Metals Mining

Industry
Surveys
Metals & Mining
JUNE 2022
Matthew Miller, CFA Fateh Yahaya

Equity Analyst Industry Analyst
CONTENTS Contacts
Sales Inquires & Client
Support
5 Industry Snapshot 800.220.0502
cservices@cfraresearch.com
6 Financial Metrics
Media Inquiries
9 Key Industry Drivers press@cfraresearch.com
CFRA
14 Industry Trends
977 Seminole Trail, PMB 230
Charlottesville, VA 22901
30 How the Industry Operates
35 How to Analyze a Company in this Industry

Contributors
43 Glossary Raymond Jarvis
Senior Editor
44 Industry References
Aaron Weingott,
45 Comparative Company Analysis Atifi Kuddus, Geraldine Tan
Associate Editors
Marc Bastow
Contributing Editor
Copyright © 2022
CFRA
977 Seminole Trail, PMB 230
Charlottesville, VA 22901
All rights reserved.
CHARTS & FIGURES NEW THEMES
6 Revenue Growth
EBITDA Margin
Total EBITDA
7 Net Debt-to-EBITDA
Debt-to-Equity
What’s Changed: Copper
8 Enterprise Value (EV)-to- EBITDA was expected to see
significant growth in 2022 due
9 Steel Global Supply and Demand
to EV and decarbonization
Copper Global Supply and Demand technologies, but forecasts
have now been revised
10 Real GDP Growth
downward for the year,
Gold Bullion Historical Price (LBM) though longer-term forecasts
Aluminum Historical Price (LME) remain positive. See page 17
for our discussion.
11 Iron Ore Historical Price (TS01021)
Zinc Historical Price (LME)
Copper Historical Price (LME)
12 Hot Rolled Steel Historical Price (NYMEX)

Silver Price (LBMA)
U.S. Private Non-Residential Construction
Spending What’s Changed: Gold
demand in Q1 increased 34%
13 U.S. Housing Starts Y/Y. The Ukraine invasion
Global Light Vehicle Auto Production and surging inflation were key
factors affecting both gold
14 Profit Pool Maps prices and demand. We
discuss this on page 18.
17 Largest Steel Producing Countries
18 World Production of Refined Aluminum
21 Imports vs. Exports of Steel Mill Products
22 U.S. Exports of Steel Mill Products, By Group

Capacity Utilization of U.S. Steel Industry
EXECUTIVE SUMMARY
CFRA has a positive outlook overall for the Metals & Mining industry. Within the Metals & Mining industry,
we have a positive outlook on industrial metals and a neutral outlook on precious metals. Here are some
of the key themes that shape our outlook for the next 12 months.
Russia-Ukraine Conflict to Have a Long-Lasting Impact on Metals Markets
When Russia invaded Ukraine on February 24, 2022, it had immediate effects on commodities markets,
given supply-side risks combined with surging power prices in Europe. Physical stocks declined and
prices for several metals appreciated significantly. Many countries have imposed severe sanctions on
Russia, and market participants will be reticent to buy from Russian suppliers. Russia supplies significant
percentages of the world’s metal: 40% for palladium, 15% for battery-grade nickel, 11% for zinc, 6% for
aluminum, 4% for copper, and nearly 3% for cobalt. Disrupted metal markets (with new supply-side risks)
likely support higher prices for key industrial metals. Furthermore, many European countries are now
likely to accelerate green energy transitions (to decrease dependence on Russian energy sources), a
potential positive catalyst for copper, nickel, and other metals required for decarbonization.
The Copper Bull Run Has Only Just Begun
Copper prices rebounded sharply from the Covid-19 low, and the fundamental outlook for copper is
strong. In May 2021, copper reached an all-time high of $4.76 per pound, eclipsing the previous record-
high price of $4.53 per pound. In March 2022, copper set a new record high at $4.94 per pound. CFRA
thinks copper is in the early phase of a long-term bull market, supported by very strong fundamentals on
both the demand and supply sides.
CFRA forecasts strong secular growth globally in copper consumed by electric vehicles (which require 2x
to 3x more copper than internal-combustion cars) and the necessary charging infrastructure. As the world
progresses toward a sustainable and energy-efficient future, copper has an important role to play. Copper
is used to increase the efficiency of numerous electrical technologies, from motors and transformers to
solar and wind energy systems. Renewable energy should continue to gain share of the global energy
market, and this should be a long-term secular tailwind for copper. Wind and solar energy projects require
4x–6x more copper per megawatt than legacy, carbon-intensive energy. Furthermore, as renewable
energy grows, so does the need for energy storage, which is very copper-intensive.
There are supply constraints that also paint a bullish picture. We expect the world will see only limited
supply growth from greenfield and brownfield projects. Some of the largest mines in the world have been
producing lower ore grades, a trend that we think will continue. And heightened geopolitical risk in Chile
and Peru (which, combined, account for nearly 40% of the global supply) could hinder new investment in
copper mines.
Gold Has Run Out of Positive Catalysts
Gold started 2021 at nearly $1,900 per ounce but struggled to trade above $1,800 per ounce for most of
the year, despite macro fundamentals that arguably supported gold prices well above $2,000 per ounce,
such as unprecedented levels of stimulus, quantitative easing, and negative real yields. In 2021, gold
investments were a major drag on portfolio performance, as the 2021 equity bull market (and risk-on
trade) removed much of the enthusiasm for gold and other precious metals.
Despite a strong start for gold in 2022 (driven by heightened inflation and financial market risks), we
expect tighter monetary policy from central banks to be a headwind for gold. Over the last 50 years, the
biggest driver of gold prices has been the real interest rate on the 10-year Treasury, with strong negative
correlation. Rising inflation expectations have (so far) been met with expectations for higher interest rates;
therefore, real yields could have already achieved the trough for this interest rate cycle, leaving fewer
positive catalysts for gold in 2022 and in the medium term as well.
INDUSTRY SURVEYS METALS & MINING / JUNE 2022 4

METALS & MINING
Outlook: Positive
MARKET CAP BREAKDOWN* BY THE NUMBERS
RANK COMPANY MARKET
NO. NAME CAP
($ billion)
$4.94/lb. 82%
1 BHP Group 164.9 New
2 Rio Tinto 114.5 Domestic
high-water
3 Vale S.A. 76.0 steel capacity
mark for
4 Freeport-McMoRan 53.9 utilization in
copper set in
5 Newmont 51.3 2021
May 2021
Others† 108.8
Source: CFRA, S&P Global Market Intelligence.
*Companies included in the S&P 1500 index as of
June 14, 2022.
†Refer to the Comparative Company Analysis section
of this survey for other companies in the industry.
$3,480/tonne. $550 Billion

ETF FOCUS Amount of
Aluminum hits
Expense incremental
GDX AUM ($M) all-time high in
spending (over
VanEck Vectors Ratio March 2022
Gold Miners
12,412.8 0.51 baseline) in the
amid Ukraine- $1.2 trillion
Russia war infrastructure bill
XLB Expense
AUM ($M)
Materials Select Ratio
Sector
6,859.1 0.12
GDXJ Expense
VanEck Vectors AUM ($M)
Ratio
Junior Gold 3,737.9 0.52
Miners 2x–3x 4x-6x
Battery EVs Wind and solar
VAW Expense consume 2x to energy require
AUM ($M)
Vanguard Ratio 3x as much 4x–6x more
Materials
NA 0.10 copper as copper per
internal- megawatt than
XME Expense combustion cars legacy energy
AUM ($M)
SPDR S&P Ratio
Metals & Mining
2,534.9 0.35
20-YEAR INDEX PERFORMANCE

400%
350% S&P Composite 1500 Metals & Mining S&P Composite 1500
300%
250%
200%
150%
100%
50%
0%
-50%
-100%
5 METALS & MINING / JUNE 2022 INDUSTRY SURVEYS

FINANCIAL METRICS
Revenue Growth
(percent) ◆ The Covid-19 pandemic has disrupted both
80% the demand and supply side of industrial
60% metals. Diminishing demand, coupled with
40%
declining prices for industrial metals, hurt the
industry’s revenue growth in 2020.
20%
◆ In 2021, revenue for the S&P Composite 1500
0%
Metals & Mining index significantly improved,
-20% supported by much better metal pricing, which
-40% is mainly driven by China’s strong metals
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
(e) (e) consumption despite slowing down in late
Source: CFRA, S&P Global Market Intelligence 2021. In 2022, revenue growth should
decelerate but remain strong at nearly 20%,
driven by both higher volume and higher
average prices.
EBITDA Margin
(percent) ◆ The EBITDA margin of the S&P Composite
26
1500 Metals & Mining index contracted by an
24
average of 132 basis points in 2020 due to
22
lower average metal prices and lower capacity
20
utilization.
18
16 ◆ The EBITDA margin rebounded in 2021 by

14 around 7.5 percentage points, and we expect
12 it to expand by 80 basis points in 2022, driven
10 by higher volumes, strong prices, and ongoing
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
(e) (e) efficiency efforts.
Source: CFRA, S&P Global Market Intelligence
Total EBITDA
(industry aggregated, $, in billions) ◆ EBITDA for the S&P Composite 1500 Metals
70
& Mining index grew 1.4% in 2020, but was
60 lower than 2018’s level due to the Covid-19
50 crisis. In 2020, significant declines in EBITDA
40 from steel producers were more than offset by
30 higher earnings from gold and copper miners,
20
resulting in a modest year-over-year increase.
10 ◆ EBITDA grew significantly in 2021, by 192%, a
0 multiyear high as vaccination rollouts, a
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
(e) (e) rebound in economic activity, and shortages of
Source: CFRA, S&P Global Market Intelligence supply drove demand and pricing for industrial
metals. EBITDA is expected to increase by an
additional 15% in 2022, driven by higher
pricing and volumes for most metals.

Net Debt-to-EBITDA
(multiple) ◆ The average net debt-to-EBITDA for the S&P
5.5
Composite 1500 Metals & Mining index
5.0
4.5
soared significantly in 2020, primarily due to
4.0 weaker EBITDA from the steel sub-industry.
3.5 Significant cost-cutting and restructuring
3.0 programs as well as capital discipline helped
2.5 mitigate the headwinds, limiting the increase
2.0
in net debt.
1.5
1.0 ◆ The ratio improved in 2021 as EBITDA surged
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 LTM*
*Last twelve months ended first quarter of 2022.
for most steel producers and copper miners
Source: CFRA, S&P Global Market Intelligence following the negative shock in 2020 related to
the Covid-19 crisis. Many metals and mining
companies have also utilized the extra free
cash flow to reduce debt. CFRA expects the
ratio to continue to improve in 2022, driven by
capital discipline across the industry and
strong earnings from resilient metal pricing.
Debt-to-Equity
(percent) ◆ The median debt-to-equity ratio for the S&P
65
Composite 1500 Metals & Mining index
60 increased to 60.1% in 2020 from 48.7% in
55 2019. Several new debt offerings were
50 completed during the onset of Covid-19, but
45 higher equity values helped offset the increase
40
in debt.
35 ◆ The balance sheets and liquidity of global
30 miners are in a strong position, in our view.
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 LTM*
Given the rise of most metal prices, mining
*Last twelve months ended first quarter of 2022.
Source: CFRA, S&P Global Market Intelligence companies stand to benefit as the median
debt-to-equity declined back to pre-pandemic
levels in 2021. Despite the ongoing rally in
most metal prices, we expect the index to
remain flat in 2022, given recent weakness in
metal stocks as lockdowns in China
dampened the outlook for industrial metals.

Enterprise Value (EV)-to-Forward EBITDA
(ratio) ◆ As of December 2021, the EV/EBITDA of the
16
S&P Composite 1500 Metals & Mining industry had declined 54% versus December
14
S&P Composite 1500
2020 due to a strong outlook for EBITDA as
12 commodity prices surged and investors
10 question the sustainability of higher prices.
8
◆ We expect valuation metrics in the metals and
6
mining industry to remain pressured as
4
investors question whether prices for industrial
metals can remain strong, given several risks
to global economic growth.
Source: CFRA; S&P Global Market Intelligence.

KEY INDUSTRY DRIVERS
Steel Global Supply and Demand

(million tonnes) ◆ According to the World Steel Association,
2,100
global steel production remained flat in
2,000
1,900 2020 as the whole world went into
1,800 lockdown but production quickly rebounded
1,700
that year and the back half of the year offset
1,600
1,500
earlier declines. Production increased by
1,400 1.7% in 2021 and is expected to rise 4.0%
1,300 in 2022.
1,200
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
(e)
◆ Meanwhile, global demand for finished steel
Demand of Finished Steel Products Crude Steel Production products remained flat in 2020 and grew
Source: CFRA, World Steel Association 3.3% in 2021, but it is expected to remain
flat in 2022, according to the World Steel
Association.
Copper Global Supply and Demand

(million tonnes) ◆ World production of refined copper rose
26
1.3% in 2021 and is expected to increase
25
24
4.2% in 2022. World refined usage rose
23 1.1% in 2021 and is expected to rise 1.9%
22 in 2022.
21
20 ◆ Despite China’s Covid-19 lockdowns in the
19 first half of 2022, world refined demand is
18
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
forecast to accelerate in 2022 as China’s
(e) rolling re-openings should drive much
World Refined Production* World Refined Usage
*Including Primary and Secondary Production.
stronger demand growth in the second half
Source: International Copper Study Group of the year. We expect demand to
experience secular growth over the long
term, as copper is expected to play a major
role in decarbonization.

Real GDP Growth
(percent) ◆ Global GDP declined 3.3% in 2020 before
10
rising 6.1% in 2021. The International
8
Monetary Fund expects global GDP to
6
4
expand by 3.6% in 2022 and 2023.
2
◆ There has been a downward revision for
0
the forecast, reflecting a downgrade due to
-2
-4
uncertainties brought by supply disruptions,
-6 the Ukraine-Russia war, and a rapid
-8 increase in inflation.
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
(e) (e)
World China United States European Union

Source: International Monetary Fund
Gold Bullion Historical Price (LBM)

($/ounce) ◆ Gold bullion prices averaged $1,796/ounce
2,000
in 2020, up 27.9% from $1,404/ounce in
1,800 2019. Factors that contributed to the surge
in gold prices include the Covid-19 crisis,
1,600
the potential for escalating trade tensions,
1,400
and gold’s nature as a safe haven, in
CFRA’s opinion.
1,200
◆ Gold bullion prices continued to remain
1,000 elevated in 2021, averaging $1,792/ounce.
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*
In May 2022, gold bullion prices averaged
*Data through May.
Source: S&P Global Market Intelligence $1,824/ounce, down 1.0% from the same
period in the prior year. The outlook for gold
in 2022 is a mixed bag, as macro-economic
uncertainty has led to higher demand for
gold as a safe haven, but expectations for
rising real interest rates could be a major
headwind for gold during the current cycle
of interest rate hikes.
Aluminum Historical Price (LME)

($/tonne) ◆ Aluminum prices averaged $2,502/tonne in
3,800
2021, up 46.5% from $1,707/tonne in 2020,
3,300 the biggest annual gain since 2009.
2,800 ◆ Furthermore, aluminum prices continued to

hold above $2,800/tonne in the first five
2,300
months of 2022 and peaked at
1,800 $3,480/tonne in March 2022, reaching an
all-time high. The strong recovery came as
1,300
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*
global demand increased significantly and
*Data through May. the supply gap widened due to soaring
Source: S&P Global Market Intelligence
energy costs and other production cuts.

Iron Ore Historical Price (NYMEX)
($/tonne) ◆ Iron ore prices averaged $157/tonne in
250
2021, up 44.1% from $109/tonne in 2020.
200
◆ In June 2021, iron ore prices peaked at a
150 record high of $218/tonne, but the price
dropped by more than half by November to
100
$100/tonne, before rebounding to
50 $133/tonne in May 2022. The fall in prices
came as iron ore was oversupplied,
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*
coupled with a lower demand outlook for
*Data through May. steel products.
Zinc Historical Price (LME)

($/tonne) ◆ Zinc prices averaged $3,032/tonne in 2021,
4,000 up 33.3% from $2,273/tonne in 2020.
3,500
◆ In 2022, zinc prices surged to an all-time
3,000
high at $4,232/tonne in March. CFRA has a
2,500 positive long-term outlook for zinc, given the
2,000 increased demand for galvanized steel.
1,500
1,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*
*Data through May.
Copper Historical Price (LME)

($/tonne) ◆ Copper prices averaged $9,731/tonne in
11,000
2021, up 51.1% from $6,203/tonne in 2020.
10,000
9,000
◆ In 2021, copper price averages increased
8,000
by more than 50%. The price rally has
continued into 2022, reaching an all-time
7,000
high in March, eclipsing the highs achieved
6,000
in May 2021. A resurgence in the price of
5,000
copper (after plummeting due to the Covid-
4,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*
19 crisis) has been driven by Chinese
*Data through May. stimulus and a surge in demand as the
Source: S&P Global Market Intelligence economy rebounded and is being boosted
by its pivotal role in a number of rapidly
growing sectors (e.g., electric vehicle
batteries, solar and wind energy, and
semiconductor wiring).

Hot Rolled Steel Historical Price (NYMEX)
($/short ton) ◆ Hot rolled steel is the main steel product of
2,100
1,900
the manufacturing sector. Hot rolled steel
1,700 prices averaged $1,565/short ton in 2021,
1,500 up 160% from $608/short ton in 2020.
1,300
1,100
◆ YTD through May 2022, prices of hot rolled
900 steel averaged $1,307/short ton, which rose
700 slightly (2.6%) from the same period in the
500 prior year.
300
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022* ◆ Steel prices have faced headwinds
*Data through May.
recently, with prices declining amid
Source: S&P Capital IQ
stagnant steel demand in China and lower
iron ore prices. In May 2022, hot rolled steel
prices stood at around $1,376/short ton,
down by 4% from $1,435/short ton in
December 2021.
Silver Price (LBMA)

($/ounce) ◆ The price of silver tends to track the
50
movement of gold prices and averaged
40 $24.87/ounce in 2021, up 20.7% from
$20.60/ounce in 2020.
30
◆ During much of 2020 and through the first
20 half 2021, silver prices experienced a major
10
bull run, rising from $14.16/ounce on March
31, 2020, to $28.21/ounce on June 1, 2021.
0 However, from the second half of 2021
2012 2013 2014 2015 2016 2017 2018 2019* 2020 2021 2022*
through the first five months of 2022, silver
*Data through May.
Source: S&P Global Market Intelligence prices struggled to maintain momentum,
dropping down to $21.17/ounce in May
2022.
U.S. Private Nonresidential Construction Spending

(seasonally adjusted annual rate, $, in billions) ◆ Metals such as steel, aluminum, copper,
550
and zinc are commonly used in the
500
construction industry.
450
◆ The seasonally adjusted annual rate of U.S.
400
private nonresidential construction spending
350
ended 2020 at a level 9.5% below 2019
300
year end but rebounded by 9.5% in 2021.
250
◆ The U.S. private nonresidential construction
200
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022* spending is expected to increase 5.1% in
*Data through March. 2022, according to Action Economics.
Source: U.S. Census Bureau

U.S. Housing Starts
(seasonally adjusted annual rate, in thousands) ◆ The seasonally adjusted annual rate of U.S.
2,000
housing starts grew 7.8% in 2020 and
1,800
1,600
14.9% in 2021.
1,400
◆ U.S. housing starts are expected to grow
1,200
6.1% in 2022, according to Action
1,000
800
Economics.
600
400
200
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*
*Data through March.
Source: U.S. Census Bureau
Global Light Vehicle Auto Production

(in million units) ◆ Steel and aluminum are major inputs in the
80
production of light vehicles. Hence, the
70
60
global production level of light vehicles
50 affects global demand for steel and
40 aluminum.
30
20 ◆ In 2020, the production of passenger cars
10 declined 15.9% and production of
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
commercial vehicles dropped 8.7%, for a
Passenger Cars Commercial Vehicles
total decline of 13.8%. However, we saw a
rebound in total auto production of 3.4% in
Source: International Organization of Motor Vehicle Manufacturers 2021, and S&P Global Mobility projects
decline in auto production of 1.3% in 2022.

