Broker snap: Barclays predicts difficult 2014 for miners

10th Jan 2014 09:17

2014 could initially be 'another difficult period' for the UK mining sector, according to analysts at Barclays, who maintained their 'negative' view on the industry on Friday.In a research note to clients, the bank said that "key issues" of 2013 - negative earnings growth, minimal free cash-flow (FCF) generation, slowing demand in China and surging supply - will likely remain in place this year."Broader macro is also unlikely to be supportive of commodity pricing (developed-markets recovery, emerging-markets malaise, higher rates/stronger USD, geopolitical uncertainty)," the broker said.However, looking ahead to 2015, the bank believes that FCF yields should start to pick up and earnings growth should turn positive, meaning that markets will begin to price in a recovery "at some stage in 2014".Nevertheless, in the near term, the first quarter of 2014 "at least looks like 'more of the same'".The bank has upgraded its rating for Glencore Xstrata from 'equal weight' to 'overweight', which alongside BHP Billiton ('overweight'), is among its top picks in the diversified mining market.First Quantum Minerals is now also rated as 'overweight' by Barclays, along with Asia Resource Minerals and Randgold Resources.Meanwhile, Hochschild Mining has been lifted from 'underweight' to 'equalweight'.In contrast, the bank has lowered its recommendations for Fresnillo (to 'equal weight'), Polyus Gold (to 'underweight') and Vedanta Resources (to 'underweight').BC