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Australia Resource Investing 101

If you’re curious about the Australia investing buzz that’s been happening in recent years, we’ve got a quick summary of how it started and where it’s going.

If you’re reading this, chances are you’ve seen some of the recent buzz around Australia as a destination for resource investment and potential profit.

Australia ranks as the 13th largest economy in the world, due in no small part to its mineral largess. Between 2010 and 2020, mining contributed an impressive 10.4 percent to Australia’s economy, translating to a gross domestic product of AU$202 billion.

The country is a global mining hotspot, and its abundant natural resources and government incentives have attracted some of the mining industry’s biggest names: BHP (ASX:BHP,LSE:BHP,NYSE:BHP), Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) and Newcrest Mining (ASX:NCM,OTC Pink:NCMGF).


Nearly half of the companies trading on the Sydney-based Australian Securities Exchange (ASX) — the primary stock exchange in Australia — are listed in the basic materials and energy sectors.

The state of Western Australia is one of the world’s premiere mining jurisdictions, coming in fourth after Nevada, Arizona and Saskatchewan. According to the Fraser Institute’s Annual Survey of Mining Companies 2020, three other Australian states and territories rank in the top 20 mining jurisdictions in the world: South Australia (seventh), Queensland (16th) and the Northern Territory (19th).

Australia has been a plentiful provider of diverse commodities in the resource investment space for over a century; if you’re curious about exploring it for yourself, here’s a quick guide on the origins of the country’s resource industry, the current landscape for mining investment and future opportunities.

Australia investing: The beginning

European settlers first arrived in Australia in the 1780s, and by the 1790s whale oil and baleen (whalebone) had become the colony’s first major exports.

When the 1820s rolled around, the economy grew exponentially through fine wool production. By the 1830s, wool had overtaken whale oil as the colony’s biggest export, with New South Wales replacing Germany as Britain’s primary supplier by 1850.

1851 saw the beginning of a major gold rush in Australia, causing the area’s population to surge from 430,000 to a whopping 1.7 million by 1871. In 1901, Australia’s first federal government was formed, and for the next 30 years, agricultural goods remained one of the country’s biggest exports, with wheat and dairy products being added to the roster.

The UK was Australia’s biggest export destination by the early 1960s, but it had begun to enhance its relationship with its European neighbours. At the same time, Australia was working to strengthen its ties with Asia, and by 1966/1967 Japan had become the country’s biggest export destination.

While Australia’s economic roots were formed in the agricultural sector, the 1970s brought a surge of mineral and fuel exports, driven specifically by iron ore and coal.

Fast forward to 2013/2014, and iron ore, coal and natural gas had become the country’s top three exports, with rural commodities falling to the wayside.

During this transitional period, Australia’s trading relationship with the UK further waned as Japan and China became the country’s two primary export destinations. China eventually overtook Japan as Australia’s leading export partner in 2009/2010, and according to a report from Australia’s Department of Foreign Affairs and Trade, the UK made up only 1.4 percent of Australia’s exports by 2013/2014.

Australia investing: Current opportunities

Today, Australia’s mining industry is comprised of more than 350 mines and the production of 19 different mineral commodities. Gold mines are the most common operations, and according to the US Geological Survey, the country is the world’s second largest gold producer.

While Australia’s major gold rush took place over a century and a half ago, current industry trends show that there is still much to be explored, discovered and put towards modern-day industries and technologies. You can find a number of gold investment opportunities to consider in the Investing News Network’s (INN) Best Gold Stocks on the ASX article.

Along with precious metals, Australia’s most valuable mineral exports include base metals, battery metals and energy resources. The country leads the world in iron ore production, and is also an important source of global aluminium, nickel and copper supply.

Western Australia is a key nickel-mining jurisdiction within Australia, and accounts for 90 percent of the country’s economic reserves of the metal. BHP and Glencore (LSE:GLEN,OTC Pink:GLCNF) both have nickel-mining operations in the state. Other important nickel stocks for investors to watch include IGO (ASX:IGO) and Mincor Resources (ASX:MCR,OTC Pink:MCRZF). Those interested in learning more about nickel opportunities should check out INN’s article Nickel Stocks in Western Australia.

Australia is second only to Chile when it comes to copper reserves, and the red metal reigns supreme in the South Australia, which is home to the world’s fourth largest copper-producing mine, BHP’s Olympic Dam. Other nickel operations in South Australia are OZ Minerals’ (ASX:OZL,OTC Pink:OZMLF) Prominent Hill and Carapateena mines. INN’s Copper Stocks in South Australia and Copper in Australia articles offer investors further insight on what to know about the base metal in the country.