INDUSTRY TRENDS
The Metals & Mining industry is within the materials sector and is comprised of five sub-industries: 1)
aluminum, 2) diversified metals & mining, 3) copper, 4) gold, and 5) steel. Below are the profit maps
showing the current state of the sector and industry.
PROFIT-POOL MAP OF MATERIALS SECTOR

(for the last 12 months ended first quarter of 2022)
20 Construction Materials
Paper & Forest Products
Containers & Packaging
16 Metals & Mining
Chemicals
Operating Margin (EBIT)
12
0
Share of Revenue
PROFIT-POOL MAP OF METALS & MINING INDUSTRY

(for the last 12 months ended first quarter of 2022)
45
Aluminum
40 Copper
35 Diversified Metals and Mining

Operating Margin (EBIT)
Gold
30
Steel
25
20
15
10
0
Share of Revenue

As depicted above, the Metals & Mining industry is the second-largest industry in the materials sector in
terms of revenue market share, trailing behind the chemicals industry; furthermore, the industry’s margin
has improved significantly, benefiting from the surge in most metal prices, leaving behind the containers &
packaging industry in 2021. Within the Metals & Mining industry, the steel sub-industry has the most
revenue share. Margins for the Metals & Mining industry vary significantly across each sub-industry, largely
due to the high correlation with the prices of their underlying commodities, as well as the global competitive
landscape for each sub-industry.
Competitive Environment
Below, we use the Porter’s Five Forces framework as a tool to analyze the competitive environment of the
U.S. Metals & Mining industry.
DEGREE OF BARGAINING
BARGAINING POWER THREAT OF THREAT OF NEW
RIVALRY/ POWER OF
OF CUSTOMERS SUBSTITUTES ENTRANTS
COMPETITION SUPPLIERS
Low Medium Medium Low
An oligopolistic The oligopoly nature Steel is a cheaper Large capital is
industry where grants the producers more substitute in auto needed to function,
companies tend to pricing power. However, production, while and massive
be vertically pricing is still affected by copper has better resources are
Aluminum integrated. global supply and demand conductivity, which is required to mine
dynamics. A supply glut a key consideration bauxite, handle
will drive prices lower. in power grids, materials, and
wires, etc. operate smelters,
rolling mills, and
finishing plants.
Low High Medium Low
Highly concentrated Switching cost of copper is Aluminum has Large capital
industry dominated relatively low and can be increasingly investments could
by a handful of easily replaced with other replaced copper in deter new entrants.
Copper miners. materials. power grid cables, R&D is also
High
wires, radiators, etc. important to improve
The industry is Other substitutes to mining and
very labor- copper include fiber processing of
intensive and optic and plastics. copper.
heavily monitored
High Medium Medium Low
by labor unions
The advent of Steel pricing is impacted and environmental Aluminum (much Minimills are less
minimill steelmakers by global supply and organizations lighter than steel) is capital-intensive
intensified the demand dynamics groups. Labor a viable substitute in than the integrated
competitiveness of (producers’ control strikes are a auto production but steelmakers.
Steel the steel industry. production levels while common issue that is more expensive.
Minimills enjoy labor consumers determine the constantly haunts For construction,
cost advantage and demand for auto, the mining steel is irreplaceable
account for nearly construction activity, etc.) industry. due to its strength.
70% of U.S. crude
steel production.
Low Medium Low Low
Recent Demand is highly Silver (also a A new entrant will
consolidations in an correlated to the global precious metal) is need huge capital to
already highly economic situation. more affordable with acquire a gold
concentrated Demand for gold will similar attributes as reserve, which are
industry further increase during periods of gold (jewelry, safe- mostly owned by the
reduced the high uncertainties (as a haven investment). largest gold miners
Gold
competitiveness safe-haven investment) or However, silver has in the world.
level of this industry. during booming period greater volatility and
(higher demand for is affected by its
jewelry). However, the applications.
production level or proven
reserve will also influence
gold pricing.

Industrial Metals: Steel, Aluminum, and Copper
Steel, aluminum, and copper are the dominant industrial metals globally. However, the manufacturing
processes and fundamental drivers for these three metals are quite different. Aluminum and copper markets
are concentrated and oligopolistic. The steel market, however, is more fragmented.
The largest North American aluminum producer (Alcoa) accounts for approximately 3.5% of the world’s
primary aluminum production, whereas the two largest North American steel companies, Nucor and U.S.
Steel, account for about 2.0% of global steel output. Meanwhile, Freeport-McMoRan, Inc., the world’s
largest publicly listed copper producer, accounts for about 7% of global copper output.
The most important long-term trends shaping the industrial metals markets are related to new manufacturing
technologies, consolidation, foreign competition or imports, and raw material costs. These trends will likely
exert significant influence on the direction of industrial metals companies for the near future.
U.S. industrial metals firms face fierce competition from overseas producers and must contend with global
overcapacity. However, international pressures have affected competitive positioning in the market in other
ways.
Steel
Increased production in China is the main reason for the rise in global steel production since 1999. Because
of the sharp rise in China’s steel production, raw material costs (e.g., iron ore, ferrous scrap, coke, and coal)
and other inputs also increased dramatically. However, the pivotal point for China, and therefore the global
demand for steel, occurred with the slowdown of the country’s real estate market – one of the main drivers
of China’s GDP growth – due to the country’s economic rebalancing efforts. More recently, the massive
lockdowns in China to curb the spread of Covid-19 have had a negative impact on demand..
In 2021, Chinese steel production reached 1,032.0 million tonnes (1,137.6 million tons), down 3.0% from
1,064 million tonnes (1,160.7 million tons) in the prior-year period, according to statistics compiled by
industry trade group World Steel Association. Despite the challenging environment since 2012, China still
accounted for about 53% of global steel production in 2021 and is responsible for about half of the global
overcapacity. To address this issue, the Chinese government shut down about 140 million tonnes per
annum (mtpa) of unlicensed induction furnace capacity in 2017 and closed 150 million mtpa of legitimate
steelmaking capacity from 2016 to 2018, according to S&P Global Platts. However, S&P Global Platts
estimates that China will see an addition of 208.57 million mtpa of new crude steel capacity from 2019 to
2023, versus capacity closures of 170.92 million mtpa over the same period, resulting in a net crude steel
capacity expansion of 37.65 million mtpa.
A huge rebound in global GDP growth in 2021 indicates an unprecedented recovery in global activity due to
the vaccine rollout and economy reopening. However, a number of headwinds, such as soaring inflation, the
Ukraine-Russia war, and disruption in supply chains, have the International Monetary Fund (IMF)
forecasting world GDP growth to decline from 6.1% in 2021 to 3.6% in 2022 and China GDP to grow 4.4%
in 2022, according to its “World Economic Outlook” released in April 2022.
The tougher low-price environment (at multiyear lows in 2015 and 2016) and domestic woes forced North
American firms to restructure and put more focus on return on invested capital and productivity. As a result,
CFRA thinks domestic steel producers are fundamentally stronger than previous cycles. Significant
investment is going into new state-of-the-art steel mills in the U.S. This new domestic capacity could
become a headwind during economic downturns.

LARGEST STEEL-PRODUCING COUNTRIES
(arranged by steel production in 2021)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
MILLION TONNES (1 metric ton/tonne = 1.10231 U.S. ton)
China 731.0 822.0 822.3 803.8 807.6 870.9 920.0 996.3 1,064.8 1,032.8
India 77.3 81.3 87.3 89.0 95.5 101.5 109.3 111.2 100.3 118.2
Japan 107.2 110.6 110.7 105.1 104.8 104.7 104.3 99.3 83.2 96.3
United States 88.7 86.9 88.2 78.8 78.5 81.6 86.6 87.8 72.7 85.8
Russia 70.2 69.0 71.5 70.9 70.5 71.5 72.1 71.9 71.6 75.6
South Korea 69.1 66.1 71.5 69.7 68.6 71.0 72.5 71.4 67.1 70.4
Turkey 35.9 34.7 34.0 31.5 33.2 37.5 37.3 33.7 35.8 40.4
Germany 42.7 42.6 42.9 42.7 42.1 43.3 42.4 39.7 35.7 40.1
Brazil 34.5 34.2 33.9 33.3 31.6 34.8 35.4 32.2 31.0 36.2
Iran 14.5 15.4 16.3 16.1 17.9 21.2 24.5 25.6 29.0 28.5
WORLD TOTAL 1,560.4 1,650.4 1,671.1 1,621.5 1,629.1 1,732.2 1,813.6 1,874.7 1,880.4 1,951.9
AS % OF WORLD TOTAL
China 46.8 49.8 49.2 49.6 49.6 50.3 50.7 53.1 56.6 52.9
India 5.0 4.9 5.2 5.5 5.9 5.9 6.0 5.9 5.3 6.1
Japan 6.9 6.7 6.6 6.5 6.4 6.0 5.8 5.3 4.4 4.9
United States 5.7 5.3 5.3 4.9 4.8 4.7 4.8 4.7 3.9 4.4
Russia 4.4 4.0 4.3 4.3 4.2 4.1 4.0 3.8 3.6 3.9
South Korea 4.5 4.2 4.3 4.4 4.3 4.1 4.0 3.8 3.8 3.6
Turkey 2.3 2.1 2.0 1.9 2.0 2.2 2.1 1.8 1.9 2.1
Germany 2.7 2.6 2.6 2.6 2.6 2.5 2.3 2.1 1.9 2.1
Brazil 2.2 2.1 2.0 2.1 1.9 2.0 2.0 1.7 1.6 1.9
Iran 0.9 0.9 1.0 1.0 1.1 1.2 1.4 1.4 1.5 1.5
Source: World Steel Association
Copper
CFRA thinks the copper market will be the best performing sub-industry within the Metals & Mining industry.
We are forecasting continued strength in copper prices, driven by strong incremental demand (mostly from
decarbonization) and shortage in supply growth. Copper is an important component of power cables and
renewable energy generation systems due to its excellent conductivity. We anticipate a strong price rally for
copper due to tight supply—a positive catalyst for copper miners.
The growth in EVs will provide a major new source of secular growth for copper, in CFRA’s opinion. All
types of EVs consume a large amount of copper—about three to four times as much as conventional cars—
as it is used in everything from batteries to copper rotors, electric motors, wiring, and charging infrastructure
(such as charging ports and higher overall electricity demand). Copper demand for EVs is expected to
increase from 72,000 tonnes in 2021 to 3.3 million tonnes in 2030, according to Reuters. From 2022 to
2028, the global EV market size is projected to grow at a compound annual growth rate (CAGR) of 24.6%
during the 2022-2028 period, surpassing $980 billion by 2028 from $185 billion in 2021, according to
Fortune Business Insights.
Continuous policy support has been one of the main reasons for strong EV sales, with overall public
spending on subsidies and incentives doubling in 2021 to nearly $30 billion. Global EV sales have
maintained their momentum in 2022 after breaking records in 2021, when sales of EVs doubled to a new
record of 6.6 million units. Sales have continued rising strongly in 2022 despite disruptions in global supply
chains, reaching two million units in the first quarter, up 33% compared to the same period in the prior year,
according to the International Energy Agency (IEA). Furthermore, the number of electric cars on the world’s
roads at the end of 2021 was about 16.5 million, which is three times more than in 2018. The International
Copper Association also estimates that the number of plug-in EVs will reach 58 million by 2027, requiring

more than 40 million charging ports, driving copper demand for port charging cables, charging units, and
wiring to electrical panels to over 100,000 tonnes per year.
On the supply side, most of the copper projects that are slated to come online over the next few years are
relatively small, and the increase in new supply is likely to be slower than the decline rates at larger mines,
in CFRA’s opinion. According to the International Copper Study Group (ICSG), the increase in refined
copper usage in 2021 was 1.2%, while copper mining production increased 2.4%, and refined output was up
only 1.1%, which resulted in a refined copper deficit of 439 thousand tonnes. ICSG forecasts the global
refined copper balance to shift from a deficit in 2021 to a surplus of 142 thousand metric tons in 2022 and a
surplus of 352 thousand metric tons in 2023. Copper mine production was flat for three years before 2021,
and ICSG expects the growth in mined production to accelerate from 2.4% in 2021 to 5% for both 2022 and
2023. After three years of muted growth in refined copper production (average growth of 1.0%), ICSG
forecasts 4.3% growth in 2022 and 3.6% growth in 2023. ICSG revised its 2022 copper demand forecast
downward to 1.9% growth, largely due to the Russia-Ukraine situation and Covid-19 lockdowns in China.
Demand growth is expected to rebound to 2.8% in 2023.
Aluminum
Given that they have always had to obtain raw materials from overseas, U.S. aluminum companies have
been global competitors virtually since their inception. The top-tier company in the U.S., Alcoa, has
substantial overseas manufacturing holdings and derives a sizable portion of its sales and earnings from
outside the country.
WORLD PRODUCTION OF REFINED ALUMINUM

(in thousands of metric tons)
UNITED UNITED WORLD

YEAR STATES CANADA FRANCE GERMANY KINGDOM NORWAY INDIA AUSTRALIA CHINA RUSSIA TOTAL
2021 908 3,137 435 509 38 1,408 3,960 1,565 38,503 3,931 67,132
2020 1,027 3,118 407 529 36 1,302 3,467 1,585 37,080 3,856 65,111
2019 1,126 2,854 379 508 39 1,279 3,184 1,570 35,044 3,896 64,314
2018 897 2,937 380 529 48 1,295 2,934 1,574 35,802 3,621 63,502
2017 741 3,212 430 550 48 1,253 3,062 1,488 35,189 3,742 62,411
2016 818 3,209 425 547 46 1,247 2,733 1,634 32,698 3,561 59,326
Source: World Bureau of Metal Statistics
From 1989 through 2013, the aluminum market was generally in surplus, reflecting lower demand caused
by recessions combined with excess supply. CFRA attributes this to two primary factors. First, the collapse
of the Soviet government caused a dramatic decline in domestic consumption, which made more aluminum
available for export. With a pressing need to raise hard currency, Russia began to export most of its output.
Second, China’s emergence as the world’s largest aluminum producer and a net exporter since 2002 has
added to global oversupply and contributed to the persistent glut that plagued the industry through 2013.
Since 2016, the U.S. has imported more aluminum than its total consumption; imports as a percentage of
total consumption in the U.S. rose to 118% in 2016, according to the U.S. Geological Survey (USGS). In
2021, the ratio increased to 127%.
Gold
Historically, gold has proven to be an excellent store of value and is arguably the best hedge against
inflation and stock market volatility. Gold prices struggled to gain any traction in 2021 (after achieving all-
time highs in 2020) but remained historically high. We expect prices to be mostly range-bound in 2022 and
2023, as higher demand for safe havens will likely be offset by headwinds from rising real interest rates.
Another headwind, in our opinion, is that gold (as well as other precious metals) is losing meaningful market
share to cryptocurrencies when investors are seeking alternative investments and/or a hedge against fiat

currency devaluation. The gold market had a solid start for 2022, with gold demand increasing 34% in Q1
2022 compared to Q1 2021 and gold prices gaining 8% in the same period.
Central banks are one of the key drivers of gold demand, primarily due to diversification of reserve risk away
from the U.S. dollar. In 2018, central banks demand for gold as a reserve asset rose 73% compared to
2017, the highest central bank buying in 50 years; this level of central bank purchases continued in 2019
(before falling to more normal levels in 2020 2021) attributed to geopolitical concerns and the uncertain
macroeconomic environment, according to the World Gold Council (WGC). The U.S. dollar share of global
foreign exchange reserves stood at 59% in 2020 and remained mostly unchanged in 2021.
The other important driver of demand growth is gold-backed ETFs, which are fully backed by physical gold.
Gold ETFs was one of the biggest drivers of gold demand in 2020, as ETFs recorded record annual net
inflows of 877 tonnes, or $47.9 billion. In 2021, gold ETFs saw net outflows of 173 tonnes ($9.1 billion).
Year-to-date through April 2022, gold ETFs posted net inflows of 312 tonnes ($19.4 billion).
In May 2018, Goldcorp Chairman Ian Telfer claimed that the world had reached peak gold – a situation
where global gold mine production reached its peak and will start declining – and all major gold deposits
have already been discovered. In fact, 15 of the world’s 20 largest gold miners (including Barrick Gold
Corp., Newmont Mining Corp., AngloGold Ashanti Ltd., and Kinross Gold Corp.) suffered from a decline in
their overall remaining years of production (reserve life index) from 2008 to 2017, according to an article
published by S&P Global Market Intelligence (SPGMI) in August 2018. SPGMI noted that the increase in
gold exploration budgets over the past decade failed to produce any significant discoveries. Spending on
gold exploration was at historically high levels in the 10 years prior to 2018, nearly 60% higher than the
preceding 18-year period; however, only 215.5 million ounces of gold have been defined in 41 discoveries,
eight times below the 1,726 million ounces of gold in 222 discoveries over the preceding 18 years.
Rare Earth Metals Gaining Traction

