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Investing.com -- The European metals and mining sector faces continued uncertainty through 2026, with market watchers closely monitoring developments in the US and China, according to a recent analysis by BofA Securities.
Despite ongoing policy volatility, BofA maintains bullish views on several key metals including copper, aluminum, uranium, gold, and silver. The bank has made significant upward revisions to its 2026 price forecasts, including a 4% increase for copper to $11,751/t, an 8% rise for iron ore to $97/t, and an 8.7% jump for aluminum to $3,125/t. Most notably, BofA raised its long-term gold forecast by 20% to $3,000/oz.
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Against this backdrop, BofA Securities has identified top picks in the European metals and mining sector:
1. Rio Tinto
BofA reiterates its Buy recommendation for Rio Tinto with an increased price objective of GBp 7400 (previously GBp 6900), representing approximately 1.0x DCF-derived 2026E NPV. The bank is particularly bullish on Rio Tinto’s exposure to copper and aluminum, while suggesting the market may be underappreciating the company’s lithium potential. Historically, major mining shares have traded between 0.7-1.3x NPV, though this ratio has typically peaked closer to 1.1x NPV since the 2008 Global Financial Crisis.
In a recent development, Rio Tinto announced it will shelve its $2.4 billion Jadar lithium project in Serbia as part of a business simplification strategy under its new CEO.
2. BHP
BofA has updated its BHP model with a new price objective of A$49/share (US$62/share), which also represents approximately 1.0x DCF-derived NPV. The bank highlights BHP as the "Big Australian" and considers it a blue-chip in the sector with strong copper exposure. Diversified miners have traded in a range of 0.7-1.4x NPV over the past five years, with lower multiples during economic slowdowns and higher multiples during periods of rising commodity prices and earnings.
BHP is reportedly facing a temporary halt on new iron ore sales to China after the country’s state buyer instructed major steelmakers to pause purchases. The company also reported first-quarter production in line with consensus and maintained its full-year guidance.
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