At what point should major iron ore miners BHP Group and Rio Tinto shift to being described in terms of their copper portfolios rather than their contribution to steel making?
Now might be a good time. Their latest results show copper is increasingly driving profits.
Rio posted a 43% jump in half-year underlying earnings on Wednesday, its biggest in four years, with its non-iron ore operations, of which copper is the largest chunk, outperforming iron ore for the first time.
This is a significant milestone as Rio is the world's top iron ore miner, ahead of Brazil's Vale and BHP.
Rio and BHP have ridden China's industrial boom for the past two decades, building massive iron ore mines in the state of Western Australia as China's steel sector surged to annual production levels of around 1 billion metric tons, or just over half of global output.
But now China's steel output is easing back just as more iron ore supply comes on line from largely Chinese-owned mines in Guinea, although Rio is a partner in the 120-million tons a year Simandou venture.
Copper and other metals key to the energy transition are likely to drive the growth of major mining companies in the coming decades.
Rio's half-year results showed that 56% of its $6.85 billion in underlying earnings came from copper and aluminium. Copper alone accounted for 39%. Moreover, earnings before interest, taxes, depreciation and amortisation (EBITDA) for copper surged 84% while the same measure for iron ore saw a 1% decline.
It's also worth noting that based on 2025 output, Rio is only the 10th-largest copper miner in the world.
Likewise, half-year results in February for BHP, the world's second-biggest copper miner, showed copper surpassing iron ore for the first time in driving profits.
Copper, including byproducts such as gold, contributed $7.95 billion to BHP's operating earnings in the six months ending December 31, exceeding iron ore's $7.50 billion and making up 51% of the group's total underlying operating earnings.
Copper prices are strengthening the case
Copper's increasing importance as the main driver of profit growth for BHP and Rio reflects not only increased output, but also stronger prices.
Benchmark London copper futures hit a record high of $14,527.50 a ton on January 29. They ended trade at $13,581 on Wednesday to be up 68% since hitting an 18-month low of $8,105 a ton on April 7 last year.
In contrast, Singapore Exchange iron ore contracts have traded in a fairly narrow range between $90 and $120 a ton for the past two years, ending at $98.20 a ton on Wednesday, down 12.3% from this year's peak of $111.91 on May 11.
It's also easier to construct a long-term bullish case for copper than it is for iron ore, with the industrial metal benefiting from both the energy transition and the electrification needed to power artificial intelligence.
Global steel production is also expected to rise in the coming decades, but iron ore supply growth is likely to be sufficient to meet demand, and there is also the risk that an increasing share of new steel production is sourced from scrap.
Shares have already started to reflect the shift
As copper and other energy transition metals such as lithium and aluminium play a greater role in Rio and BHP's earnings, the broader question is whether this means their share prices will be re-rated higher as these metals become more important than iron ore.
To some extent, that appears to be already happening.
Rio Tinto's shares hit an all-time high of A$195.84 ($136.30) on June 3, although they have eased back to end at A$165.39 on Wednesday.
Rio's shares have gained 51% since copper started its current rally in April last year, while BHP's stock has gained 74.1% to end at A$60.18 on Wednesday.
Even though Rio has slightly underperformed copper since April last year, while BHP has outperformed, the stock gains appear to be more reflective of copper's strength than the relative stability of iron ore prices.
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