Rare earth elements (REEs) have grown to be an essential part of our daily lives, although most people
wouldn’t notice their existence and influence. REEs are a set of 15 metallic elements plus two additional
metals, scandium and yttrium, which are typically found in the same ore as the true rare earths. The 17
metals are further broken down into light and heavy rare earths, the latter being harder to find and more
desirable for their application in technology. Because of their geochemical properties, REEs are typically
dispersed. This means they are not often found in concentrated enough clusters to make them viable to
mine. It was the scantiness of these minerals that led to them being called rare earths.
Scientifically, rare earths are strong reducing agents. Rare earths react with other metallic and non-metallic
elements to form compounds, each of which has specific chemical behaviours. This makes them
indispensable and non-replaceable in many electronic, optical, magnetic, and catalytic applications. In
layman’s terms, REEs are an essential part of many high-tech devices. According to the U.S. Geological
Survey (USGS), REEs are necessary components in over 200 items spanning a wide range of applications,
including cellular phones, computer hard drives, electric and hybrid vehicles, and flat-screen monitors and
televisions. Electronic displays, navigation systems, lasers, and radar and sonar systems are all important
defense uses. Despite the fact that the amount of REEs used in a product may not constitute a major
portion of the product in terms of weight, value, or volume, the REEs may be required for the device to
function. Magnets made of REEs, for example, account for just a small percentage of the total weight, but
without them, spindle motors and voice coils of desktops and laptops would not be possible. Even
governments are starting to take notice and there is tremendous U.S. government support to rejuvenate the
domestic rare earths industry.
According to the USGS, in 1993, 38% of the world production of REEs was in China, 33% in the United
States, 12% in Australia, and 5% each in Malaysia and India. Several other countries, including Brazil,
Canada, South Africa, Sri Lanka, and Thailand, made up the remainder. However, in 2008, China

accounted for more than 90% of world production of REEs, and by 2011, the country accounted for 97% of
world production. Starting from 1990, supplies of REEs became an issue as the government of China began
to change the amount of REEs that it allows to be produced and exported. The Chinese government also
began to limit the number of Chinese and Sino-foreign joint-venture companies that could export REEs from
China.
Operating Environment
Steel
The impact of the novel coronavirus pandemic brought large sections of the U.S. economy to a halt. U.S.
steelmakers curtailed production rapidly in the face of Covid-19-related shutdowns in the North American
auto industry. Steel consumption decreased about 18.0% to 80 million metric tons in 2020 compared to
2019 before rebounding 20% to 97 million metric tons in 2021, according to the World Steel Association. In
2022, the World Steel Association forecasts that steel consumption increased by 2.8% to 99.8 million metric
tons. YTD through May 2021, raw steel production in the U.S. was 35.2 million tons, at a capacity utilization
rate of 80.3%, according to the American Iron and Steel Institute (AISI). This represents a 1.8% year-over-
year production decline from the same prior-year period, when capacity utilization was 78.7%.
2021 was a volatile year for iron ore, the main ingredient in steel production. In May 2021, prices increased
to an all-time high on China’s surging steel demand. At that time, iron ore prices had risen by more than
200%, compared to the prior-year period. China’s steel output was at a historic high rate of about 97.85
million tonnes in April 2021 alone, despite the government’s pledge to curb annual output, according to
SPGMI. However, in the second half of 2021, iron ore prices crashed down, dipping to $85/tonne in
November 2021 and erased half of its achieved value in June 2021. However, in 2022, iron ore managed to
reclaim 60% of its lost value in late 2021, reaching $158.30/tonne in March 2022 before slipping down
slightly as demand faltered, with China facing real estate sector issues and lockdowns as well as the effects
of the Ukraine-Russia war.
Global iron ore production is expected to grow at around 5.6% from 2022 to 2026, reaching annual
production of 3.49 billion tonnes in 2026, according to Businesswire. Furthermore, CFRA believes that (in
the long term) the iron ore outlook is less than optimal, as China has pledged to slash its steel production,
one of the country’s largest property developers has defaulted, significant Covid-19 lockdowns have
continued, and the country is accelerating efforts to decarbonize its economy. On top of that, the Ukraine-
Russia war has further diminished the iron ore outlook.
Imports of steel products have been an overhang on the domestic steel industry for decades. The strength
of the U.S. dollar has made steel imports from other countries more affordable compared to U.S.
domestically produced steel. Massive overcapacity due to the economic slowdown of major steel-
consuming countries such as China, Russia, and Brazil resulted in a surge of imports into the U.S. and a
large drop in steel prices, forcing steel producers to idle capacity. In recent years, the Section 232 tariffs and
quotas have been effective at leveling the playing field and shrinking the market share of imported products.
However, the surge in domestic steel prices in 2021 led to a significant arbitrage opportunity (even after
accounting for tariffs). Based on preliminary Census Bureau data, AISI reported that 2021 total and finished
steel imports were 32.6 million tons and 23.8 million tons, up 48.2% and 47.6%, respectively, versus 2020.
China, the world’s largest steel exporter, has historically dumped cheap steel products into European and
American markets; its steel production reached a record 1,064.8 million tonnes in 2020 before declining to
1,034 million tonnes in 2021. The European Union (EU) estimates that there were about 606 million tonnes
of excess steel capacity globally at the end of 2020. In July 2020, the OECD noted that many investment
projects were underway across the globe, or in the planning stages. Upon completion of these projects and

excluding closures, the OECD estimates that global steelmaking capacity could expand by about 2% to 3%
between 2020 and 2022.
Following the implementation of Section 232 steel tariffs, we note a significant decrease in the imports of
steel mill products. After falling 21.2% in 2019, the total U.S. imports of steel mill products fell an additional
23.3% in 2020. Imports from Japan had the largest decline at 38%, according to the AISI.
With the exemption of Section 232 steel tariffs granted to Canada and Mexico in May 2019, CFRA believes
that the U.S. steel consuming industries (e.g., auto, oil and gas, etc.) will hunt for cheaper Canadian and
Mexican steel, thus increasing U.S. steel imports. Notably, imports of steel mill products from Canada and
Mexico accounted for the largest share of U.S. steel imports at 19% and 18%, respectively.
After the transition of power from Donald Trump to Joe Biden in early 2021, the October 2021 accord was
set to lift barriers on steel and aluminum trade between the U.S. and Europe, helping both sides of the
Atlantic turn the page after a long conflict. The agreement was more complex than Biden’s simple statement
that it will immediately remove tariffs on the European Union metal exports, as the zero tariff was only at a
volume set by historical patterns, through a new system of bilateral tariff rate quotas (TRQs). These quotas
could turn into voluntary export restraints, paving the way to return to the “managed trade” era of the 1980s,
when governments, not market forces, controlled much of international commerce, according to Peterson
Institute for International Economics (PIIE). This accord is expected to benefit American manufacturers as
they have suffered from high steel and aluminum prices.
IMPORTS vs EXPORTS OF STEEL MILL PRODUCTS

(in millions of net tons)
50
40
30
20
10
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*
Exports Imports
*Data through the March.
Source: American Iron and Steel Institute

U.S. EXPORTS AND IMPORTS OF STEEL MILL PRODUCTS, BY GROUP
(in thousands of net tons)
PRODUCTS 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*
Exports
Flat Products 6,107 5,885 5,383 5,197 5,812 4,744 4,388 4,038 5,074 1,317
Long Products 3,023 2,763 2,025 1,826 2,028 1,950 1,391 1,336 1,693 419
Pipe and Tube Products 1,865 1,724 1,196 943 1,130 993 756 608 675 190
Stainless Products 727 884 867 855 1,011 705 468 342 384 93
Semi-Finished Products 392 245 108 84 117 68 60 119 147 36
Total exports 12,114 11,503 9,580 8,905 10,098 8,461 7,064 6,442 7,973 2,055
Imports
Ingots, blooms, billets, slabs 6,642 9,605 6,617 6,063 7,770 7,291 6,247 5,334 7,898 1,693
Wire rods 797 1,474 1,442 1,446 1,434 1,046 856 643 1,043 410
Structural shapes & piling 634 963 950 878 881 580 586 457 608 209
Plates 1,989 3,713 3,222 2,330 1,990 2,019 1,579 1,051 2,019 498
Rails & accessories 345 338 338 324 239 178 150 69 64 19
Bars & tool steel 3,285 3,491 3,850 3,577 3,252 2,753 2,275 1,980 2,532 694
Pipe & tubing 7,044 7,998 6,473 4,199 7,617 6,595 5,516 3,157 4,086 1,218
Wire & wire products 686 810 940 907 838 740 715 705 864 212
Tin mill products 1,330 1,609 1,795 1,906 1,904 1,628 1,631 1,686 1,965 546
Sheets & strip 7,102 11,032 10,457 9,233 9,386 8,483 6,449 5,656 9,386 2,419
Total imports 29,853 41,033 36,084 30,864 35,310 31,313 26,006 20,737 30,465 7,917
*Data through March for Imports and Exports.
Source: U.S. Census, International Trade Administration
CFRA notes that many steel mills in the U.S. have focused on harder-to-make steel products to avoid the
impact of cheap steel imports. This, combined with the Section 232 tariffs/quotas, has helped steel mills
gain market share and improve pricing power. The domestic steel capacity utilization of manufacturing
equipment in operation had been largely above 80% from October 2018 through January 2020. The
capacity utilization fell considerably to 67.7% in 2020, its lowest level since 2009. The U.S steel utilization
has since recovered significantly and reached a record high of 82.2% in 2021.
CAPACITY UTILIZATION OF U.S. STEEL INDUSTRY

(in percentage)
85
80
75
70
65
60
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021* 2022*
Capacity Utilization Period Average

*Data through May 14, 2022.
Source: American Iron and Steel Institute

Since the 1960s, U.S. minimills have been able to make raw steel at a lower cost than their integrated peers
(especially lower labor costs and fixed operating costs). Minimills have undercut their rival integrated
companies on price and driven them out of nearly every market, except flat-rolled carbon sheets.
Following significant consolidation of integrated steel producers, the newly merged integrated companies
have lower cost structures than before due to their more flexible work rules, lower employment levels, and
generally declining costs for pension and other post-retirement benefits. Nevertheless, it remains to be seen
if they can match the low-cost minimill structure and high profit margins over the course of the business
cycle.
The minimill labor cost advantage (particularly the absence of pension and other post-retirement obligations)
is important in the context of balance sheet strength and its impact on the cost of capital. This cost
advantage enables minimills to generate greater levels of operating cash flow on earnings, which can be
used to internally fund capital spending and to pay for acquisitions, dividends, and share repurchases.
The imperative to cut raw material costs have likely been a strong motivating factor in merger activity since
2000. It has also been an impetus for backward integration. Given that four companies (Vale, BHP Group,
Rio Tinto, and Fortescue) account for nearly all the seaborne iron ore trade, steelmakers need to become
much larger entities in order to obtain more favorable terms from their suppliers and thus cut overall costs. It
is worth noting that major iron ore mining companies are also large producers of manganese and
metallurgical coal, which are also used in steelmaking.
U.S. STEEL PRODUCTION, CAPACITY,AND UTILIZATION vs WORLD PRODUCTION AND USE

--------------- TOTAL WORLD --------------- U.S. PRODUCTION AS
OPERATING CAPACITY --------------------------------------
PRODUCTION in millions of tons --------------------------------------
% OF TOTAL WORLD
-----------------------------------------------
YEAR RATE (%) PRODUCTION‡ APPARENT USE†‡
in millions of tons --------------------------------------------- PRODUCTION
2022ɤ 81.6 66.0 20.3 503.3 2,028.5 4.0
2021 81.6 66.0 95.1 2,150.1 2,021.3 4.4
2020 67.0 119.6 80.1 2,054.7 1,953.1 3.9
2019 80.1 118.1 94.6 2,067.1 2,082.2 4.6
2018 78.2 122.1 95.5 2,012.3 2,023.6 4.7
2017 74.0 121.6 90.0 1,913.5 1,940.0 4.7
2016 70.5 122.7 86.5 1,799.9 1,808.2 4.8
2015 70.1 124.0 86.9 1,791.4 1,792.5 4.9
2014 77.5 125.4 97.2 1,845.3 1,850.1 5.3
2013 76.7 124.9 95.8 1,821.3 1,834.4 5.3
2012 75.2 130.0 97.8 1,722.1 1,718.4 5.7
2011 74.5 127.8 95.2 1,697.4 1,687.3 5.6
2010 70.4 126.0 88.7 1,582.1 1,564.8 5.6
ɤData through May.
*Consumption. †Consumption; 2022 data is forecasted. ‡Original data in tonnes (metric) are converted to
U.S. tons; (1 metric ton/tonne = 1.10231 U.S. ton).
Source: American Iron and Steel Institute, World Steel Association
Global steel demand rebounded 2.7% in 2021.The World Steel Association (Worldsteel) forecasts global
steel demand to increase by 0.4% in 2022 and 2.2% in 2023, according to its “Short Range Outlook” report
released in April 2022. Global steel demand declined significantly in most countries during H1 2020 due to
the Covid-19 crisis, but demand bounced back quickly in H2 2020, with a fast recovery in Chinese demand
and a v-shaped recovery in demand for automotive and construction markets.

China emerged from the lockdown ahead of other countries and started its recovery in late February 2020.
By the end of April 2020, all major steel-using sectors were back to near full productivity, although the
operations of the manufacturing sector were held back by lower export demand. Following the lifting of the
lockdown in Wuhan on April 8, 2020, the construction sector quickly returned to full productivity. A strong
recovery in China mitigated the reduction in global steel demand in 2020. The post-lockdown recovery in
steel demand in the rest of the world was stronger than expected, but still marked a deep contraction in
2020, both from developed and emerging economies.
In 2021, steel demand exhibited a true “v-shaped” recovery. Strong manufacturing activity bolstered by
pent-up demand was the main driver. The developed economies outperformed developing economies,
showing the positive benefits of higher vaccination rates and government support policies amid Covid-19.
Localized and targeted lockdowns helped minimize the impact of infection waves on economic activities in
developed economies. Despite the Covid-19 spread and supply chain disruptions in the EU and U.S., steel
demand rebounded significantly in 2021. However, steel demand growth in the EU and the U.S. is expected
to weaken in 2022 due to rising inflation and the effects of the Ukraine-Russia war. The impact of the war
will be particularly pronounced in the EU. Steel demand in the EU and U.S. is forecast to rise by 1.1% in
2022 and 2.4% in 2023, after recovering by 16.5% in 2021. In the developing economies (excluding China),
pandemic recovery faced more challenges, with the continued impact of Covid-19 and soaring inflation.
Steel demand for developing economies rose 10.7% in 2021, but it is expected to remain flat in 2022 due to
headwinds from the Russia-Ukraine war and U.S. monetary tightening, before rising by 4.5% in 2023. In
China, steel demand faced a major slowdown in 2021 due to tough government measures on real estate
developers. China’s steel demand should remain flat in 2022 as the government tries to boost infrastructure
investment and stabilize the real estate market. The stimuli introduced in 2022 are likely to lead to modest
growth in steel demand in 2023.
Copper
In 2020, global copper mine production increased about 1.6% compared to 2019, as increases in output
from India, Chile, and the Democratic Republic of Congo offset the production decline in other countries,
according to the International Copper Study Group (ICSG). After three years of flat growth, world copper
mine output increased 2.4% in 2021 and is expected to increase 5% in 2022 and 2023.
Refined copper production rose to 21.87 million tonnes (Mt) in 2021, and SPGMI expects it to increase to
26.14 Mt in 2025, bolstered by brownfield mine expansions and some large greenfield projects. Despite
expectations of an easing in the copper concentrate market balance through 2025, SPGMI forecasts the
refined copper market will move into a 279,000-tonne deficit by 2025 from a 142,000-tonne surplus in 2020.
Furthermore, SPGMI forecasts that during the 2026-2030 period, copper production would be unable to
meet the surging demand. SPGMI’s latest research indicated that significant additional pipeline investment
would be needed to avoid increasing shortages of mined copper between 2026 and 2030. On top of that,
output from existing mines is expected to dwindle and fall at a CAGR of 4.7% in the 2026-2030 period,
driven by declining ore grades and mine closures. Tightness in the copper market, along with the growing
demand, could push copper prices to unchartered territories. On the other hand, the expected increase in
the copper price may present an opportunity for miners to gain funding for future projects. China is the
world’s largest consumer and importer of copper, as well as the leading producer of refined copper.
Meanwhile, global apparent refined demand increased 1.5% in 2020 and continued to increase 1.4% in
2021 according to ICSG, driven largely by the 8.5% increase in the global (excluding China) apparent
refined usage, offset by the decline in consumption from China of 3.8% Additionally, demand for refined
copper is also supported by infrastructure developments in major markets, such as China and India, as well
as the global trend towards cleaner energy. Global demand is expected to grow by 1.9% in 2022 and will
continue to grow over the long term as the world is heading for a decarbonized economy.

Global demand for refined copper has more than tripled in the past 50 years due to the expansion in
electrical and electronic products, construction, industrial machinery and equipment, transportation
equipment, and consumer and general products worldwide, according to ICSG. In recent years, equipment
accounted for 31% of total copper usage, followed by building construction (28%). Copper is also used in
infrastructure (16%), as well as in the transportation (13%) and industrial (12%) segments.
In 2022, the Americas is forecast to account for the greatest share in global copper mine production
(51.8%), followed by Asia & Oceania (20.5%) and Africa (14.3%), according to the 2022/2023 ICSG
forecast. Asia & Oceania is projected to be the world’s largest producers of refined copper during the same
period (with a 59.2% share), followed by the Americas (176.9%) and Europe (14.7%). Asia & Oceania is
projected to account for 68.0% of global refined copper consumption in 2022, followed by Europe (15.6%)
and the Americas (11.0%).
After 3 years of stagnation where only two major copper mines were commissioned, the pipeline of copper
mines starts to improve. Major projects starting in 2021/2023 include Kamoa Kakula in the D.R Congo,
Quellaveco in Peru, Spence-SGO and Quebrada Blanca QB2 in Chile and Udokan in Russia. A number of
medium and small projects as well as expansions have also, or are expected to, start in the period 2021-
2023.
Aluminum
China became the world’s largest aluminum producer in 2002 and went from being a net importer of
aluminum to a net exporter in the same year. In 2021, China’s aluminum production was up 4% year-over-
year, accounting for about 58% of global output, compared to just 6.3% of global output in 1993. The
increase in 2021 was mainly attributable to a surge in economic activities as China moved on from Covid-
19-related lockdowns, which ended in April 2020.
Apart from world economic growth, conditions in the aluminum industry in 2022 and beyond will mostly
depend on developments in China’s aluminum market. In the decade ended 2014, China slashed the
number of aluminum producers from more than 120 to 64, according to the Henan Provincial Nonferrous
Metals Guild. Outside of China, the global aluminum industry has also consolidated significantly. In 2022, a
number of issues arose which affected the aluminum industry severely, with the most notable effects coming
from the lockdowns in China and the war between Ukraine and Russia, which have disrupted the supply
and demand of aluminum.
After a series of aluminum capacity closures and restarts in China since late 2015, the government took
steps to address aluminum overcapacity and pollution issues. In June 2019, China’s Henan provincial
government announced that it plans to cap the aluminum smelting capacity of its province, the largest
aluminum production region in China since 2017, at 2.5 million tonnes per annum in 2020, as the country
shifts its focus on producing more value-added aluminum products, according to S&P Global Platts. For the
2019/2020 winter, China’s central government did not impose a blanket winter output cut on heavy industry,
but local governments were responsible for the level of output cuts based on manufacturers’ emissions,
according to Reuters. China’s northern cities were required to cut the density of lung-damaging small
particles known as PM2.5 by an average of 4% during the 2019/2020 winter. In 2021, China was faced with
aluminum production cuts after local governments continued to implement strict and widespread energy
usage restrictions. Yunnan Aluminum, a unit of China’s state-run metals group Chinalco, cut its 2021
aluminum output target by more than 50,000 tonnes, and Changji prefecture in the Xinjiang region imposed
output limits on five aluminum smelters, resulting in reduced output by almost 450,000 tonnes, according to
Fastmarket.
Since 2017, China has enforced a strict policy that new capacity must be matched by closing old capacity,
with a net-zero addition to Chinese aluminum capacity. For the entire Chinese aluminum market, the
government has committed to a capacity cap of 45.0 million tonnes per year; in November 2021, Chinese

run-rate production exceeded 39.0 million tonnes for the first time ever. A strictly enforced cap on Chinese
capacity is bullish for the market and producers outside of China should theoretically be able to capture
more market share over the long run. However, most aluminum producers are struggling with surging power
prices. Aluminum smelters are power-hungry facilities and higher demand for electricity has squeezed the
profitability of several smelters globally.
Gold
Gold is one of the most important and newsworthy precious metals. It is often held as an investment asset
and is one of the largest sub-industries, in terms of market capitalization, in the Metals & Mining industry.
In the first quarter of 2022, global gold demand rose 34% year-over-year to 1,234 tonnes, the highest rise
since the fourth quarter of 2018 and 19% above the five-year average of 1,039 tonnes, according to the
WGC. The growth was due to the Ukraine-Russia war and soaring inflation.
Meanwhile, the launch of the Shari’ah Standard on Gold in 2016, which provides definitive guidance on gold
products for the Muslim markets, has helped boost gold demand in recent years. The size of Shari’ah-
compliant assets under management reached $6.5 trillion in 2020, according to the Islamic Finance Stability
Board.
On the supply side, the surge in gold prices from 2001 to 2011 prompted new gold mining projects that
caused a 10-year expansion in mine output through 2018, albeit at a slower pace towards the last few years
of that period. In 2020, the global gold supply fell to 3,532 tonnes, down 4% compared to the prior year amid
Covid-19 restrictions disrupting the production, according to the WGC. Gold development capex fell about
$1.6 billion or 15% in 2020, as projects and expansions in Africa and Latin America transitioned from
construction stage to production stage, more than offsetting the increases in the U.S. and Canada,
according to SPGMI. SPGMI notes that capital was also allocated to mergers and acquisitions, while the
larger players were seeking to rationalize their portfolios.
The WGC classifies gold demand into four categories: jewelry, technology, investment (e.g., exchange-
traded funds or ETFs), and central bank net purchases. Given these classifications, gold’s supply and
demand dynamics are not as straightforward as the other asset classes. Gold prices are influenced by
macroeconomic factors in the U.S. and other world economies, performance of alternative assets such as
equity and bonds, the value of the dollar, interest rates, and inflation.
Investors hold gold in their portfolios as an inflation hedge. When inflation is high, the purchasing power of
money falls, and investors opt for gold, as it does not lose its value in this environment. As the demand for
gold rises in an inflationary environment, the lack of inflation and fears of global deflation is bearish for gold.
Meanwhile, the relative strength of the U.S. economy and the dollar could limit any gold price appreciation.
In addition, as the Federal Reserve (the Fed) raises interest rates, gold becomes less attractive in terms of
returns relative to interest-bearing securities.
Investors also value gold in their portfolios when there is elevated uncertainty or enhanced event risk. For
example, gold prices experienced a meaningful appreciation during the market turmoil early in the Covid-19
pandemic.

