Analysts say the surge in copper demand from power infrastructure and artificial intelligence sectors is providing new investment logic for mining stocks, with Australian mining shares likely to continue their upward trend.
Over the past year, the mining sector has been the top-performing segment within the S&P/ASX 200 index. As mining companies shift their growth focus toward copper, the sector's growth narrative is transitioning away from iron ore, which has long dominated. BHP Group Ltd. has benefited from record-high copper prices, with its copper business recently accounting for more than half of its total annual revenue for the first time. In contrast, Fortescue Ltd., primarily focused on iron ore, continues to see negative profit growth.
Demand for copper remains strong due to AI data centers, electrification transitions, and grid expansion, while China's slowing real estate market dampens iron ore demand-further accelerating this structural shift. Australia's leading major miners are gradually increasing their copper assets, moving away from a long-standing reliance on a single commodity to achieve greater business diversification.
David Tuckwell, Chief Investment Officer at Sydney ETF Shares, said: "The core logic is that copper demand continues to grow while iron ore demand stagnates, and the market is pricing this positively." According to the latest financial reports from Australia's leading mining companies, "the shift toward copper business has already been concretely implemented."
BHP isn't alone in pursuing a larger share of global copper resources. Competitors such as Rio Tinto Group are also adopting similar strategies, capitalizing on rising copper prices driven by supply tightness, increased demand fueled by the AI boom, and trade disruptions caused by tariffs. BHP's previous attempt to acquire Anglo American Plc was part of its effort to strengthen its copper portfolio, though the bid failed last year.
The divergence between copper and iron ore markets has become increasingly evident. Iron ore prices have remained weak overall due to sluggish recovery in China's real estate sector post-pandemic. Despite multiple policy measures aimed at stabilizing the market, recent data on new home sales in China indicates continued downward pressure on housing prices.
However, some analysts believe that in the Australian market, investment options for pure copper assets remain relatively limited.
Dylan Kelly, the head of research at Terra Capital Holdings, said: "If you are looking for volume, quality and scale and want to invest in copper assets, the ASX is not the first choice." He pointed out, "If you are seeking large copper mining producers with long mining cycles, low costs and a wide range of products, Canada is the appropriate market." He added that the institution holds a small stake in FireFly Metals Ltd., headquartered in Perth.
Even so, increasing the allocation to copper assets still provides investors with a way to share the dividends of the AI bull market - this round of AI rally is driving global stock markets to new highs and also providing further upward potential for Australian mining companies. With the acceleration of data center and power grid investments, copper demand is expected to continue to rise; and with proposed tariffs in the US and the decline in copper production in Chile, supply-side pressure is further intensifying.
Jessica Leung, the portfolio manager of Global X Management, said: "There is a structural supply gap in the entire copper industry." Coupled with the growth in copper demand driven by AI infrastructure construction, the Australian mining sector is shifting towards "what they consider to be the next growth track".