Commodities: Copper
BHP has regained its “mojo” in the last five trading sessions after being weighed down by a soft copper price as tensions flared between the US and Iran, plus a strike set to commence at BHP’s Port Hedland Bulk Export Terminal. Unfortunately, we can see plenty of industrial action over the coming years, with AI set to replace thousands of jobs. BHP is already well underway in reducing its headcount at its Escondida copper pit in Chile; the site went fully autonomous in January 2026 with 33 autonomous trucks and 11 autonomous drills operating around the clock.
So far this year, copper miner SFR has consolidated its strong gains through 2025, which we regard as bullish considering the headwinds from the US-Iran war on the industrial metal. With copper again threatening to break out on the upside, we believe it’s a matter of time before SFR tests/breaks its all-time highs.
S32 has transformed itself in recent weeks after selling off its aluminium value chain, including Worsley Alumina, Hillside Aluminium and its Brazilian bauxite and alumina assets, to Alcoa for an implied US$5.6bn. The package comprises US$3.1bn in cash, around US$1bn in Alcoa shares, assumed liabilities and contingent payments linked to future aluminium prices. The assets accounted for around 60% of group earnings, making this a transformational portfolio reshaping.
As we touched on earlier the local copper names reversed higher on Tuesday, despite the escalating conflict between the US and Iran, which was encouraging for the bulls like ourselves. So far in 2026, while copper has advanced ~9%, the Copper Miners ETF (WIRE) has struggled, retreating ~2%; however, as we’ve seen before, if traders get a sniff that the industrial metal is set to challenge its recent all-time highs, the copper miners can explode higher – we believe such a move could be close at hand.
Copper has a huge influence on the ASX200 through it’s strong correlation to the likes of BHP and RIO, and although its “wobbled” since the US-Iran conflict started, we like one of the leading indicators of demand:
The correlation between BHP and Spot LME Copper over the last 2-years is 0.91, a very high positive correlation, reflecting BHP’s significant copper exposure and the market’s tendency to price the stock as a copper proxy. BHP’s copper assets, including Escondida (the world’s largest copper mine) and Olympic Dam, make it one of the most copper-leveraged large-cap miners globally. And as BHP continues to grow its copper revenue, this correlation is likely to remain elevated or even strengthen over time.
Sandfire (BHP is 2nd) has the highest correlation to Samsung, without the steroids on the upside, but its ~17% fall in the last 4 weeks has followed a very similar path to the Korean semiconductor giant. MMs portfolios are skewed towards copper and the miners; hence it’s been a tough few weeks, but we remain comfortable with our underlying analysis and are more likely to add to our exposure than trim into current weakness.
Copper trod water last week, not benefitting from the same tailwinds as gold – yet. However, related stocks like BHP (+2.6%) and Sandfire (+2.4%) did encouragingly bounce after struggling through the back end of June. On the positive side, the late-June macro-driven correction was courtesy of a hawkish Fed and strong US dollar rather than a fundamental demand deterioration, attracting physical buyers relatively quickly.
S32 +9.74%: announced the transformational sale of its aluminium, alumina and bauxite business to Alcoa in a deal worth up to US$5.6bn ($8.1bn), materially simplifying the portfolio and accelerating its transition toward a future-facing base metals producer. The consideration includes US$3.1bn in cash, around US$1bn in Alcoa shares, US$750m of assumed net debt and lease liabilities, plus a US$750m contingent value right (CVR) linked to aluminium and alumina prices over the next four years.
AIC Mines has been one of the strongest performers in our Emerging Companies Portfolio over the past 12 months, more than doubling over the period. Despite a recent pullback alongside the copper price, we continue to see the investment case strengthening rather than weakening. Electrification, AI infrastructure and data centre construction remain huge structural demand drivers for copper, though as we often harp on about, there are limited quality ASX-listed copper producers for local investors to gain exposure to this thematic – A1M fits the bill.