M&A Environment
In June 2020, Canada’s Kirkland Lake Gold (KL) acquired its rival Detour Gold in an all-stock deal valued at
CAD4.9 billion. The acquisition expanded KL’s mineral reserve base by 15.4 million ounces, extended its
reserve life index by eight years, and was expected to generate pre-tax synergies of about $75 million to
$100 million per year.
In September 2020, SSR mining completed an all-stock acquisition of Alacer Gold Corp, equaling a
transaction of $2.4 billion. Alacer shareholders received 0.3246 of an SSR share per Alacer share held, on
closing. Thus, SSR and Alacer shareholders collectively own approximately 57% and 43% of the combined
entity, respectively. The combined enterprise has a market capitalization of approximately $5.0 billion.
In January 2020, Newmont Corp. completed the disposal of its 50% stake in KCGM to Australia’s Northern
Star Resources Limited for $800 million in cash ($25 million of which to give Northern Star specified
exploration tenements, transitional services support, and an option to purchase NEM’s Kalgoorlie power
business).
In September 2021, Agnico Eagle Mines Limited and Kirkland Lake Gold Ltd announced that they have
entered into a merger agreement. The combined company will continue under the name “Agnico Eagle
Mines Limited”. The merger will establish the new Agnico Eagle as the highest-quality senior gold producer.
The merger is expected to have $2.3 billion of available liquidity and a mineral reserve base of 48 million
ounces of gold.
Regulatory Updates
A Net Win for Metals and Mining under a Newly Elected Biden Administration
The Metals and Mining industry could net a win under a newly elected Biden Administration. Potential wins
include the rollout of $2 trillion in green infrastructure plans and Biden’s proposals to develop the U.S.
electric vehicle sector into the global leader, both of which will increase the demand for a variety of metals. A
potential risk is Biden’s pledge to raise corporate taxes.
Stricter Regulations on Tailings Management Needed

In February 2019, Brazil’s mining regulator, National Mining Agency (ANM), banned the construction of new
upstream tailings dams, following the collapses of the Brumadinho dam in January 2019 and the Samarco
dam in November 2015. Meanwhile, all upstream tailings dams in Brazil must be decommissioned or
removed by August 2021. Notably, both the Brumadinho and the Samarco dams used the upstream design,
which is among the simplest, least expensive, but also the most dangerous method to store mining waste,
or tailings. Upstream dam structures are built by stacking the dry tailings like a stairway, instead of using
reinforced concrete or stones. The upstream design is prone to liquid seeping under the dam, which
weakens the structure, according to Reuters. Thus, the stability of upstream structures is dependent largely
on the tailings rather than engineering. As of late 2019, Chile, Peru, and Brazil are the only countries that
have banned the upstream design tailings dams.
CFRA believes there will be enhanced regulatory action on tailings management, as well as the construction
and maintenance of tailings dams. There are over 3,500 tailing dams globally, according to the Global
Tailings Review, a group comprising the world’s largest mining trade group, International Council on Mining
and Metals (ICMM), the United Nations Environment Programme. (UNEP), and the Principles for
Responsible Investment (PRI). The Global Tailings Review Standard was published in August 2020
primarily to establish an international standard on tailings facilities management.

Import Tariffs and Quotas under Section 232
On March 8, 2018, President Trump issued Proclamations 9704 and 9705 under Section 232 of the Trade
Expansion Act of 1962, after concluding that the quantities and circumstances of steel and aluminum
imports threaten to impair national security, according to the White House. A 10% tariff on aluminum imports
and 25% tariff on steel imports were imposed on most countries, except for Australia, Argentina, Brazil,
Canada, Mexico, South Korea, and the European Union (EU), beginning from March 23, 2018.
In late May 2018, the U.S. extended the 10% tariff on aluminum imports to Brazil, Canada, South Korea,
Mexico, and the EU, beginning from June 1, 2018, while Argentina has been impacted by annual quotas
covering imports since January 1, 2018. Meanwhile, the U.S. also imposed a 25% tariff on steel imports
from Canada, Mexico, and the EU, beginning from June 1, 2018, while Argentina, Brazil, and South Korea
are subject to absolute quotas covering imports since the beginning of 2018. In response to the tariff and
quotas implemented by the U.S., several countries have retaliated by proposing tariffs against a wide range
of U.S. exports, including steel, aluminum, food, and agricultural goods.
On May 17, 2019, the Trump administration came to consensus with Canada and Mexico to remove its 25%
steel tariffs and 10% aluminum tariffs on metals imported from them. As a result, Canada and Mexico also
agreed to relax their retaliatory tariffs on roughly $15 billion worth of U.S. exports, including metals,
consumer products, food, etc., according to the WSJ. The agreement calls for measures to prevent imports
of steel and aluminum at dumping prices, as well as to prevent the flooding of steel and aluminum imports.
CFRA believes the relaxation of the U.S. government’s protectionist position on Section 232 could allow
China and other serial dumpers to increase transshipping (i.e., by shipping first to Canada or Mexico before
eventually ending up in the U.S. market). However, we think the tariff truce was intended to speed up the
ratification of the U.S.-Mexico-Canada Agreement (USMCA), a revision of the North American Free Trade
Agreement (NAFTA). The USMCA was signed by all participating countries on November 30, 2018, but not
ratified as Canada and Mexico insisted on the removal of steel and aluminum tariffs. The USMCA
emphasizes more U.S.-based trucking and auto, including parts and manufacturing. The agreement came
into effect on July 1, 2020.
On March 22, 2022, the Biden administration announced it will replace its Section 232 tariffs on steel and
aluminum from the United Kingdom (U.K.) with tariff-rate quotas (TRQ) that will permit "historically-based
sustainable volumes" of 0.5 million tonnes of steel and 21.6 thousand tonnes of aluminum to enter the
United States annually, free of Section 232 tariffs. The TRQs will take effect on June 1, 2022. In exchange,
the UK will cease the retaliatory tariffs it has imposed on approximately $500 million worth of annual imports
from the United States.

Environmental Regulations
The Metals & Mining industry is highly regulated with respect to the environment. The industry is subject to a
variety of federal, state, and local environmental laws that regulate air emissions, wastewater, and
hazardous waste disposal.
Gold mining activities are regulated through a complex set of federal regulations by the U.S. Environmental
Protection Agency (EPA), the Bureau of Land Management, the Forest Service, the Fish and Wildlife
Service, the National Park Service, and the Army Corps of Engineers. There is also a variety of state and
local regulations, which can be more stringent than the federal requirements.
The EPA stepped into the fray and based on its interpretation of its statutory authority under the Clean Air
Act, intended to institute greenhouse gas regulations for stationary sources (such as steel plants) beginning
in 2011. In 2011, however, attempts by the EPA to implement greenhouse gas regulations were not applied
directly to aluminum and steel. Instead, the EPA took aim at U.S. power plants to limit the amount of carbon
dioxide that they can emit.
In August 2018, the EPA proposed a new rule, known as the Affordable Clean Energy (ACE), to replace the
Clean Power Plan (CPP). The final ACE rule, primarily to regulate greenhouse gas emissions from existing
coal-fired electric utility generating units (EGUs), was issued by the EPA on June 19, 2019 and covered
about 600 coal-fired EGUs at 300 facilities, according to the EPA. Concurrently, the CPP, which exceeded
EPA’s statutory under the Clean Air Act, was formally repealed. Most notably, under the proposed ACE rule,
carbon emission guidelines are established by the federal government, but states will have the flexibility to
determine their own emissions standards for coal-fired power plants. As opposed to the CPP, which
intended to shut down coal power plants, the ACE rule aims to try and make them run cleaner, more
modern and more efficiently.
With the adoption of ACE, carbon dioxide (CO2) emissions from the electric sector are expected to decline
by as much as 35% below 2005 levels by 2030. However, the Biden Administration campaigned on a target
of 100% clean energy by 2035.
In June 2017, President Trump announced that the U.S. would withdraw from the Paris Climate Agreement,
and that he would try to renegotiate the accord on a bilateral basis with member nations. The withdrawal
took effect on November 4, 2020. However, President Joe Biden rejoined the Paris Agreement on his first
day in office.

HOW THE INDUSTRY OPERATES
Metals & mining companies operate in an industry that is highly capital intensive. Aluminum companies are
vertically integrated, meaning that they own the sources of raw materials, as well as the plants and
equipment used to manufacture finished products. Steel companies, once highly integrated, have become
much less so since the 1980s. Meanwhile, gold mining companies are heavily capital intensive. Large sums
of capital are required for the construction of mines, production facilities, exploration, and development, as
well as the purchase of mining equipment. Operations concentrated on the raw materials side of the industry
are referred to as being in the primary, or “upstream,” end of the business. Those focused on finishing or
processing are in the “downstream” portion of the business.
Demand Drivers
The demand for most industrial metals is cyclical in nature and highly sensitive to whether the economy is
growing or declining. Revenues and earnings for aluminum and steel rely heavily on demand for consumer
products such as appliances, cars, and containers, as well as property investments. Nevertheless, there are
some differences: aluminum depends more heavily on consumer demand than steel and copper, which rely
more on the capital goods markets. Due to its property as an excellent conductor of heat and electricity,
while being corrosion resistant and antimicrobial, copper is also highly utilized in power infrastructures.
On the other hand, since gold is widely considered an asset and investment type, the demand for this
precious metal is driven by a wider range of factors, including macroeconomic and market conditions.
Early Cycle, Late Cycle

Industrial metals can be classified as either early cycle or late cycle. Investors make this distinction in order
to track the sales and earnings trends of a particular industry. The early stages of economic recoveries are
generally led by rising demand for consumer durables. Because aluminum derives a substantial portion of
its revenues from consumer durables, we classify it as an early-cycle market. Shipments to transportation,
household consumer durables, and packaging account for more than half of aluminum domestic
consumption, according to the U.S. Geological Survey (USGS).
As the economic expansion enters its latter stages, demand for capital goods tends to rise, benefiting the
steel segment. However, the integrated steelmakers are more closely tied to consumer durables, particularly
autos, than are the minimill operators. Consequently, this division of the steel segment qualifies as an early-
cycle division.
A capital goods company will not generally experience an upturn in sales and earnings until the economic
recovery is in full swing. Its sales and earnings typically do not peak until after the economic cycle turns
down. Thus, demand for capital goods typically increases at about the time that demand for consumer
durables hits a plateau.

Steel: Evolving to Survive
For the better part of the 20th century, the steel segment operated in a vertically integrated fashion. This
entailed massive capital investment to process coal, iron ore, limestone, and other raw materials into molten
iron, which was then transformed into finished steel products. It required huge investments in processing
plants and equipment, and in iron ore and coal mines.
The original method of steelmaking used by integrated companies was the ingot teeming method, in which
molten steel was poured into a mold and allowed to cool in the form of an ingot before being transformed
into a semi-finished product: a slab, a bloom, or a billet. Today, however, a method known as continuous
casting is more common. In this process, molten metal is poured into a water-cooled mold, and then drawn
down into a series of rolls and water sprays. The advantage of this process is that it yields semi-finished
products—slabs, blooms, and billets—in a single step, saving energy and creating a better product.
Integrated Steelmakers Contend with High Costs

The integrated production process requires expensive plant and equipment purchases that will support
production capacities ranging from two million to four million tons per year. Capital costs are significant—
approximately $2,000 per ton of capacity, compared with minimills’ $500 per ton. (Minimills are discussed in
more detail later in this section.)
Costs per ton have been declining for integrated producers, but they still exceed minimill costs. Integrated
companies employ unionized workers, whose labor is more expensive over the course of a business cycle
than is nonunion labor. Union contracts prevent integrated companies from reducing total compensation
costs when demand and production decline. In addition, integrated companies incur “legacy costs”—
contractual obligations to pay pension and health benefits to retirees. These obligations became part of
union contracts long before minimills emerged as a competitive threat. To the extent that minimills incur
legacy costs at all, they are far lower than that of the integrated companies.
The restructuring and consolidation that has taken place since 2002 means that legacy costs will decrease
for integrated steelmakers in the future. Accordingly, the labor cost advantage that minimill operators have
traditionally enjoyed over integrated companies will gradually diminish.
U.S. Steel Segment Downsizes

Due to increased steel imports, the advent of minimills, and the reduced consumption by the automobiles
segment, traditional U.S. steelmakers have lost a substantial portion of tonnage.
Demand from the U.S. automobiles industry has been declining for decades. In 1973, direct shipments of
steel to the U.S. auto market totaled 23.2 million tons; data show that figure at 18.46 million tons in 2020,
according to USGS’s annual Iron and Steel publication. Two factors are behind this decline. First, greater
demand for smaller, lighter, more fuel-efficient cars in the 1970s and 1980s spurred the auto market to
substitute aluminum, plastic, and other materials for steel. Second, rising imports of foreign cars during this
period cut demand for U.S.-produced vehicles, which were made with U.S.-manufactured steel.
Because high volume was critical to steelmakers’ ability to keep unit costs down, the decrease in tonnage
led to sizable losses. Bankruptcies, plant closures, and mergers forced a massive contraction in the
integrated steel segment, substantially reducing the number of integrated steelmakers. In 1960, these firms
accounted for 91.6% of U.S. raw steel production; in 2019, their share was estimated to be 30%, according
to the USGS.
De-Integration Process Reaches Limits

A number of years ago, to cope with the decline in demand from automakers, as well as to cut costs and
comply with increasingly stringent environmental legislation, the steel segment became less vertically

integrated. Producers cut back on the raw steelmaking end of their operations—reducing their holdings of
raw materials (coal and iron ore) and shutting down coke ovens, blast furnaces, and other primary
steelmaking equipment—and started buying raw materials (coke, coal, and iron ore) and semi-finished steel
from outside suppliers. However, recent volatility in the prices of raw materials has encouraged companies
to cut back on sourcing these inputs externally and, rather, to increase their own holdings of coke, coal, and
iron ore.
Although owning and mining these raw materials would increase fixed costs, it would give producers more
control over their raw material costs. Any substantial increase in raw materials costs will incentivize
steelmakers to consolidate further.
Minimills Step Up Production

Minimill steelmakers—small regional companies that make a limited number of commodity steel products
using a less capital-intensive process than the integrated steelmakers—have played a major role in
displacing larger firms. With the advent of thin-slab casting in the late 1980s, minimills began to compete in
the flat-rolled sheet market, the steelmakers’ largest and most lucrative segment. The invention of the thin-
slab caster substantially reduced capital requirements for producing flat-rolled steel, removing the main
barrier to entry into this market segment.
Minimills accounted for 8.4% of total U.S. raw steel production in 1960, according to the AISI. In 2020, their
share was 70%, according to the “Mineral Commodity Summaries 2021” of the USGS. Minimill companies
vary in size, from one-plant operations with annual capacities of as little as 150,000 tons, to multi-plant
operations with annual capacities of between 400,000 tons and 22 million tons. Minimill operators enjoy a
labor cost advantage because their operations are largely nonunion. When production and profits rise, so
does compensation; conversely, lower production and declining profits result in lower labor costs.
Recycling’s Role
While the integrated steel segment recycles internally generated scrap steel and purchases scrap from
outside suppliers, producers limit the amount of scrap they use, partly because of their investments in
production equipment that relies on traditional resources: iron ore and coal. Other considerations include
rising scrap prices and product quality: high-grade scrap is expensive. For minimills, recycled scrap is the
chief raw materials cost. Minimill operators purchase scrap from outside suppliers, and, thereby, avoid the
high fixed costs associated with internal sourcing of their raw materials needs. However, the rising price of
scrap has prompted several minimill firms to produce raw materials internally via the production of scrap
substitutes—essentially becoming more vertically integrated.
Divesting Distribution
The steel segment has exited the sales, or distribution, side of the business. In their heyday, the integrated
companies owned the firms that distributed their goods. The function of the distributors, or service centers,
was to take the finished steel products from the mills, process them further, and resell them to
manufacturers, large companies, or suppliers of large companies. The service centers supplemented the
efforts of the steelmakers’ direct sales forces and thus were part of the overall operation, which began with
the mining of raw materials and ended with the sale of finished steel products.
The segment has divested its distribution operations for the same reasons it cut back its raw steelmaking
capabilities: to reduce fixed costs and to focus on the manufacturing and finishing end of the steel business.
Virtually all service centers now operate as independent companies. The steel segment shipped over 30%
of its products to service centers in 2020, which is up from about 17% in the 1970s. However, ongoing
consolidation in the U.S. steel segment may alter this arrangement. It is possible that some service centers
will once again become the distribution arm of a steel producer through mergers.

Copper: Continuously Growing
Global industrialization has spurred the growth of copper usage in the past 50 years, with continuously
expanding markets such as electrical and electronic products, construction, industrial machinery and
equipment, consumer and general products, and transportation equipment.
The extraction of copper-bearing ores is the start of primary copper production, and open-pit mining is the
predominant mining method in the world. The mined ores can be refined via metallurgical treatment of
concentrates or electrowinning (SX-EW process). Copper scraps can also be recycled and refined and
classified as secondary copper production. In 2018, 17% of total copper refined production was attributed to
secondary copper refined production, according to International Copper Study Group (ICSG) estimates.
Innovation, recycling, and mining exploration contribute to the long-term availability of copper, according to
the ICSG. A USGS report showed that the two deposit types of copper, porphyry copper deposits (which
account for 80% of the world’s copper supply) and stratabound copper deposits (20% of the world’s copper
supply) have estimated mean undiscovered deposits of 3.5 billion tons.
Production Delays, Labor Disputes, and China Demand

While the undiscovered copper reserves prove that there is a sufficient worldwide supply of copper,
unscheduled production losses, weather disruptions, and labor issues still haunt the market, along with the
market’s sensitivity to copper demand from China. For instance, the Escondida mine in Chile faced a
prolonged strike, which lasted 43 days and ended in March 2017. Another labor dispute occurred during the
first half of 2017 at Freeport-McMoRan’s Grasberg mine in Indonesia, which resulted in the company firing
around 10% of the mine’s total workforce. Meanwhile, weather can also cause disruptions that can impact
mine production. On the demand side, China’s rebalancing of its economy toward more consumer-oriented
growth and away from the fixed asset investment model is an ongoing risk for the global copper market.
Aluminum: Still Vertically Integrated

Like integrated steelmakers, aluminum manufacturers must make large capital investments to transform raw
materials into finished products. Unlike steelmakers, however, U.S. aluminum companies still function as
vertically integrated entities—both mining and producing the raw materials used in finished products.
Aluminum companies mine bauxite, a basic raw material, and transform it into a substance called alumina.
Alumina is made into aluminum ingot, which is subsequently used to make finished aluminum products. The
major aluminum companies own large reserves of bauxite and spend substantial amounts of money on
plants and equipment.
Recycling Reduces Integrated Aluminum Costs

The aluminum segment has been able to stay vertically integrated, largely by successfully reducing its
manufacturing costs through recycling. Recycling consists of melting aluminum scrap (in the form of used
beverage cans and scrap generated from operations) and forming it into ingots and finished products.
In 2020, recycled aluminum in the U.S. amounted to 3.2 million tons; 53% came from new (manufacturing)
scrap, while 47% came from old scrap (discarded aluminum products), according to USGS. Refining and
reduction are the most energy-intensive steps of primary aluminum production.

