The metals sector has been the best-performing commodities category in early 2025, with precious and industrial metals delivering quarterly returns of 15.2 per cent and 12.5 per cent.
“Looking at the performances and individual weights, we find that gold, copper, and natural gas have delivered close to 75 per cent of the total return, despite the three contracts only carrying a total index weight of 27.5 per cent,” Saxo Bank head of commodity strategy Ole Hansen said.
“This highlights the advantage of holding broad exposure to commodities instead of trying to pick individual winners.”
Gold has climbed 14.7 per cent in the past year, fuelled by central bank purchases, geopolitical uncertainty, and investor demand for safe-haven assets.
Northern Star has been a strong performer during this period, recording a 28 per cent increase in revenue in the first half of the 2024–25 financial year, which underpinned a record interim dividend of $0.25 per share.
And the company is eager to continue its growth, announcing the acquisition of De Grey Mining and its Hemi project in the Pilbara.
The combined group will boast 74.9 million ounces (Moz) of mineral resources and 26.9Moz of ore reserves, operating across four production centres, three of which are in Western Australia.
Hemi itself has the potential to produce 530,000 ounces per annum of gold over its first 10 years of life, bringing the first Tier 1 gold mine to the Pilbara region.
Copper prices have also reached record highs in recent months, driven by US prices surging $US1400 per tonne above global benchmarks.
“The HG copper contract (traded in New York) has surged to a record high on speculation that Trump may implement tariffs on imports within weeks,” Hansen said.
“This price strength highlights the market’s sensitivity to supply chain disruptions, particularly in the face of shifting trade policies.”
For Australia, a major copper producer, this price strength is a significant advantage for companies such as BHP.
BHP produces copper from its South Australian business, including the Olympic Dam, Prominent Hill and Carrapateena mines. The company is also a prominent producer in Chile through its Escondida and Pampa Norte operations.
Rising metals prices are likely to encourage further exploration, new project developments and increased investment in the Australia mining sector.
The ASX 200, which is heavily weighted towards mining stocks, could also benefit from the upswing.
“So far this millennium, we have witnessed three major commodities bull cycles,” Hansen said.
“The long-term trend for key commodities remains upward, driven by several major themes or mega-trends, and they highlight why we believe a broad approach is the best option for long-term gains.”
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