Aside from that, Australia is abundant in energy resources such natural gas and uranium. With more than a dozen basins that yield natural gas, Australia hosts significant natural gas reserves. Natural gas is the country’s third most valuable resource export, as per the most recent data from the Department of Foreign Affairs and Trade, earning more than AU$49 billion for the economy. Chevron (NYSE:CVX) and Shell (LSE:RDSA,LSE:RDSB,NYSE:RDS.A,NYSE:RDS.B) are the biggest natural gas producers in the country.

Uranium is another important sector in Australia’s resource industry. The country is the third largest uranium producer globally and hosts more than one-quarter of the world’s known uranium resources. Both of the country’s two producing uranium mines are in South Australia: BHP’s Olympic Dam mine, the largest-known uranium deposit in the world, and the Four Mile mine, owned by Quasar Resources.

In recent years, Australia has also come to dominate the global lithium industry and is well positioned to capitalise on the rapidly growing electric vehicle market. Increased demand for lithium has proved positive for ASX-listed lithium stocks. The nation ranks second in the world for lithium reserves behind Chile, but when it comes to annual lithium production Australia’s output is more than twice as high.

Australia’s largest lithium mine is Greenbushes, which is majority controlled by China’s Tianqi Lithium (SZSE:002466), the largest hard-rock lithium miner in the world. Tianqi owns a 51 percent stake in Talison Lithium, which operates the mine, while major producer Albemarle (NYSE:ALB) owns a 49 percent stake in Talison via its acquisition of Rockwood Holdings.

Rare earths are another important commodity segment for technology, and Australia is set up to take advantage of opportunities in this market too. The country holds the sixth largest-known rare earths reserves in the world, and rare earths production in Australia has been rising over the last few years.

Northern Minerals (ASX:NTU) opened Australia’s first heavy rare earths mine in 2018, producing heavy rare earths products such as dysprosium, which is used in permanent magnet technology. Lynas (ASX:LYC,OTC Pink:LYSCF) operates the Mount Weld mine and concentration plant in Western Australia, and the company recently announced plans to boost production to 10,500 tonnes per year of neodymium-praseodymium products by 2025.

Other rare earths projects in the country include Australian Strategic Metals’ (ASX:ASM) Dubbo project in Central New South Wales, Arafura Resources’ (ASX:ARU,OTC Pink:ARAFF) Nolans project in the Northern Territory as well as Hastings Technology Metals’ (ASX:HAS) Yangibana project in Western Australia.

Australia investing: Investor takeaway

Australia’s abundant natural resources, close proximity to export partners, top-notch mining jurisdictions and plethora of publicly traded mining companies together put the country in a unique position to be a leader in the global economy of the 21st century. Investors with an eye on lucrative opportunities in the resource sector would do well to consider Australian mining stocks and further educate themselves about the Australian mining outlook.

As a resource-intensive economy, the Australian dollar moves with the commodities the country exports. Those who play the Australian market should have an understanding of how the Australian dollar impacts miners and look to where the Australian to US dollar conversion rate is trending.

This is an updated version of an article first published by the Investing News Network in 2018.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

Featured

The mining and resources sector now sets its sights on Australia’s largest mining investment forum, Mines and Money @ IMARC, co-located with IMARC from January 31, 2022, to February 2, 2022, at the Melbourne Showgrounds.

It was gold price, lithium demand and China’s appetite for copper that dominated much of the discussion at Mines and Money Online Connect @ IMARC this week at the virtual event running from the 19th to the 21st October.

Mines and Money Online Connect saw 90 mining companies, 600+ investors and more than 2,000 participants log-on to hear mining executives and analysts discuss the next big thing for savvy investors in 2022.

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Rio Tinto Iron Ore Chief Executive, Simon Trott and Rio Tinto Managing Director of Port, Rail and Core Services, Richard Cohen, joined community members, local businesses and representatives from local government to celebrate the official opening of its new community ‘Hub’ in Karratha. Located on Ngarluma country in the heart of Karratha’s CBD, the new Rio Tinto Karratha Hub will make it easier for local …

Rio Tinto Iron Ore Chief Executive, Simon Trott and Rio Tinto Managing Director of Port, Rail and Core Services, Richard Cohen, joined community members, local businesses and representatives from local government to celebrate the official opening of its new community ‘Hub’ in Karratha.