Ongoing Oligopoly
Because the U.S. aluminum segment remains vertically integrated, it requires vast amounts of capital to
function and massive resources to mine bauxite, handle materials, and operate smelters, rolling mills, and
finishing plants. This requirement effectively prevents start-up competitors from entering the business.
Consequently, the North American aluminum segment is likely to remain an oligopoly.
Gold: Supply Constraints

The source of gold supply can be classified into two categories: total mine supply and recycled gold.
Recycled gold, which accounts for a quarter of the total supply, was at an eight-year low in 2015. The
increase in gold price from 2001 to 2011 prompted a surge of new gold mining projects. From a 10-year low
in 2008, mine production grew at an average annual rate of 5.7% from 2009 to 2011. However, gold supply
was essentially unchanged in the last seven years due to the sharp decline of gold prices from 2011 until
2014, which has since been range-bound. This caused a cutback in the development of new mining
projects, with producers changing their focus to cost-cutting and rationalization. In 2019, global gold supply
increased modestly by 2%, amid a marginal increase in mine production and recycling, which more than
offset the continued producer net de-hedging, according to the World Gold Council.

HOW TO ANALYZE A COMPANY IN THIS INDUSTRY
At CFRA, we recommend a top-down approach to valuation. An examination of the industry drivers outlined
on page 8—steel and copper global supply and demand, real GDP growth, metal prices, non-residential
construction spending, new home building, and light vehicle auto production—is a good starting point.
Industry Drivers
Steel, Copper, and Aluminum
◆ Automobile sales and production. Vehicle production is critical to the traditional integrated steel
manufacturers because it accounts for nearly one-quarter of industry shipments (direct and indirect) and for
nearly all of the value-added products. It is also critically important for aluminum, a lighter metal that could
start to gain market share if fuel efficiency standards strengthen.
◆ Value of new construction in the U.S. Reported monthly by the U.S. Department of Commerce
(DOC), these statistics cover every category of U.S. construction spending. They are useful for estimating
demand from this important sector of the economy.
Steel
◆ Production and capacity utilization rates. The American Iron and Steel Institute (AISI) compiles
steel market data every week. This series contains the data for the previous year and the previous week
so that numbers can be analyzed both sequentially and year over year to derive trends. The data appear
weekly in American Metal Market (AMM).
◆ Service center inventories. The trade association Metals Service Center Institute (MSCI) publishes
monthly data on service center inventories and shipping rates. An important statistic supplied by the
MSCI is the number of months of shipments on hand. For example, a three-month supply of inventory is
considered normal. Variations above or below this number indicate possible shortages or surpluses.
◆ Steel scrap prices. The direction of scrap prices can be used to gauge the strength or weakness in
the steel market and the likely direction of steel product pricing. AMM compiles and publishes the price for
steel scrap on a daily basis. The price is an average of scrap prices from three locations where scrap is
traded.
Copper
◆ Chinese construction activity. The state of China’s property development investments is important
for the copper segment, as the country is the world’s top consumer of copper. China’s National Bureau of
Statistics (NBS) publishes the official data for the country’s property development investment. The
International Copper Study Group (ICSG) publishes monthly, semi-annual, and annual data for copper.
◆ Power infrastructure. Power infrastructure accounts for around half of China’s copper usage. Hence,
plans to boost power investment will drive consumption growth for the global copper market.
Aluminum
◆ Shipments, production, and orders. Two trade groups publish monthly statistics on the aluminum
segment. The Aluminum Association publishes virtually all key industry statistics pertaining to the U.S.
aluminum business. The International Aluminum Institute (IAI) publishes worldwide shipment, production,
and inventory data. The London Metal Exchange (LME) also publishes daily inventory and price data for
aluminum.

◆ Inventories. The behavior of inventories is very useful in analyzing trends in the aluminum market.
The LME publishes daily data on aluminum inventories held at LME-approved warehouses. (LME
aluminum inventory refers to production that has been sold but is being stored in a warehouse for future
shipment.) The World Bureau of Metal Statistics (WBMS) publishes data showing the sum of warehouse
inventories along with stockpiles held by nations.
◆ Beverage can shipments. Because can sheet is such an important end market for aluminum
producers, the level of beverage can shipments is critical to tracking the aluminum market’s health. The
Can Manufacturers Institute, a trade association, reports shipments of beverage cans for monthly,
quarterly, and annual periods.
◆ Prices. Information on the price of aluminum ingot is published daily in AMM, The New York Times,
and The Wall Street Journal. The price of aluminum ingot is probably the most closely watched statistic in
the aluminum market. The trend of ingot prices, either rising or falling, is the most reliable indicator of
profitability for aluminum companies.
Gold
◆ Inflation expectations. The amount of gold held by investors has a direct relationship with inflation
expectations. When inflation is high, the purchasing power of money falls, and investors opt for assets
like gold because it holds its value in this environment.
◆ Consumer sentiment. Thomson Reuters and the University of Michigan release a monthly U.S.
Consumer Sentiment Index, a measure of consumer confidence in the economy at a specific period. This
index is negatively correlated with the demand for gold. An improving consumer sentiment indicates
improvement in the job market, increasing incomes, and overall positive prospects for the economy.
These factors lead to a stronger U.S. dollar, making other investments, such as equities and bonds, more
attractive compared with gold.
Company Analysis
When analyzing a metals & mining company, important elements to consider include the quality of the
management team, the quality and location of its assets, shipment volume, market share, product mix, and
cost controls. A thorough financial analysis also entails a close look at the income statement, balance sheet,
and statement of cash flow.
To project a company’s results, industry investors usually take a top-down approach. Based on a general
economic forecast, they extrapolate a projection model for industry shipment levels and pricing. They then
assess how well an individual company is likely to perform within that picture.
Qualitative Factors
Quality of Management or Leadership
The management of metals & mining companies should be steadfast and strategic, given market conditions,
regulations, and the economic environment. For instance, the surge of steel imports and the low price for
gold has prompted the management of steelmakers and gold miners to focus more on production efficiency
and cost controls amid the challenging environment.
Geography or Location of Assets

The location of assets and operations is vital for metals & mining companies in terms of domestic output and
export volume decisions, as well as regulatory requirements. For instance, in China, the slowing domestic
demand for steel has prompted a surge of exports to other countries such as the U.S. Other countries also

have existing trade regulations for imports and exports. For gold mining companies, some states such as
Nevada and South Carolina implement state regulations on top of the federal requirements.
Quantitative Factors: Key Revenue and Cost Factors

Among the key factors affecting a metals & mining company’s health and outlook are shipment volume,
market share, product mix, and cost control. These areas tie into an analysis of income statement data
(discussed later in this section).
Shipment Volume
Increases or decreases in volume have a large impact on metals & mining companies’ profits. Because
fixed costs are sizable, profitability improves as these costs are spread over more units of production.
Higher volume provides lower unit costs.
To forecast shipment trends for industrial metals companies, investors must first establish economic
assumptions. Industrial metals shipments correlate closely with trends in GDP and, in particular, with auto
sales and construction spending. Production volume from gold miners depends on the quality of the mine
and the productivity of operations.
Market Share
Market share is a crucial issue for steelmakers. The domestic steel market is mature and has limited secular
growth potential, while the number of competitors has grown as new technology has reduced barriers to
entry.
With more firms vying for business in a slow-growth market, the only way to increase revenues is to gain
market share. An individual steel company’s market share over the course of an economic cycle can reveal
much about its prospects for long-term profitability and about its ultimate viability. If a company’s shipments
change relative to the Metals & Mining industry at large, try to ascertain whether its market share is rising or
falling. Is it gaining market share at the expense of profits? Is its market share rising or declining over the
course of an entire business cycle?
Product Mix
Given the global overcapacity and competitiveness in their industries, aluminum and steel companies are
compelled to maximize profits by including value-added goods in their product mix. In the case of steel, this
means concentrating on producing higher-value, coated, flat-rolled sheet, rather than commodity-grade, hot
rolled sheet products. In the case of aluminum, it entails producing flat-rolled sheet for transportation
markets rather than commodity-grade sheet for the building and beverage can markets. On the other hand,
gold is being catered to the market as jewelry, technology, investment, and central bank net purchase.
Because value-added products generally bring more revenue and profit per unit, a higher-value product mix
boosts profits in good times, when strong demand pushes up volume and profit on each unit of production.
During downturns, a higher-end product mix may be less price-sensitive, which can help to cushion the
impact of volume declines. More broadly, a diversified product mix helps to insulate the manufacturer from
cyclical downturns in individual markets.
Cost Control
Whether a company produces a commodity or value-added products, it must exercise strict cost control.
Value-added products command higher prices than commodity products, but they also cost more to produce
and market. Therefore, increasing sales of value-added products is no guarantee of success if a company
does not exercise firm cost control.

It is very important to examine a company’s cost trends over the course of a cycle. Do the profit margins
from value-added products justify the company’s investment in plant and equipment? In addition to fixed
capital costs, it is important to examine labor and other operating cost trends. Legacy costs related to labor
contracts are also a key item. In the midst of a challenging environment, steel and gold companies are being
strategic on capital expenditures, and operational costs and efficiency.
The Income Statement

Income statement analysis is one of the principal tasks in evaluating a company. The investor should
examine trends over the course of a business cycle in sales, gross profit margin, times-interest-earned
(TIE), pretax profit per unit of production, net income, and earnings per share (EPS). The results indicate if
the company is profitable and growing.
Sales
Sales numbers depend on volume and pricing trends. A rise in volume may be a function of strong market
conditions, or it could indicate that the company is gaining market share. A price increase might occur in line
with a general rise in product prices or because of an improved product mix. Trends in company sales over
the course of the business cycle should be compared with those of rival companies and the overall industry.
Trends in the industry’s capacity utilization rates and in shipment volume provide a reliable indicator of the
direction of pricing. In general, rising shipments and higher utilization rates lead to price increases. Product
mix is another factor in pricing trends. For example, revenue per ton might rise in a flat pricing environment
because a company’s product mix has become more lucrative.
Gross Profit Margin

Subtracting the cost of goods sold from revenues or sales and dividing the result by sales calculates the
gross profit margin. The computation excludes selling, general, and administrative (SG&A) expenses and
interest expenses. Some companies include depreciation in the cost of goods sold, while others do not.
Ideally, depreciation should be included in the cost of sales.
A company’s gross margin should be viewed in relation to its peers’ margins and to the industry average,
both year over year and sequentially. In addition, it should be compared with the company’s own past
performance. Gross margin levels and trends depend on volume, pricing, product mix, raw materials, and
labor costs, and depreciation.
The gross margin indicates how efficiently a company manages its largest assets and greatest costs.
Relatively small changes in pricing and volume, or other components of the cost of goods sold, can cause
large positive or negative changes in the gross margin ratio. Financial analysts refer to this characteristic as
operating leverage. Because metals & mining companies’ operating leverage is high, they can experience
greater profit volatility than less capital-intensive industries and companies.
The TIE Ratio

The TIE ratio, also known as fixed-charge coverage, measures the number of times a company earns or
covers its interest expense. The ratio is calculated by dividing income (before depreciation, interest, and
taxes) by interest expense. If periodic principal repayments of long-term debt are coming due, they should
be added to interest expense.
This ratio gauges the degree to which a company’s bondholders and other creditors are protected from the
possibility of default: the higher the ratio, the greater the protection. Conversely, the lower the ratio, the
lower the protection is and, thus, the higher the risk. A decrease in the ratio over time, thus, warrants
scrutiny, as it indicates that the company’s ability to repay debt is deteriorating.

The ratio’s limitation in assessing risk is that it uses earnings (or income) rather than cash flow in the
numerator. Interest expense is paid with cash, not earnings. Thus, a high TIE ratio might overstate the
degree of protection if the company generates little cash flow from operations.
Nevertheless, a company’s creditors monitor the ratio carefully, comparing it with the company’s past
performance, as well as with that of other companies in the industry. These comparisons are particularly
needed in the case of industrial metals companies. Carrying large amounts of debt as part of their capital
structure, they incur significant interest expense as a fixed cost, greatly magnifying the impact that any
change in sales can have on profitability. The combination of a large amount of financial leverage and high
operating leverage increases earnings volatility.
Watch Out! Companies can boost current earnings by shifting costs to the balance sheet by
capitalizing these costs as part of fixed assets or mining development costs. Metals and Mining
companies capitalize interest costs that relate to financing the purchase of equipment and the
development of mines. To detect potential manipulation of capitalized interest, investors can analyze
trends in capitalized interest relative to total interest costs as well as capitalized interest relative to
total capital expenditures. If these ratios are increasing, a company may be manipulating earnings by
capitalizing interest costs that are normally expensed.
Pretax Profit per Unit of Production

Pretax profit per unit of production is derived by subtracting pretax operating cost per unit of production from
the average revenue per unit of production—or by dividing pretax profits by the number of units produced. It
is the single most useful and comprehensive calculation for comparing companies in terms of cost efficiency
and overall profitability.
This figure shows how a company is performing relative to the industry and to its peers, with respect to both
operating and financial leverage. It can indicate a company’s success in coping with market downturns and
its ability to capitalize on market booms. Finally, it lets one assess whether a company is benefiting from
efforts to increase sales of value-added products.
Watch Out! Companies may underestimate the life-of-mine stripping ratio, resulting in an increased
deferral of costs recognized on the balance sheet as opposed to through the income statement.
Metals and Mining companies, in order to mine the ultimate resource they wish to sell, have to extract
waste to reach the resource both before the mine goes into production (pre-production) and as the
mine is in production (post-production). Pre-production stripping costs in the mining industry are
generally capitalized and amortized over the life of the asset using the units-of-production method.
Stripping costs incurred during the production phase of a mine (post-production) are included in the
costs of the inventory produced (extracted) during the period in which the costs are incurred.
Capitalization is therefore only appropriate to the extent that inventory associated with the post-
production stripping costs has not been sold as of the balance sheet date.
Net Income
The bottom line is net income: pretax income minus taxes (and in some cases, minus preferred dividends
and minority interest). To avoid distortions and to permit valid comparisons and the analysis of trends, this
figure should be adjusted to exclude restructuring charges, gains or losses from asset sales, asset write-
downs, gains from litigation settlements, and other items that are not expected to recur or are not
considered genuine operating items.
The investor also should be aware that net income could be distorted by changes in accounting practices.
Companies can adopt different inventory valuation methods, revise depreciation schedules, or change
assumptions for employee benefit costs to make their earnings look better than they would under a different

accounting method. The earnings quality of a company using liberal accounting methods may not be as
good as those of another company that employs more conservative methods.
Watch Out! Companies can boost earnings by underestimating the amount of depletion/ amortization
to be recognized. Companies in the Metals and Mining Industry often require upfront expenditures
such as excavation, ramps, infrastructure, and removal of overburden to prepare a site for mining.
Companies generally capitalize these costs and deplete/amortize them based on the units-of-
production method, which is based on the production assets of a reserve. Reserve estimates could
change as a result of geological or engineering data, or changes in resource prices which may have
rendered certain mining uneconomical in previous periods but based on current resource prices are
now feasible.
Watch Out! Companies can manipulate earnings by capitalizing certain exploration expenses that
would normally be expensed. Metals and Mining companies expense exploration costs until a reserve
is proven and probable. A reserve is proven and probable when a mineral property discovery has been
made and the property can be economically developed. At this point, costs are capitalized as they are
now no longer considered to be exploratory spending, but rather spending to develop the property.
Earnings per Share

Earnings per share (EPS) is probably the most closely watched measure of profitability. Analysts and
investors focus much attention on EPS in order to discern trends. Is the company’s EPS rising or falling over
the course of a cycle? How does it compare with that of its peers and with companies in related and
unrelated industries?
As with net income, management can influence the level of EPS. For example, if gains in EPS consistently
exceed growth in net income, chances are that the company is buying back common shares. Because EPS
is calculated by dividing net income by the total number of shares outstanding, reducing the number of
shares via stock buybacks will increase EPS without requiring any increase in net income.
A share buyback may be an appropriate corporate strategy if a company has little debt and can fund its
capital spending from cash flow. When EPS rises much faster than net income for an extended period,
however, a close examination is warranted.
Balance Sheet Data

The balance sheet details a company’s finances at a particular point in time, listing its assets, liabilities, and
net worth or equity. These data are used to calculate various capitalization ratios, which are very important
because metals & mining companies typically have high debt.
To be of use, debt ratios must be examined over time: trends indicate the way a company manages its
assets and liabilities. Is the company adding too much debt, given its sales and earnings growth? Are debt
ratios increasing or decreasing as an economic expansion is ending?
Probably the most commonly consulted measurement is the ratio of long-term debt to total capitalization. It
is calculated by dividing long-term debt by the sum of long-term debt plus retained earnings, preferred stock,
deferred taxes, and minority interest. A steady increase in this ratio, which is not accompanied by rising
earnings and cash flow, would cause concern, because it might signal that the company is taking on too
much debt.
A more comprehensive risk measurement uses total debt (the sum of long- and short-term debt) divided by
company capitalization. This ratio gives a more complete and accurate picture of the company’s financial
leverage. Historically, companies often experience severe financial difficulties in conjunction with short-term
debt problems. Unusually large additions to short-term debt could signal that a company is having trouble

generating operating cash flow. More often than not, excessive short-term debt is what precipitates liquidity
problems and bankruptcy.
To refine debt-to-capitalization ratios and enhance their usefulness in assessing risk, the investor should
exclude preferred stock from a company’s capitalization. Companies with large amounts of debt and
chronically poor earnings often cannot obtain additional credit or sell common stock. Instead, they issue
preferred stock.
This method of financing was quite common among steel companies in the late 1970s and early 1980s.
Failure to pay a dividend on preferred stock does not constitute a default, so such stock gives a weak
company an extra layer of protection in its capitalization. In fact, continual issuance of preferred stock by a
metals & mining company is often a sign of deteriorating finances and should prompt the investor to look for
other signs of trouble.
Watch Out! Acceleration of future cash flows into the current period by selling/securitizing accounts
receivable, which eliminates them from the company’s balance sheet. Companies often securitize
substantial amounts of accounts receivable by selling the receivables to a wholly-owned consolidated
special purpose entity. The special purpose entity then sells, on a non-recourse basis, an undivided
interest in the receivables to off-balance sheet asset-backed conduits. CFRA's concerns are that
these sales (1) are not operating in nature and therefore the presentation in operating cash flow is
misleading (although not a violation of U.S. GAAP), (2) represent off-balance sheet debt that will
impact the company's cost and availability of future financing, and (3) are not a sustainable source of
cash flow due to the limits on the securitization facilities.
Watch Out! Companies can use inventory accounting to manipulate margins. Rising inventories can
be a sign of a business slowdown. Analysts should assess whether or not a company has changed its
inventory costing methodology, as this can impact comparability (and potentially flatter results) versus
prior periods. Similarly, when analyzing a company relative to its peers, it is important to identify any
differences in inventory costing policies between the companies. Analysts should further note that a
decline in the LIFO reserve (a LIFO liquidation) generally represents an unsustainable boost to
earnings as older, lower-cost inventories flow through the income statement.
Cash Flow
Cash flow analysis is an excellent tool for gauging how a company generates profits and where it places its
funds. Cash flow equals the sum of net income plus non-cash charges such as depreciation, depletion, and
amortization of goodwill. For most metals & mining companies, amortization is a small item, while
depreciation tends to be sizable. When assessing cash flow trends, it is important to exclude cash
generated by asset sales or litigation settlements, because such events are essentially non-operating items.
Cash flow analysis is also a helpful device to evaluate how much of a company’s net income is actually
available to shareholders for dividend increases or share repurchases. For example, integrated steel
companies typically incur sizable costs for pension and healthcare. While the direct expense for these items
is captured in the income statement, the indirect costs that do not appear in the income statement can be
found in the statement of cash flow and their impact can be meaningful.
For metals & mining companies, cash flow is an extremely important measure to monitor due to the large
interest costs firms incur and the sizable ongoing capital expenditure programs they must fund. Does a
firm’s cash flow cover its capital spending, or will it have to increase its borrowing? Does the company
generate enough cash flow to cover capital spending and make acquisitions, pay dividends, or fund joint
ventures? For metals & mining companies, the capital requirements and interest costs are often so
significant that they can limit the ability of companies to pay large dividends or to regularly buy back stock
over the course of the business cycle.

