3 min read
Mining Industry 2024: Key Insights for Financial Advisors
What do elevated commodity prices mean for investors?
Key Takeaways
Cost Advantage is Essential in a Price-Taking Industry
![Bar graph showing EBIT margin per metric ton of iron ore assets of BHP, Rio Tinto, and more.](/content/cs-images/v3/assets/blt9415ea4cc4157833/blt3856cb122ed87b47/6633bdf6a7a00fb4c41b3e44/Iron_Ore_Cost_Advantage.png?format=webp&auto=webp&disable=upscale&width=null)
The iron ore assets of BHP and Rio Tinto may justify a wide moat.
Demand From China Drives Most Commodities
![Line graph showing demand for iron ore, copper, metallurgical coal, and gold from 2018 to 2023.](/content/cs-images/v3/assets/blt9415ea4cc4157833/blt148cce5923e3bbdc/6633bdf614f1694163e6f7cb/Demand_for_Major_Commodities.png?format=webp&auto=webp&disable=upscale&width=null)
Most commodities markets are driven by demand from China.
Commodity Demand is Cyclical and Driven by Economic Growth
![Line graph showing major commodity prices for iron ore, metallurgical coal, copper, and gold and China’s nominal GDP from 2004 to 2022.](/content/cs-images/v3/assets/blt9415ea4cc4157833/bltb89dc4a294e71901/6633bdf64379ba53aa2f08c8/Commodity_Prices.png?format=webp&auto=webp&disable=upscale&width=null)
Commodity demand can be driven by changes in gross domestic product—such commodities like iron ore and copper are highly leveraged to investment.