Zero policy in the second half of 2022, something that would be positive for commodities.

Iron ore big three share prices today:

Gold joins lithium in mid cap bloodbath

Things were not so rosy among the mid-cap stocks, with US dollar gold prices falling more than 15 big ones overnight to around US$1838/oz.

A stronger US dollar made the safe haven investment feel a little less so as local gold stocks tumbled.

Some consolidation is starting to rear its head again as well, with falling valuations making companies a little more attractive.

South Africa’s Gold Fields has pounced on TSX-listed Yamana Gold in a move that would marry the Johannesburg-based gold miner’s Australian, African and South American assets with Yamana’s North American pipeline, making a US$6.7 billion entity ranked as the fourth largest producer globally.

Over in the local market Northern Star (ASX:NST) fell 2.74% with Evolution (ASX:EVN) down 4.17% and Newcrest (ASX:NCM) off 2.56%.

Smaller producers like Ramelius (ASX:RMS), St Barbara (ASX:SBM), Capricorn (ASX:CMM) and Gold Road (ASX:GOR) were even worse hit, sieving more than 5% of their value to 3.30pm AEST.

That didn’t come close to the carnage in the lithium sector, where a blend of a negative note on lithium pricing from Goldman Sachs and reports out of China BYD was looking to buy up lithium mines in Africa took a knife to local stocks.

Pilbara Minerals (ASX:PLS) was the hardest hit, off a stunning 22.03%.