Watch Out! Some companies engage in supplier financing arrangements (aka reverse factoring).
There are several variations of these programs, but basically, a company arranges for a financial
institution to pay its suppliers and the company repays the financial institution later. This effectively
lengthens the supplier payment terms and thus improves working capital. However, operating cash
flows can be overstated if the cash payment to the financial institution is presented as financing
outflows rather than operating cash flows, which would be the case if the company pays the supplier
directly. Furthermore, companies may not reclassify accounts payable under reverse factoring
programs into financial liabilities, which may understate leverage ratios.
Watch Out! The various assumptions used to determine pension and postretirement benefit expenses
and liabilities enable companies to manage earnings and these expenses may not represent the true
economic costs of these plans. Defined benefit pension plans continue to raise concern as changes in
assumptions, methodologies, and presentation can have a significant impact on financial results.
Recent changes that impacted margins for many companies include switching to the full yield curve
approach for calculating certain costs and the new requirement under U.S. GAAP to present only the
service cost component of pension expense in operating income.
Equity Valuation Measures

The final step in analyzing a metals & mining company involves determining if its shares are undervalued or
overvalued. CFRA suggests using a variety of valuation methods to arrive at a reasonable range of values.
One common approach looks at the current market price of the company’s shares. What is its price-to-
earnings (P/E) ratio? What is its price-to-cash flow (P/CF) ratio? How do these values compare with
historical ratios and with those of the company’s peers?
The size of the potential market for the company’s products and services may be used to estimate the long-
term growth rate. What is the ratio of forward P/E (price per share divided by projected 12-month EPS) to
long-term growth (PEG)? Although further analysis is advisable, a common benchmark is that the shares
may be undervalued if a company’s PEG is below 1.0 and the fundamentals of the business are healthy.
Sometimes, forward earnings or cash flow become unreliable, due for instance, to the unpredictability of key
metals prices. At such times, valuation methods based on asset value or historical performance measures
may be useful. What would the entire business sell for today? Prices paid for recent mergers and
acquisitions, known as transaction values (TVs), are useful indicators of how much an entire firm in a similar
line of business (debt plus equity) might fetch in the market. Enterprise value (EV)—calculated as the
market capitalization of common equity plus preferred equity, minority interest, and the book value of debt,
less cash and equivalents—can be used as a proxy for TV. Deal multiples, such as TV-to-earnings and TV-
to-assets, capture the target valuation of a firm. Market multiples, such as EV-to-earnings and EV-to-assets,
are useful indicators of how the business is currently valued in the market. A commonly used metric is
enterprise value-to-earnings before interest, taxes, depreciation, and amortization (EV/EBITDA).
A common methodology for valuing companies in various lines of business is the sum-of-the-parts
approach. Each business line is valued individually and then summed using a weighted average of each
segment’s contribution to the company’s overall revenues.
Investors tend to give higher multiples to rapidly growing companies and lower multiples to more stagnant
firms. Consequently, certain businesses tend to trade at premiums to their peers, while others trade at
discounts. Additionally, companies with stronger balance sheets and more consistent free cash flow
generation generally command higher valuations compared with peers having less robust finances. Before
deciding whether a company’s stock is undervalued or overvalued, compare its valuation ratios with its own
historical ratios, as well as with those of its peers and the S&P 500 index.

GLOSSARY
Alumina—A substance produced from bauxite by a chemical process; it may subsequently be transformed into
aluminum.
Bauxite—An ore from which alumina is extracted and aluminum is eventually smelted. Bauxite usually contains at
least 45% alumina. About four pounds of bauxite are required to produce a pound of aluminum.
Blast furnace—Cylindrically shaped furnace, lined with refractory bricks, used by integrated steel mills to smelt iron
from iron ore.
Continuous casting—An operation in which molten metal is poured from a ladle through a water-cooled mold and
solidified into a particular shape. This process is much less costly than the traditional ingot method, because it
eliminates such time-consuming processes as ingot teeming, stripping, soaking, and certain preliminary rolling steps.
Ingot—A large metal shape, formed when molten steel or aluminum is poured into an ingot mold to solidify. The
metal is later reheated and rolled into a semi-finished shape such as a billet, bloom, or slab.
Integrated steel mill—A steel mill that generally carries out all (or most) of the steps of steelmaking (utilizing a blast
furnace), including iron making, steel making, casting, roughing rolling/billet rolling, and product rolling. The principal
raw materials for an integrated mill are iron ore, limestone, and coal (or coke).
Iron ore—A mineral containing enough iron to be a commercially viable source of the element for use in steelmaking.
London Metal Exchange (LME)—International trading body facilitating the global open-market sale and purchase of
metals.
Metric ton (or tonne)—A unit of mass equal to 1,000 kilograms or 2,204.6 pounds.
Minimill—A steel mill that obtains most of its iron from scrap, recycled from automobiles and equipment, or
manufacturing byproducts. A typical minimill utilizes an electric arc furnace to melt scrap, a ladle furnace or vacuum
furnace for precision control of chemistry, a strip or billet continuous caster for converting molten steel to solid form, a
reheat furnace and a rolling mill.
Slab—A semi-finished aluminum or steel product that is later rolled or processed into a finished product.
Tailings—Waste materials from mining and refining operations.
Thin-slab casting—Steel product cast to 1.2–2.4-inch slabs, which reduce steel-rolling energy needs.

INDUSTRY REFERENCES
PERIODICALS GOVERNMENT AGENCIES
American Metal Market (AMM) U.S. Environmental Protection Agency (EPA)

amm.com epa.gov
Covers developments in ferrous and nonferrous A ggovernment agency responsible for enforcing
metals. compliance with clean air laws and other
environment-related legislation.
World Bureau of Metal Statistics (WBMS)
world-bureau.com U.S. Geological Survey (USGS)
Covers production, consumption, and trade of the minerals.usgs.gov
major nonferrous metals. Also publishes World Metal A division of the U.S. Department of the Interior (DOI);
Statistics Yearbook and World Metal Statistics its Mineral Resources Program produces publications
Quarterly Summary. and data products focused on the worldwide supply,
demand, and flow of minerals and materials.
TRADE ASSOCIATIONS
International Energy Agency
The Aluminum Association (AA) iea.org
aluminum.org The International Energy Agency is a Paris-based
Industry trade association, which publishes aluminum autonomous intergovernmental organization
data. established in the framework of the Organization for
Economic Co-operation and Development in 1974 in
American Iron and Steel Institute (AISI) the wake of the 1973 oil crisis.
steel.org
Trade association representing North American Fortune Business Insights
companies engaged in the iron and steel industries; fortunebusinessinsights.com
publishes monthly and annual data. Fortune Business Insights offers market studies and
consulting services to global businesses.
Can Manufacturers Institute (CMI)
cancentral.com ONLINE RESOURCES
Trade association; publishes monthly, quarterly, and
annual data on can manufacturing and shipments. Allied Market Research
alliedmarketresearch.com
International Copper Study Group (ICSG) A market research and advisory company of Allied
icsg.org Analytics LLP. It provides business insights and
Trade association for the global copper market; market research reports to large as well as small- and
publishes copper production, consumption, and trade medium-scale enterprises.
data.
The London Metal Exchange (LME)
Metals Service Center Institute (MSCI) lme.com
msci.org The London Metal Exchange calls itself “the world’s
Trade association for steel and aluminum service premier nonferrous metals market.” It offers a range
centers; publishes steel shipment data for distributors. of futures and options contracts for nonferrous and
minor metals, as well as steel and plastics.
World Gold Council (WGC)
gold.org Peterson Institute for International Economics
Gold trade association; publishes comprehensive (PIIE)
monthly and annual data on the global gold market. piie.com
Previously known as the Institute for International
World Steel Association Economics, PIIE is an American think tank based in
worldsteel.org Washington, D.C.
Steel trade association; publishes comprehensive
monthly and annual data on the global steel market. Reuters
reuters.com
The International Wrought Copper Council (IWCC) Reuter is an international news organisation owned
coppercouncil.org by Thomson Reuters. It is the world’s largest
The IWCC is the international association for the multimedia news provider. Reuters provides business,
copper and copper alloy fabricating industry. financial, national and international news.

COMPARATIVE COMPANY ANALYSIS
Operating Revenues
Million $ CAGR(% ) Index Basis (2008=100)
Ticker Company Yr. End 2021 2020 2019 2018 2017 2016 2015 10-Yr. 5-Yr. 1-Yr. 2021 2020 2019 2018 2017 2016
ALUMINUM
AA † ALCOA CORPORATION DEC 12,152.0 9,286.0 10,433.0 13,403.0 11,652.0 9,318.0 11,199.0 NA 5.5 30.9 109 83 93 120 104 83
CENX § CENTURY ALUMINUM COMPANY DEC 2,212.5 1,605.1 1,836.6 1,893.2 1,589.1 1,319.1 1,949.9 5.0 10.9 37.8 113 82 94 97 81 68
KALU § KAISER ALUMINUM CORPORATION DEC 2,622.0 1,172.7 1,514.1 1,585.9 1,397.5 1,330.6 1,391.9 7.3 14.5 123.6 188 84 109 114 100 96
COPPER
FCX [] FREEPORT-MCMORAN INC. DEC 22,845.0 14,198.0 14,402.0 18,628.0 16,403.0 14,830.0 14,607.0 0.9 9.0 60.9 156 97 99 128 112 102
DIVERSIFIED METALS AND MINING

BHP BHP GROUP LIMITED JUN 61,231.0 43,223.0 44,572.0 43,129.0 35,947.0 29,005.0 45,124.0 (1.6) 16.1 41.7 136 96 99 96 80 64
RIO RIO TINTO GROUP DEC 63,495.0 44,611.0 43,165.0 40,522.0 40,030.0 33,781.0 34,829.0 0.5 13.5 42.3 182 128 124 116 115 97
CMP § COMPASS MINERALS INTERNATIONAL, INC. SEP 1,115.5 1,004.9 1,085.1 1,493.6 1,364.4 1,138.0 1,098.7 0.1 (0.4) 11.0 102 91 99 136 124 104
MTRN § MATERION CORPORATION DEC 1,510.6 1,176.3 1,185.4 1,207.8 1,139.4 969.2 1,025.3 (0.1) 9.3 28.4 147 115 116 118 111 95
GOLD
NEM [] NEWMONT CORPORATION DEC 12,222.0 11,497.0 9,740.0 7,253.0 7,379.0 6,680.0 6,085.0 1.7 12.8 6.3 201 189 160 119 121 110
RGLD † ROYAL GOLD, INC. DEC 677.1 495.0 418.9 456.8 439.1 355.8 272.6 12.6 13.7 36.8 248 182 154 168 161 131
STEEL
ATI § ALLEGHENY TECHNOLOGIES INCORPORATED DEC 2,799.8 2,982.1 4,122.5 4,046.6 3,525.1 3,134.6 3,719.6 (5.3) (2.2) (6.1) 75 80 111 109 95 84
VALE VALE S.A. DEC 52,681.2 39,686.1 35,982.4 34,738.5 32,762.9 29,079.4 19,704.9 11.3 25.4 42.4 267 201 183 176 166 148
CRS § CARPENTER TECHNOLOGY CORPORATION JUN 1,475.6 2,181.1 2,380.2 2,157.7 1,797.6 1,813.4 2,226.7 (1.3) (4.0) (32.3) 66 98 107 97 81 81
CLF † CLEVELAND-CLIFFS INC. DEC 20,444.0 5,354.0 1,990.0 2,332.0 1,866.0 1,554.5 2,013.3 12.0 67.4 281.8 1015 266 99 116 93 77
CMC † COMMERCIAL METALS COMPANY AUG 6,729.8 5,476.5 5,829.0 4,643.7 3,844.1 3,596.1 5,424.4 (1.3) 13.4 22.9 124 101 107 86 71 66
HAYN § HAYNES INTERNATIONAL, INC. SEP 337.7 380.5 490.2 435.3 395.2 406.4 487.6 (4.6) (3.6) (11.3) 69 78 101 89 81 83
NUE [] NUCOR CORPORATION DEC 36,483.9 20,139.7 22,588.9 25,067.3 20,252.4 16,208.1 16,439.3 6.2 17.6 81.2 222 123 137 152 123 99
ZEUS § OLYMPIC STEEL, INC. DEC 2,312.3 1,234.1 1,579.0 1,715.1 1,330.7 1,055.1 1,175.5 6.2 17.0 87.4 197 105 134 146 113 90
RS † RELIANCE STEEL & ALUMINUM CO. DEC 14,093.3 8,811.9 10,973.8 11,534.5 9,721.0 8,613.4 9,350.5 5.6 10.3 59.9 151 94 117 123 104 92
STLD † STEEL DYNAMICS, INC. DEC 18,408.9 9,601.5 10,465.0 11,821.8 9,538.8 7,777.1 7,594.4 8.7 18.8 91.7 242 126 138 156 126 102
SXC § SUNCOKE ENERGY, INC. DEC 1,456.0 1,333.0 1,600.3 1,450.9 1,331.5 1,223.3 1,362.7 (0.5) 3.5 9.2 107 98 117 106 98 90
TMST § TIMKENSTEEL CORPORATION DEC 1,282.9 830.7 1,208.8 1,610.6 1,329.2 869.5 1,106.2 (4.1) 8.1 54.4 116 75 109 146 120 79
X † UNITED STATES STEEL CORPORATION DEC 20,275.0 9,741.0 12,937.0 14,178.0 12,250.0 10,261.0 11,574.0 0.2 14.6 108.1 175 84 112 122 106 89
HCC § WARRIOR MET COAL, INC. DEC 1,059.2 782.7 1,268.3 1,378.0 1,163.7 369.0 544.7 NA 23.5 35.3 194 144 233 253 214 68
WOR † WORTHINGTON INDUSTRIES, INC. MAY 0.0 3,171.4 3,059.1 3,759.6 3,581.6 3,014.1 2,819.7 2.6 2.4 3.7 0 112 108 133 127 107
Note: Data as originally reported. CAGR-Compound annual growth rate. []Company included in the S&P 500. †Company included in the S&P MidCap 400. §Company included in the S&P SmallCap 600. #Of the following calendar year.
Souce: S&P Capital IQ.

Net Income
Million $ CAGR(% ) Index Basis (2008=100)
Ticker Company Yr. End 2021 2020 2019 2018 2017 2016 2015 10-Yr. 5-Yr. 1-Yr. 2021 2020 2019 2018 2017 2016
ALUMINUM
AA † ALCOA CORPORATION DEC 429.0 (170.0) (1,125.0) 250.0 279.0 (400.0) (863.0) NA NM NM (50) 20 130 (29) (32) 46
ARNC § ARCONIC CORPORATION DEC (397.0) (109.0) 177.0 187.0 209.0 155.0 155.0 NA NM 264.2 (256) (70) 114 121 135 100
CENX § CENTURY ALUMINUM COMPANY DEC (167.1) (123.3) (80.8) (66.2) 48.6 (252.4) (59.3) NA (7.9) 35.5 282 208 136 112 (82) 426
KALU § KAISER ALUMINUM CORPORATION DEC (18.5) 28.8 62.0 91.7 45.4 91.7 (236.6) NA NM NM 8 (12) (26) (39) (19) (39)
COPPER
FCX [] FREEPORT-MCMORAN INC. DEC 4,306.0 599.0 (239.0) 2,602.0 1,817.0 (4,154.0) (12,236.0) (0.6) NM 618.9 (35) (5) 2 (21) (15) 34