Located on Ngarluma country in the heart of Karratha’s CBD, the new Rio Tinto Karratha Hub will make it easier for local people to connect with our busines.

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Rio Tinto is progressing an innovative new technology to deliver low-carbon steel, using sustainable biomass in place of coking coal in the steelmaking process, in a potentially cost-effective option to cut industry carbon emissions. Over the past decade, Rio Tinto has developed a laboratory-proven process that combines the use of raw, sustainable biomass with microwave technology to convert iron ore to metallic …

Rio Tinto is progressing an innovative new technology to deliver low-carbon steel, using sustainable biomass in place of coking coal in the steelmaking process, in a potentially cost-effective option to cut industry carbon emissions.

Over the past decade, Rio Tinto has developed a laboratory-proven process that combines the use of raw, sustainable biomass with microwave technology to convert iron ore to metallic iron during the steelmaking process. The patent-pending process, one of a number of avenues the company is pursuing to try to lower emissions in the steel value chain, is now being further tested in a small-scale pilot plant.

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There are many big Australian gold stocks, but these are the five top companies in the sector by market cap.

Australia is the fourth largest producer of gold worldwide, and this past year has brought ups and downs for the commodity. The precious metal hit its 2021 high point early on and fell soon after.

Lately, gold has been resting at a strong price of around US$1,800 per ounce, and it seems like it will exit the year that way. It may even be in for a serious price hike if inflationary pressures continue on their current trajectory.

Read on to learn more about Australia’s five top gold companies by market cap. All market cap and share price information was obtained on November 25, 2021, using TradingView's stock screener.


1. Newcrest Mining

Market cap: AU$19.54 billion; current share price: AU$24.14

Newcrest Mining (ASX:NCM) operates a portfolio of gold mines across Australia, Canada and Papua New Guinea. These include its New South Wales-based Cadia mine and its Western Australia-based Telfer and Havieron mines.

In November 2021, Newcrest agreed to purchase British Columbia-based Pretium Resources (TSX:PVG,NYSE:PVG) for C$3.5 billion, marking the company’s expansion into Western Canada.

2. Kirkland Lake Gold

Market cap: AU$14.57 billion; current share price: AU$54.99

Kirkland Lake Gold (ASX:KLA) has mining operations in Australia and Canada, both of which are low-risk, gold-rich countries. The company’s Fosterville mine is based in Victoria, Australia, and as of December 31, 2018, its mineral reserves stood at 2.7 million ounces. It produced 640,467 ounces in 2020.

In September 2021, Kirkland Lake Gold and Agnico Eagle Mines (TSX:AEM,NYSE:AEM), a Canadian gold miner, announced a “merger of equals." The new company will go by the name Agnico Eagle Mines, and the companies expect the transaction to close in late 2021 or early 2022.

3. AngloGold Ashanti

Market cap: AU$12.43 billion; current share price: AU$5.83

AngloGold Ashanti (ASX:AGG) is a global gold miner formed in 2004. It has two Australia-based operations, both of which are based in Western Australia’s northeastern goldfields: Sunrise Dam and Tropicana. Sunrise Dam is 100 percent owned, while Tropicana is 70 percent owned, with the remaining 30 percent owned by Regis Resources (ASX:RRL,OTC Pink:RGRNF). In 2020, these operations produced 554,000 ounces of gold.

In Q3 2021, AngloGold Ashanti reported total gold production of 613,000 ounces at a total cash cost of US$927 per ounce. This represents a 5 percent quarter-over-quarter increase in production, though a year-to-date decrease.

4. Northern Star Resources

Market cap: AU$11.39 billion; current share price: AU$9.66

Northern Star Resources (ASX:NST) is an Australian gold-mining company with projects throughout Western Australia and North America at its Kalgoorlie, Yandal and Pogo production centres. In the 2021 fiscal year, Northern Star experienced a 40 percent revenue increase and a 10 percent cash earnings hike.

In late November 2021, Northern Star announced an agreement to buy Newmont Australia’s power business for US$95 million. The company paid US$25 million for the option to purchase this business, an opportunity it was given through its recent 50 percent acquisition of Kalgoorlie Consolidated Gold Mines.

