Anglo Pacific's low-panic portfolio

The company owns royalties, which entitle it to a share of mine or company revenue. Royalties cover metallurgical coal, copper, vanadium, iron ore and thermal coal. It has said its current thermal coal holding will be its last. 

Looking at the situation on the ground in China, chief executive Julian Treger said steelmakers needing to keep smelters running meant prices for its key materials had stayed relatively stable. “The Chinese have not been able to shut down their smelting capacity because it's super expensive and time-consuming to start it again. But they haven't been producing as much domestically as they did historically,” he said. “So they've had to buy more from... seaborne trade.” 

Mr Treger said the ensuing squeeze on the seaborne market had supported vanadium, metallurgical coal and iron ore prices. The operations Anglo Pacific holds royalties on export more to Japan, South Korea and India than China. 

Reflecting the nuanced impact of coronavirus, out of the major miners feeding bulk materials into China, Rio Tinto (RIO) escaped the worst of the sell-off (falling 6 per cent) while BHP (BHP) fell 16 per cent on 9 March when stocks got routed after the Saudi Arabia/Russia oil stand-off. However, these losses were mostly reversed in the following days as optimism grew on the prospect of Chinese stimulus. Broker SP Angel says China has already spent $14.2bn (£11bn) and believes there is “much more to come”, on top of the $113bn in bonds issued by regional governments in January. 

Anglo’s copper interests should also benefit from the stimulus, with the metal’s price having hit a three-year low on 9 March on the back of the oil crash. An investor might look for some kind of precious metal hedging alongside the industrials, but Anglo Pacific has kept away from that sector apart from a 2012 royalty bought on Hummingbird Resources’ (HUM) Dugbe project.