BHP BHP GROUP LIMITED JUN 11,304.0 7,956.0 8,306.0 3,705.0 5,890.0 (6,385.0) 1,910.0 (7.1) NM 42.1 592 417 435 194 308 (334)
RIO RIO TINTO GROUP DEC 21,094.0 9,769.0 8,010.0 13,638.0 8,762.0 4,617.0 (866.0) 13.7 35.5 115.9 NM NM (925) NM NM (533)
CMP § COMPASS MINERALS INTERNATIONAL, INC. SEP (284.4) 63.1 60.8 68.8 42.7 162.7 159.2 NA NM NM (179) 40 38 43 27 102
MTRN § MATERION CORPORATION DEC 72.5 15.5 53.4 21.0 11.5 25.7 32.2 6.1 23.0 368.7 225 48 166 65 36 80
GOLD
NEM [] NEWMONT CORPORATION DEC 1,166.0 2,829.0 2,805.0 341.0 (114.0) (629.0) 220.0 12.3 NM (58.8) 530 1,286 1,275 155 (52) (286)
RGLD † ROYAL GOLD, INC. DEC 276.7 199.3 93.8 (113.1) 101.5 (77.1) 52.0 14.5 NM 38.8 532 384 181 (218) 195 (148)
STEEL
ATI § ALLEGHENY TECHNOLOGIES INCORPORATED DEC (38.2) (1,572.6) 252.5 222.4 (91.9) (640.9) (377.9) NA (43.1) (97.6) 10 416 (67) (59) 24 170
VALE VALE S.A. DEC 21,757.8 5,143.8 (1,659.9) 6,627.5 5,321.1 4,090.3 (11,161.2) 12.4 55.6 353.8 (195) (46) 15 (59) (48) (37)
CRS § CARPENTER TECHNOLOGY CORPORATION JUN (229.6) 1.5 167.0 188.5 47.0 11.3 58.7 NA NM NM (391) 3 284 321 80 19
CLF † CLEVELAND-CLIFFS INC. DEC 2,988.0 (122.0) 293.0 1,128.0 367.0 174.1 (749.3) 6.3 76.6 NM (399) 16 (39) (151) (49) (23)
CMC † COMMERCIAL METALS COMPANY AUG 412.9 279.5 198.1 138.5 46.3 54.8 79.4 NA 49.8 47.7 520 352 249 174 58 69
HAYN § HAYNES INTERNATIONAL, INC. SEP (8.7) (6.5) 9.7 (21.8) (10.2) 5.0 30.5 NA NM 34.0 (28) (21) 32 (71) (33) 16
NUE [] NUCOR CORPORATION DEC 6,827.5 721.5 1,271.1 2,360.8 1,318.7 796.3 80.7 24.3 53.7 846.3 8,458 894 1,575 2,924 1,634 986
ZEUS § OLYMPIC STEEL, INC. DEC 121.1 (5.6) 3.9 33.8 19.0 (1.1) (26.8) 17.1 NM NM (452) 21 (14) (126) (71) 4
RS † RELIANCE STEEL & ALUMINUM CO. DEC 1,413.0 369.1 701.5 633.7 613.4 304.3 311.5 15.2 35.9 282.8 454 118 225 203 197 98
STLD † STEEL DYNAMICS, INC. DEC 3,214.1 550.8 671.1 1,258.4 812.7 382.1 (130.3) 27.7 53.1 483.5 NM (423) (515) (966) (624) (293)
SXC § SUNCOKE ENERGY, INC. DEC 43.4 3.7 (152.3) 26.2 122.4 14.4 (22.0) (3.3) 24.7 1073.0 (197) (17) 692 (119) (556) (65)
TMST § TIMKENSTEEL CORPORATION DEC 171.0 (61.9) (110.0) (10.0) (31.3) (105.5) (45.0) 0.2 NM NM (380) 138 244 22 70 234
X † UNITED STATES STEEL CORPORATION DEC 4,174.0 (1,165.0) (630.0) 1,115.0 387.0 (440.0) (1,642.0) NA NM NM (254) 71 38 (68) (24) 27
HCC § WARRIOR MET COAL, INC. DEC 150.9 (35.8) 301.7 696.8 455.0 (111.5) (310.6) NA NM NM (49) 12 (97) (224) (147) 36
WOR † WORTHINGTON INDUSTRIES, INC. MAY 0.0 723.8 78.8 153.5 194.8 204.5 143.7 20.2 38.2 818.6 0 504 55 107 136 142

Return on Revenues (%) Return on Assets (%) Return on Equity (%)
Ticker Company Yr. End 2021 2020 2019 2018 2017 2016 2021 2020 2019 2018 2017 2016 2021 2020 2019 2018 2017 2016
ALUMINUM
AA † ALCOA CORPORATION DEC 3.5 NM NM 1.9 2.4 NM 2.9 NM NM 1.5 1.6 NM 10.1 NM NM 12.4 8.4 NM
ARNC § ARCONIC CORPORATION DEC NM NM 2.4 2.5 3.1 2.3 NM NM 3.5 3.9 4.3 NA NM NM 6.3 6.6 0.0 0.0
CENX § CENTURY ALUMINUM COMPANY DEC NM NM NM NM 3.1 NM NM NM NM NM 3.1 NM NM NM NM NM 6.1 NM
KALU § KAISER ALUMINUM CORPORATION DEC NM 2.5 4.1 5.8 3.2 6.9 NM 1.5 4.1 6.5 3.3 6.4 NM 3.9 8.4 12.3 5.9 11.6
COPPER
FCX [] FREEPORT-MCMORAN INC. DEC 18.8 4.2 NM 14.0 11.1 NM 9.0 1.4 NM 6.2 4.9 NM 25.7 4.8 NM 19.9 19.7 NM

BHP BHP GROUP LIMITED JUN 18.5 18.4 18.6 8.6 16.4 NM 10.4 7.5 8.2 3.3 5.0 NM 25.0 16.8 16.9 12.6 10.9 NM
RIO RIO TINTO GROUP DEC 33.2 21.9 18.6 33.7 21.9 13.7 20.5 10.0 9.1 15.0 9.2 5.2 41.6 21.4 14.7 27.6 18.3 10.6
CMP § COMPASS MINERALS INTERNATIONAL, INC. SEP NM 6.3 5.6 4.6 3.1 14.3 NM 2.8 2.5 2.9 1.7 6.6 0.0 9.4 7.5 11.1 6.0 24.0
MTRN § MATERION CORPORATION DEC 4.8 1.3 4.5 1.7 1.0 2.7 4.5 1.5 5.9 2.6 1.4 3.5 10.5 2.4 8.9 4.0 2.3 5.3
GOLD
NEM [] NEWMONT CORPORATION DEC 9.5 24.6 28.8 4.7 NM NM 2.9 6.8 7.0 1.6 NM NM 0.8 11.4 17.4 2.8 NM NM
RGLD † ROYAL GOLD, INC. DEC 40.9 40.3 22.4 NM 23.1 NM 10.0 7.2 3.7 NM 3.3 NM 0.0 8.8 4.1 NM 4.0 NM
STEEL
ATI § ALLEGHENY TECHNOLOGIES INCORPORATED DEC NM NM 6.1 5.5 NM NM NM NM 4.5 4.0 NM NM NM NM 12.7 12.3 NM NM
VALE VALE S.A. DEC 41.3 13.0 NM 19.1 16.2 14.1 24.3 5.6 NM 7.5 5.4 4.1 70.8 20.0 1.2 16.2 14.4 12.8
CRS § CARPENTER TECHNOLOGY CORPORATION JUN NM 0.1 7.0 8.7 2.6 0.6 NM 0.0 5.2 6.3 1.6 0.4 NM 0.1 11.1 14.0 4.1 0.9
CLF † CLEVELAND-CLIFFS INC. DEC 14.6 NM 14.7 48.4 19.7 11.2 15.7 NM 8.4 32.0 12.4 9.0 68.5 NM 75.4 NM NM NM
CMC † COMMERCIAL METALS COMPANY AUG 6.1 5.1 3.4 3.0 1.2 1.5 8.9 6.8 5.3 4.2 1.6 1.7 19.7 15.8 12.8 9.3 3.6 4.5
HAYN § HAYNES INTERNATIONAL, INC. SEP NM NM 2.0 NM NM 1.2 NM NM 1.6 NM NM 0.8 NM NM 3.1 NM NM 1.5
NUE [] NUCOR CORPORATION DEC 18.7 3.6 5.6 9.4 6.5 4.9 26.4 3.6 6.9 13.2 8.3 5.2 55.1 7.6 13.1 25.7 15.9 11.2
ZEUS § OLYMPIC STEEL, INC. DEC 5.2 NM 0.2 2.0 1.4 NM 11.8 NM 0.6 4.4 3.1 NM 33.4 NM 1.3 11.6 7.2 NM
RS † RELIANCE STEEL & ALUMINUM CO. DEC 10.0 4.2 6.4 5.5 6.3 3.5 14.8 4.6 8.6 7.9 7.9 4.1 25.3 7.2 14.3 13.7 14.0 7.6
STLD † STEEL DYNAMICS, INC. DEC 17.5 5.7 6.4 10.6 8.5 4.9 25.6 5.9 8.1 16.3 11.9 5.9 60.9 13.6 17.0 34.9 26.0 12.9
SXC § SUNCOKE ENERGY, INC. DEC 3.0 0.3 NM 1.8 9.2 1.2 2.7 0.2 NM 1.3 5.9 0.7 9.4 1.7 NM 7.0 15.9 9.4
TMST § TIMKENSTEEL CORPORATION DEC 13.3 NM NM NM NM NM 14.8 NM NM NM NM NM 29.2 NM NM NM NM NM
X † UNITED STATES STEEL CORPORATION DEC 20.6 NM NM 7.9 3.2 NM 23.4 NM NM 10.2 3.9 NM 64.3 NM NM 29.6 13.8 NM
HCC § WARRIOR MET COAL, INC. DEC 14.2 NM 23.8 50.6 39.1 NM 10.3 NM 22.4 49.9 45.8 NM 18.9 NM 40.8 123.8 78.1 NM
WOR † WORTHINGTON INDUSTRIES, INC. MAY 0.0 22.8 2.6 4.1 5.4 6.8 NA 21.5 3.4 6.1 7.4 8.8 0.0 58.9 8.8 16.5 19.0 21.9

Current Ratio Debt/Capital Ratio (%) Debt as a % of Net Working Capital
ALUMINUM
AA † ALCOA CORPORATION DEC 1.6 1.6 1.4 1.5 1.3 1.1 22.5 34.0 23.4 19.2 17.0 15.6 99.9 144.4 186.0 127.8 140.8 395.6
ARNC § ARCONIC CORPORATION DEC 1.5 1.8 1.3 1.1 1.3 0.0 50.6 46.9 7.8 8.5 7.7 NA 144.3 109.3 60.1 301.2 71.4 NA
CENX § CENTURY ALUMINUM COMPANY DEC 1.1 1.9 2.1 2.3 2.9 2.5 53.4 35.5 29.8 25.4 23.8 25.4 566.7 137.2 110.8 90.8 70.5 97.7
KALU § KAISER ALUMINUM CORPORATION DEC 2.6 7.1 4.6 3.2 3.8 4.0 59.9 53.4 40.2 33.3 33.1 31.4 138.4 87.0 80.8 82.1 76.4 75.1
COPPER
FCX [] FREEPORT-MCMORAN INC. DEC 2.5 2.7 2.5 3.1 2.2 2.4 28.3 34.1 36.0 38.3 51.1 61.5 101.6 164.4 208.7 155.9 206.8 239.8

BHP BHP GROUP LIMITED JUN 1.6 1.4 1.9 2.5 1.9 1.4 22.3 28.6 31.1 28.8 32.0 35.7 154.8 313.8 212.4 115.9 305.0 619.1
RIO RIO TINTO GROUP DEC 1.9 1.8 1.6 1.9 1.7 1.6 16.7 19.2 21.1 19.9 22.2 27.0 96.2 133.0 195.6 123.6 186.3 297.2
CMP § COMPASS MINERALS INTERNATIONAL, INC. SEP 2.7 2.5 2.7 2.5 2.8 1.9 76.1 77.4 72.0 71.0 65.7 62.5 278.4 282.7 278.9 301.7 283.4 348.3
MTRN § MATERION CORPORATION DEC 3.1 3.7 4.4 3.1 3.2 3.8 37.6 5.3 0.2 0.4 0.6 0.7 102.8 10.8 0.3 0.7 1.0 1.4
GOLD
NEM [] NEWMONT CORPORATION DEC 2.9 2.5 2.6 3.0 3.6 2.7 20.3 18.7 21.5 23.8 26.0 25.4 110.4 106.7 157.9 103.3 110.1 138.3
RGLD † ROYAL GOLD, INC. DEC 3.5 8.3 4.6 2.4 4.2 6.5 0.0 11.5 9.0 14.1 20.2 20.8 0.0 94.3 177.2 471.7 536.2 422.8
STEEL
ATI § ALLEGHENY TECHNOLOGIES INCORPORATED DEC 2.7 3.2 2.7 2.7 2.7 2.5 66.5 70.8 38.8 43.5 45.3 55.1 113.8 109.9 95.5 108.9 127.2 167.5
VALE VALE S.A. DEC 1.5 1.7 1.2 1.7 1.4 2.0 30.0 33.3 30.5 27.5 33.4 41.6 211.0 177.5 534.4 274.4 384.3 257.4
CRS § CARPENTER TECHNOLOGY CORPORATION JUN 3.6 2.8 3.0 3.2 2.8 3.4 33.3 36.1 27.5 27.0 31.5 35.6 85.6 88.7 69.5 67.3 78.8 85.9
CLF † CLEVELAND-CLIFFS INC. DEC 2.1 1.8 2.2 3.2 3.4 2.1 47.6 63.6 85.5 83.1 123.9 257.5 128.0 227.5 432.3 206.9 210.9 501.8
CMC † COMMERCIAL METALS COMPANY AUG 2.8 3.0 3.0 3.8 2.8 2.5 30.7 35.3 42.4 43.3 36.5 35.7 57.3 70.1 86.1 74.2 72.9 61.8
HAYN § HAYNES INTERNATIONAL, INC. SEP 4.9 9.2 6.2 5.9 6.5 6.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
NUE [] NUCOR CORPORATION DEC 2.5 3.6 3.3 3.1 2.4 2.7 26.0 33.2 29.3 30.3 27.9 31.8 66.1 79.6 76.3 75.1 85.9 92.8
ZEUS § OLYMPIC STEEL, INC. DEC 3.5 3.2 4.2 4.4 3.8 3.5 43.8 35.6 38.9 49.6 41.9 39.4 58.5 60.3 61.5 69.7 63.5 63.3
RS † RELIANCE STEEL & ALUMINUM CO. DEC 3.9 5.1 4.5 4.7 4.3 4.1 21.2 24.2 22.6 31.4 27.8 30.6 53.1 65.6 65.3 82.7 77.1 90.9
STLD † STEEL DYNAMICS, INC. DEC 3.1 3.4 4.2 4.0 4.0 4.1 32.3 41.0 39.4 37.7 41.6 44.9 64.4 100.5 81.5 78.1 89.1 106.1
SXC § SUNCOKE ENERGY, INC. DEC 1.5 1.4 1.6 2.0 1.7 1.8 52.8 56.8 59.9 54.7 56.3 56.6 667.1 930.8 680.9 503.0 638.9 578.8
TMST § TIMKENSTEEL CORPORATION DEC 2.3 2.0 3.6 2.6 2.0 2.2 0.0 7.2 23.0 23.6 22.8 18.6 0.0 22.3 58.3 54.3 81.3 85.5
X † UNITED STATES STEEL CORPORATION DEC 1.9 1.7 1.5 1.5 1.7 1.9 29.4 54.4 46.6 35.2 44.8 56.7 114.8 260.7 301.0 140.1 136.2 147.2
HCC § WARRIOR MET COAL, INC. DEC 5.1 2.7 3.4 3.8 2.5 4.5 28.0 34.4 30.7 39.7 45.4 0.5 67.3 127.8 107.6 135.8 213.5 1.6
WOR † WORTHINGTON INDUSTRIES, INC. MAY 0.0 2.5 2.5 1.7 1.9 2.3 NA 31.4 42.0 38.7 41.9 34.8 NA 60.2 117.6 127.9 126.0 85.4

Price/Earnings Ratio (High-Low) Dividend Payout Ratio (%) Dividend Yield (High-Low, %)
ALUMINUM
AA † ALCOA CORPORATION DEC 26 - 8 NM - NM NM - NM 45 - 19 34 - 19 NM - NM 4 0 0 0 0 0 0.9 - 0.4 0.9 - 0.7 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0
ARNC § ARCONIC CORPORATION DEC NM - NM NM - NM NA - NA NA - NA 0 0 0 0 0 0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0
CENX § CENTURY ALUMINUM COMPANY DEC NM - NM NM - NM NM - NM NM - NM 40 - 17 NM - NM 0 0 0 0 0 0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0
KALU § KAISER ALUMINUM CORPORATION DEC NM - NM 61 - 28 30 - 22 21 - 15 40 - 28 18 - 14 NM 151 64 41 77 35 3.5 - 2.9 3.3 - 2.1 5.3 - 2.1 2.8 - 2.1 2.4 - 1.8 2.7 - 1.9
COPPER
FCX [] FREEPORT-MCMORAN INC. DEC 15 - 8 61 - 13 NM - NM 11 - 5 15 - 9 NM - NM 8 12 NM 8 0 NM 1.7 - 0.8 1.1 - 0.0 3.8 - 0.0 2.4 - 1.4 1.9 - 0.0 0.0 - 0.0

BHP BHP GROUP LIMITED JUN 23 - 15 27 - 16 26 - 19 49 - 32 25 - 16 NM - NM 70 86 75 141 50 NM 11.6 - 3.9 6.0 - 3.3 8.6 - 4.0 5.4 - 4.1 5.1 - 2.6 3.2 - 1.3
RIO RIO TINTO GROUP DEC 5 - 3 9 - 5 10 - 7 6 - 4 8 - 6 13 - 6 52 63 67 39 49 59 15.1 - 11.9 15.8 - 5.4 9.9 - 5.5 6.6 - 4.7 6.1 - 4.4 5.4 - 3.6
CMP § COMPASS MINERALS INTERNATIONAL, INC. SEP NM - NM 36 - 20 39 - 22 37 - 29 67 - 48 18 - 14 NM 157 161 142 228 58 4.8 - 0.8 5.2 - 4.0 8.0 - 4.4 7.4 - 4.1 4.9 - 3.8 4.6 - 3.3
MTRN § MATERION CORPORATION DEC 26 - 17 84 - 35 27 - 16 62 - 42 90 - 56 32 - 17 13 60 17 40 69 29 0.6 - 0.5 0.8 - 0.5 1.6 - 0.7 1.0 - 0.6 0.9 - 0.7 1.2 - 0.8
GOLD
NEM [] NEWMONT CORPORATION DEC 51 - 37 20 - 11 11 - 8 66 - 46 NM - NM NM - NM 151 29 32 88 NM NM 4.1 - 2.6 4.1 - 2.5 2.8 - 1.2 1.9 - 1.4 1.9 - 0.7 0.9 - 0.5
RGLD † ROYAL GOLD, INC. DEC 30 - 22 48 - 23 97 - 56 NM - NM 60 - 39 NM - NM 28 36 72 NM 60 NM 1.5 - 1.0 1.4 - 0.9 1.6 - 0.8 1.4 - 0.8 1.5 - 1.0 1.6 - 1.0
STEEL
ATI § ALLEGHENY TECHNOLOGIES INCORPORATED DEC NM - NM NM - NM 15 - 9 17 - 12 NM - NM NM - NM 0 0 0 0 0 NM 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0
VALE VALE S.A. DEC 5 - 3 17 - 7 NM - NM 13 - 8 12 - 7 12 - 3 60 70 0 48 26 6 18.7 - 9.9 16.6 - 4.7 8.3 - 2.2 3.5 - 1.6 3.0 - 1.5 4.2 - 2.7
CRS § CARPENTER TECHNOLOGY CORPORATION JUN NM - NM 2443 - 650 17 - 10 15 - 9 44 - 30 174 - 108 NM 2587 23 18 73 308 2.9 - 1.7 5.0 - 1.6 5.4 - 1.4 2.4 - 1.2 2.0 - 1.2 2.4 - 1.7
CLF † CLEVELAND-CLIFFS INC. DEC 5 - 2 NM - NM 11 - 6 3 - 2 9 - 4 12 - 1 0 0 0 0 0 0 0.0 - 0.0 0.0 - 0.0 3.4 - 0.0 3.6 - 1.7 2.3 - 0.0 0.0 - 0.0
CMC † COMMERCIAL METALS COMPANY AUG 11 - 6 10 - 5 13 - 8 22 - 15 61 - 37 39 - 27 14 20 29 40 120 101 1.8 - 1.2 2.5 - 1.4 4.2 - 2.1 3.6 - 2.2 2.8 - 1.8 3.2 - 2.0
HAYN § HAYNES INTERNATIONAL, INC. SEP NM - NM NM - NM 47 - 32 NM - NM NM - NM 105 - 65 NM NM 113 NM NM 219 2.8 - 1.8 5.6 - 2.2 4.9 - 2.3 3.5 - 2.3 2.9 - 2.0 3.0 - 1.9
NUE [] NUCOR CORPORATION DEC 5 - 2 24 - 12 15 - 11 9 - 7 16 - 13 27 - 14 7 68 39 21 37 60 2.1 - 1.1 3.3 - 1.3 5.7 - 2.8 3.4 - 2.5 2.7 - 2.2 2.8 - 2.3
ZEUS § OLYMPIC STEEL, INC. DEC 4 - 1 NM - NM 60 - 30 9 - 5 16 - 10 NM - NM 1 NM 23 3 5 NM 1.5 - 0.3 0.6 - 0.2 1.0 - 0.4 0.8 - 0.4 0.5 - 0.3 0.5 - 0.3
RS † RELIANCE STEEL & ALUMINUM CO. DEC 8 - 5 21 - 12 12 - 7 11 - 8 10 - 8 21 - 12 13 44 22 23 22 40 2.0 - 1.6 2.2 - 1.6 3.5 - 1.8 2.9 - 1.8 2.7 - 2.0 2.6 - 2.0
STLD † STEEL DYNAMICS, INC. DEC 5 - 2 15 - 6 13 - 8 10 - 5 13 - 10 25 - 10 7 38 30 13 18 36 2.0 - 1.4 2.9 - 1.4 6.5 - 2.6 3.8 - 2.0 2.2 - 1.3 1.9 - 1.4
SXC § SUNCOKE ENERGY, INC. DEC 15 - 8 144 - 58 NM - NM 35 - 19 7 - 4 58 - 10 46 538 NM 0 0 0 4.0 - 2.5 5.7 - 3.0 9.3 - 3.7 5.1 - 0.0 0.0 - 0.0 0.0 - 0.0
TMST § TIMKENSTEEL CORPORATION DEC 5 - 1 NM - NM NM - NM NM - NM NM - NM NM - NM 0 0 0 0 0 0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0
X † UNITED STATES STEEL CORPORATION DEC 2 - 1 NM - NM NM - NM 7 - 3 19 - 9 NM - NM 0 0 0 3 9 NM 1.1 - 0.5 0.9 - 0.1 2.2 - 0.3 2.0 - 0.8 0.9 - 0.4 1.0 - 0.5
HCC § WARRIOR MET COAL, INC. DEC 10 - 5 NM - NM 6 - 3 3 - 2 3 - 2 NA - NA 7 NM 3 2 2 0 1.0 - 0.6 1.3 - 0.7 2.0 - 0.9 1.1 - 0.6 0.9 - 0.6 1.3 - 0.7
WOR † WORTHINGTON INDUSTRIES, INC. MAY 5 - 2 31 - 14 18 - 13 17 - 12 19 - 11 17 - 10 0 7 68 34 26 25 2.4 - 1.6 4.0 - 1.4 4.7 - 2.2 2.7 - 1.7 2.1 - 1.6 2.2 - 1.3