5. Evolution Mining

Market cap: AU$7.53 billion; current share price: AU$4.12

Australian gold miner Evolution Mining (ASX:EVN) has projects throughout New South Wales, Queensland and Western Australia, as well as in Ontario, Canada. Evolution Mining produced 680,788 ounces of gold in the 2021 fiscal year at an all-in sustaining cost of AU$1,215 per ounce.

In 2019, Evolution Mining became one of only two Australian gold companies to be included in the Dow Jones Sustainability Index (INDEXDJX:W1SGI). In 2020 and 2021, the company made several strategic acquisitions and divestments, including its high-value purchases of the Red Lake and the Kundana operations.

This is an updated version of an article originally published by the Investing News Network in 2018.

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Isabel Armiento, hold no direct investment interest in any company mentioned in this article.

What are the largest Australian copper companies? These five ASX copper stocks are the biggest on the exchange by market cap.

Last year, pandemic restrictions forced copper mines to shut down across the world, driving down global production and causing the 10 largest copper-mining companies to suffer dramatic losses.

But in 2021, copper hit an all-time high of US$10,700 per tonne, and stayed over US$9,000 for much of the year.

The three top copper-producing countries globally are Chile, Peru and China, with Australia coming in at number six. Still, there are plenty of untapped resources in the land down under, and Australia is making a name for itself as an up-and-coming producer of this important base metal.


Read on to learn more about the top five Australian copper companies on the ASX, ranked by market cap. All market cap and share price information was obtained on November 26, 2021, from TradingView.

1. BHP

Market cap: AU$192.56 billion; current share price: AU$38.03

BHP (ASX:BHP) is a top global producer of copper, nickel, potash, iron ore and metallurgical coal, with copper production centralised at its South Australia-based Olympic Dam mine.

The company, whose headquarters are in Melbourne, Australia, emphasises copper’s function in renewable energy systems and the metal’s critical role in reducing carbon dioxide emissions.

Recently, BHP has focused its attention on its energy assets. In late November, the company merged its oil and gas portfolio with Woodside Petroleum, a deal that was originally struck in August of the same year. On the mineral side of its operations, BHP was looking to acquire Noront Resources (TSXV:NOT,OTC Pink:NOSOF), a Canada-based nickel, copper, chrome and platinum company, but decided not to match a superior offer.

2. OZ Minerals 

Market cap: AU$8.77 billion; current share price: AU$25.70

OZ Minerals (ASX:OZL) is a South Australia-based copper-mining company founded in 2008. Its operations include the Carrapateena project, where construction was completed in 2019, and the upcoming Malu underground mine, which was commissioned in 2015.

In a November press release, OZ Minerals reported a year-to-date 5 percent increase in group ore reserve copper metal tonnes. In its third quarter results, the company reported guidance of between 120,000 and 145,000 tonnes of copper for the year.

3. Sandfire Resources

Market cap: AU$2.59 billion; current share price: AU$6.11

Sandfire Resources (ASX:SFR) owns 7,189 square kilometres in the Bryah Basin region of Western Australia, including its DeGrussa and Monty operations. Both of these are 100 percent owned and produce copper and gold.

The company released its third quarter results in October, reporting total copper production of 15,946 tonnes. Sandfire expects output of between 64,000 and 68,000 tonnes of copper in 2022.

4. 29Metals

Market cap: AU$1.29 billion; current share price: AU$2.63

Australia-based mining company 29Metals (ASX:29M) has the Golden Grove mine in Western Australia and the Capricorn copper mine in Queensland, along with several promising new growth opportunities lined up. 29Metals focuses on copper production, though it also mines for zinc, gold and silver.

According to an October release from the company, production was weaker than expected at Golden Grove during the September quarter. However, the asset's quarter-on-quarter decline of about 10 percent was largely offset by a strong performance at Capricorn.

5. Copper Mountain Mining

Market cap: AU$804.96 million; current share price: AU$3.81

Copper Mountain Mining (ASX:C6C) is a Canadian and Australian copper miner, with its flagship Copper Mountain operation in British Columbia, Canada, and its Eva and Cameron copper projects in Queensland, Australia.

In the third quarter, Copper Mountain Mining reported total output of 22.4 million pounds of copper at its Copper Mountain mine, representing a 12.1 percent quarter-over-quarter decline in production. The company still reported positive cash flow, with strong construction and exploration gains made at its Eva and Cameron projects.

This is an updated version of an article first published by the Investing News Network in 2018.

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Isabel Armiento, hold no direct investment interest in any company mentioned in this article.