Earnings per Share ($) Tangible Book Value per Share ($) Share Price (High-Low, $)
ALUMINUM
AA † ALCOA CORPORATION DEC 2.26 (0.91) (6.08) 1.33 1.49 (2.19) 24.41 16.78 21.07 29.28 23.26 29.32 61.59 - 17.30 24.17 - 5.16 31.45 - 16.46 62.35 - 25.01 54.61 - 28.17 32.35 - 20.00
ARNC § ARCONIC CORPORATION DEC (3.65) (1.00) 1.62 1.72 0.00 0.00 11.25 9.12 23.37 0.00 0.00 0.00 38.49 - 21.80 31.59 - 5.80 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00
CENX § CENTURY ALUMINUM COMPANY DEC (1.85) (1.38) (0.91) (0.76) 0.51 (2.90) 4.61 6.06 7.57 8.65 9.48 8.67 19.60 - 9.04 12.85 - 2.91 9.98 - 5.02 24.77 - 6.54 20.68 - 8.39 10.69 - 2.63
KALU § KAISER ALUMINUM CORPORATION DEC (1.17) 1.81 3.83 5.43 2.63 5.09 37.09 43.66 43.22 41.10 42.08 42.26 141.07 - 84.78 112.00 - 50.49 117.06 - 85.04 119.66 - 83.29 109.13 - 74.56 96.06 - 69.41
COPPER
FCX [] FREEPORT-MCMORAN INC. DEC 2.90 0.41 (0.17) 1.78 1.25 (3.15) 9.31 6.70 6.13 6.49 5.30 3.98 46.10 - 24.71 26.83 - 4.82 14.68 - 8.43 20.25 - 9.60 19.45 - 11.05 16.42 - 3.52

BHP BHP GROUP LIMITED JUN 2.23 1.57 1.60 0.69 1.10 (1.20) 9.85 9.15 9.21 10.30 10.01 9.43 54.55 - 35.56 43.66 - 24.05 42.33 - 32.25 35.68 - 28.13 29.76 - 22.06 26.70 - 14.06
RIO RIO TINTO GROUP DEC 12.95 6.00 4.88 7.88 4.87 2.55 29.49 26.81 22.83 24.30 23.14 19.49 67.88 - 43.54 57.71 - 29.54 50.39 - 35.87 45.41 - 34.60 42.27 - 28.83 33.41 - 15.57
CMP § COMPASS MINERALS INTERNATIONAL, INC. SEP (8.39) 1.82 1.77 2.02 1.25 4.79 5.48 8.03 2.47 2.17 4.32 4.36 75.44 - 47.10 66.25 - 34.39 61.33 - 39.51 76.65 - 38.19 84.40 - 59.72 82.55 - 66.30
MTRN § MATERION CORPORATION DEC 3.50 0.75 2.59 1.02 0.56 1.27 12.16 22.53 27.21 22.23 19.32 19.50 95.60 - 61.96 64.23 - 26.15 71.97 - 42.50 65.10 - 42.66 52.10 - 31.05 41.23 - 20.62
GOLD
NEM [] NEWMONT CORPORATION DEC 1.46 3.51 3.81 0.64 (0.21) (1.19) 24.29 25.29 23.20 19.59 19.77 20.17 75.31 - 52.60 72.22 - 33.00 44.08 - 29.77 42.04 - 29.06 39.63 - 31.42 46.07 - 16.05
RGLD † ROYAL GOLD, INC. DEC 4.20 3.03 1.43 (1.73) 1.55 (1.19) 39.48 34.67 32.65 32.16 34.91 34.24 129.69 - 92.01 147.64 - 59.78 138.78 - 80.65 98.53 - 70.16 94.39 - 61.00 87.74 - 24.68
STEEL
Earnings per Share ($) Tangible Book Value per Share ($) Share Price (High-Low, $)
ATI
Ticker § ALLEGHENY TECHNOLOGIES INCORPORATED
Company Yr. End DEC (0.30)
2016 2015 (12.43)
2014 1.812013
1.61 2012
(0.83) (5.97) 2016 3.08
2015 1.52 11.64
2014 9.722013 8.50 5.19
2012 25.042016
- 13.85 20.91 -20154.95 29.50 - 17.03
2014 30.25 - 20.84 2013
26.59 - 14.54 19.20 - 7.08
2012
VALE
DEPARTMENT VALE S.A.
STORES DEC 24.19 5.21 (1.30) 4.95 3.39 2.56 29.37 26.80 24.81 27.22 22.25 20.35 120.45 - 61.85 88.58 - 32.45 56.20 - 40.51 62.42 - 39.93 40.26 - 25.00 31.65 - 8.60
CRS
DDS § CARPENTER
† DILLARDS TECHNOLOGY
INC -CL A CORPORATION
# JAN 4.93JUN (4.76)
6.91 0.02
7.79 3.437.103.92 6.98
0.99 0.23 53.41 23.06
49.9823.06 21.12 22.29
49.02 17.10 16.04
45.33 41.24 49.20 - - 54.37
88.58 26.84 50.25 - 13.60
144.21 - 56.33
65.14 -126.83
34.40- 61.49
82.75 - 32.77
97.87 -53.6175.33
- 34.24 42.27- - 42.54
89.98 23.99
CLF
KSS † CLEVELAND-CLIFFS
[] KOHL'S CORP INC. # JAN 3.12DEC 5.35
3.48 (0.32)
4.28 1.034.083.71 4.19
1.26 0.87 29.75 8.30
29.52 0.89 1.14 1.45
29.81 (1.49) 27.24
28.33 (6.51) 26.51 - - 33.87
59.67 12.77 14.72 - - 2.6341.85
79.60 12.26 - 63.54
6.59- 13.10
48.68 - 6.30
59.00 -12.3741.35
- 5.56 10.90- - 42.04
55.25 1.20
CMC
M † COMMERCIAL
[] MACY'S INC METALS COMPANY # JAN 2.01AUG 3.38
3.26 2.32
4.30 1.663.931.17 3.29
0.40 0.47 (0.24) 18.40
(0.52)15.20 13.11
3.34 12.09 11.43
5.42 11.24
4.51 36.86
45.50 - - 19.44
29.94 24.04 - 10.76
73.61 - 22.86
34.05 - 66.59
13.27- 26.72
50.05 - 15.23
54.07 -23.28 - 17.05
36.35 24.64
42.17 - - 12.44
32.28
JWN [] NORDSTROM INC # JAN 2.05 3.22 3.79 3.77 3.62 3.72 2.51 10.55 9.96 8.82 62.82 - 35.01 83.16 - 49.34 80.54 - 54.90 63.72 - 52.16 58.44 - 46.27
HAYN
JCP § HAYNES
† PENNEY INTERNATIONAL,
(J C) CO INC. # JAN - SEP (1.68)
(0.71) (0.53)
(2.53) 0.78(5.57)
(1.76)(4.49)
(0.83) 0.40 2.64 26.81
2.6423.37 22.99
4.64 25.998.38
26.04 24.25
11.78 47.08 - - 21.98
11.99 6.00 36.02 - 15.29
10.09 - 39.04
6.19 - 11.30
26.10- 45.14
4.90 - 24.46
23.10 -45.15 6.24
- 28.97 48.37- - 15.69
43.18 25.53
NUE [] NUCOR CORPORATION DEC 23.16 2.36 4.14 7.42 4.10 2.48 37.02 26.11 24.57 22.18 17.70 15.56 128.81 - 47.94 57.50 - 27.53 62.31 - 46.10 70.48 - 49.79 66.00 - 51.67 68.00 - 33.90
ZEUS § OLYMPIC STEEL,
GENERAL MERCHANDISE INC.
STORES DEC 10.52 (0.49) 0.34 2.95 1.67 (0.10) 34.19 23.77 25.07 25.41 22.71 20.94 40.00 - 13.38 18.05 - 7.74 20.24 - 9.99 25.84 - 13.72 27.93 - 15.83 31.19 - 7.98
RS
BIG † RELIANCE
† BIG LOTS INC STEEL & ALUMINUM CO. # JAN 3.37DEC 21.97
2.83 5.66
2.49 10.342.178.75 2.968.34 4.16 14.70 46.94
14.6735.11 32.48
14.92 25.85 23.58 16.10
15.66 13.00 181.21
56.54 - - 114.26
33.78 123.09 - 70.57
51.11 - 122.17
37.41 - 51.75
69.06- 97.41
25.50 - 68.62
39.22 -88.5827.42
- 68.46 87.58-
47.22 - 26.69
50.08
DG
STLD † STEELGENERAL
[] DOLLAR CORP
DYNAMICS, INC. # JAN 4.45DEC 3.96
15.56 3.50 3.043.175.35 2.87
2.59 3.36 1.56 (0.48) (0.56)16.89
28.49 0.56
15.36 14.36(0.45)
11.41 (1.75)
9.23 96.88
74.37 - - 66.50 81.42
33.77 40.22 - 59.75
- 14.98 39.35 - 71.78
25.03- 53.00
52.10 - 61.95 -43.8939.73
28.91 - 32.15 56.04
40.17- - 39.83
15.32
DLTR [] DOLLAR TREE INC # JAN 3.80 1.27 2.91 2.74 2.70 (13.58) (18.26) 7.87 4.81 6.65 99.93 - 72.52 84.22 - 60.31 71.53 - 49.59 60.19 - 37.70 56.81 - 37.12
FRED
SXC § FREDS INC ENERGY, INC.
§ SUNCOKE # JAN NADEC (0.20)
0.52 (0.80) (1.98)0.710.40 0.81
0.04 1.88 0.22 NA 7.13 5.22
5.57 9.09
5.38 3.5410.792.81 10.62
0.86 21.77
8.15 - - 7.89
4.36 20.05
6.64 - - 2.3311.27
11.36 - 21.05
4.56- 13.07
14.32 18.93 -12.5712.30
- 7.63 - 7.66 15.98
13.14- - 12.70
2.05
OLLI
TMST § OLLIE'S BARGAIN CORPORATION
§ TIMKENSTEEL OUTLET HLDGS # JAN 0.99DEC 0.62
3.18 0.47 (2.46)0.34
(1.38) (0.22) NA
(0.70) (2.39) (0.44) (1.98)11.03
14.22 (5.43) (4.88) NA
12.25 13.34 12.18 12.95 32.75
17.73 - - 16.13
4.66 22.99
7.99 - - 2.1614.88
14.58 NA -
- 4.86 NA
20.24 - 8.18NA -23.00 NA - 12.48 NA - NA
18.63 - 3.69
X † UNITED STATES STEEL CORPORATION DEC 14.88 (5.92) (3.68) 6.25 2.19 (2.81) 28.70 16.57 23.18 23.17 17.99 12.08 30.57 - 16.13 20.00 - 4.54 24.74 - 9.93 47.64 - 17.09 41.83 - 18.55 39.14 - 6.15
TGT [] TARGET CORP # JAN 4.62 5.29 3.86 3.10 4.57 19.23 21.06 21.39 25.08 25.31 84.14 - 65.50 85.81 - 68.15 76.64 - 54.66 73.50 - 58.01 65.80 - 47.25
HCC § WARRIOR MET COAL, INC. DEC 2.93 (0.70) 5.86 13.17 8.62 (0.94) 16.95 14.17 14.99 13.80 7.75 14.09 28.40 - 15.07 23.73 - 9.46 33.49 - 17.63 33.72 - 20.88 30.49 - 15.10 0.00 - 0.00
TUES § TUESDAY MORNING CORP JUN 0.08 0.24 (0.24) (1.33) 0.09 5.10 5.00 4.66 4.85 6.24 9.23 - 4.40 22.88 - 4.86 22.82 - 11.82 16.44 - 6.26 6.86 - 3.12
WOR † WORTHINGTON INDUSTRIES, INC. MAY 0.00 13.42 1.41 2.61 3.09 3.15 0.00 15.72 5.77 5.42 6.11 9.89 75.45 - 47.79 56.43 - 19.28 44.69 - 33.18 49.93 - 31.42 53.27 - 39.52 62.44 - 25.50
OTHER COMPANIES WITH SIGNIFICANT MULTILINE RETAIL OPERATIONS
Note:
SHLDData asSEARS
originallyHOLDINGS
reported. CAGR-Compound
CORP annual growth
# JAN rate. []Company
(20.78) included
(10.59) in (15.82)
the S&P 500. †Company
(12.87) included in the
(8.78) S&P MidCap
(52.47) 400. §Company
(38.81) (31.00)included in the S&P(4.76)
(14.06) SmallCap 600. #Of the -following
20.48 8.00calendar46.23
year. - 18.03 51.06 - 24.10 67.50 - 38.88 85.90 - 28.89
Souce:
WMT S&P [] Capital
WAL-MARTIQ. STORES INC # JAN 4.40 4.58 5.01 4.87 5.04 19.93 20.19 19.61 17.55 16.85 75.19 - 60.20 90.97 - 56.30 88.09 - 72.27 81.37 - 67.72 77.60 - 57.18
Note: Data as originally reported. []Company included in the S&P 500. †Company included in the S&P MidCap 400. §Company included in the S&P SmallCap 600. #Of the following calendar year.
J-This amount includes intangibles that cannot be identified.
The accuracy and completeness of information obtained from third-party sources, and the opinions based on such information, are not guaranteed.

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Industry

Matthew Miller, CFA Fateh Yahaya

35 How to Analyze a Company in this Industry

12 Hot Rolled Steel Historical Price (NYMEX)

18 World Production of Refined Aluminum

21 Imports vs. Exports of Steel Mill Products

22 U.S. Exports of Steel Mill Products, By Group

Russia-Ukraine Conflict to Have a Long-Lasting Impact on Metals Markets

The Copper Bull Run Has Only Just Begun

Gold Has Run Out of Positive Catalysts

INDUSTRY SURVEYS METALS & MINING / JUNE 2022 4

$3,480/tonne. $550 Billion

20-YEAR INDEX PERFORMANCE

5 METALS & MINING / JUNE 2022 INDUSTRY SURVEYS

16 ◆ The EBITDA margin rebounded in 2021 by

INDUSTRY SURVEYS METALS & MINING / JUNE 2022 6

7 METALS & MINING / JUNE 2022 INDUSTRY SURVEYS

INDUSTRY SURVEYS METALS & MINING / JUNE 2022 8

Steel Global Supply and Demand

Copper Global Supply and Demand

9 METALS & MINING / JUNE 2022 INDUSTRY SURVEYS

World China United States European Union

Gold Bullion Historical Price (LBM)

Aluminum Historical Price (LME)

2,800 ◆ Furthermore, aluminum prices continued to

INDUSTRY SURVEYS METALS & MINING / JUNE 2022 10

Zinc Historical Price (LME)

Copper Historical Price (LME)

11 METALS & MINING / JUNE 2022 INDUSTRY SURVEYS

Silver Price (LBMA)

U.S. Private Nonresidential Construction Spending

INDUSTRY SURVEYS METALS & MINING / JUNE 2022 12

Global Light Vehicle Auto Production

13 METALS & MINING / JUNE 2022 INDUSTRY SURVEYS

PROFIT-POOL MAP OF MATERIALS SECTOR

PROFIT-POOL MAP OF METALS & MINING INDUSTRY

35 Diversified Metals and Mining

INDUSTRY SURVEYS METALS & MINING / JUNE 2022 14

15 METALS & MINING / JUNE 2022 INDUSTRY SURVEYS

INDUSTRY SURVEYS METALS & MINING / JUNE 2022 16

17 METALS & MINING / JUNE 2022 INDUSTRY SURVEYS

WORLD PRODUCTION OF REFINED ALUMINUM

UNITED UNITED WORLD

INDUSTRY SURVEYS METALS & MINING / JUNE 2022 18

Rare Earth Metals Gaining Traction

19 METALS & MINING / JUNE 2022 INDUSTRY SURVEYS

INDUSTRY SURVEYS METALS & MINING / JUNE 2022 20

IMPORTS vs EXPORTS OF STEEL MILL PRODUCTS

21 METALS & MINING / JUNE 2022 INDUSTRY SURVEYS

CAPACITY UTILIZATION OF U.S. STEEL INDUSTRY

Capacity Utilization Period Average

INDUSTRY SURVEYS METALS & MINING / JUNE 2022 22

U.S. STEEL PRODUCTION, CAPACITY,AND UTILIZATION vs WORLD PRODUCTION AND USE

23 METALS & MINING / JUNE 2022 INDUSTRY SURVEYS

INDUSTRY SURVEYS METALS & MINING / JUNE 2022 24

25 METALS & MINING / JUNE 2022 INDUSTRY SURVEYS

INDUSTRY SURVEYS METALS & MINING / JUNE 2022 26

Stricter Regulations on Tailings Management Needed

27 METALS & MINING / JUNE 2022 INDUSTRY SURVEYS

INDUSTRY SURVEYS METALS & MINING / JUNE 2022 28

29 METALS & MINING / JUNE 2022 INDUSTRY SURVEYS

Early Cycle, Late Cycle

INDUSTRY SURVEYS METALS & MINING / JUNE 2022 30

Integrated Steelmakers Contend with High Costs