Copper’s 68% Rally Forces a Re-Rating of BHP and Rio Tinto

Copper hit an all-time record of $14,527.50 per tonne on 29 January 2026. Iron ore, meanwhile, has spent two years grinding between $90 and $120 per tonne, closing at $98.20/t on 2 August 2026. That gap is no longer a commodity-markets curiosity; it is actively changing how the ASX’s two biggest miners are valued.

BHP and Rio Tinto have long been treated as iron ore proxies. A 68% copper rally since April of last year, combined with first-half earnings in which copper surpassed or rivalled iron ore as the primary profit driver at both companies, is challenging that framing in real time. The shift is visible in the earnings accounts, in the share prices, and in how brokers and institutional investors describe these businesses.

What follows traces the commodity divergence, shows how it is flowing through to earnings at both majors, maps the equity re-rating, and examines whether the shift in investor framing is complete or still in progress.

Copper’s record run versus iron ore’s two-year holding pattern

Record high: Copper reached $14,527.50/t on the London Metal Exchange on 29 January 2026, a level never previously touched.

The rally began from an 18-month low of $8,105/t on 7 April of the prior year. By 2 August 2026, copper settled at $13,581/t, a gain of 68% across roughly 15 months of sustained upward movement.

Iron ore tells a different story entirely. The Singapore Exchange benchmark has traded in a $90-$120/t band for approximately two years. It peaked at $111.91/t on 11 May 2026, then declined 12.3% to $98.20/t by 2 August. The direction is flat to lower; the range is narrow.

Australian investors who still frame BHP and Rio Tinto through an iron ore lens are working from an increasingly incomplete picture.

Broader commodity market moves in mid-2026 have not been uniform: gold, silver, and energy prices have each followed their own structural and cyclical drivers, creating a multi-commodity backdrop that shapes how institutional investors allocate across resource sectors rather than treating mining as a single asset class.

Why copper and iron ore are following such different scripts

Copper’s demand profile has shifted from cyclical to structural. The metal is critical to several concurrent, policy-supported build-outs:

• Electric vehicles and charging infrastructure
• Grid upgrades and renewable energy installations
• AI data-centre construction and associated power systems
• Battery storage and electrification broadly

These are not one-quarter demand surges. They represent multi-year, government-backed spending programmes that compound copper consumption over time. BofA and JPMorgan have each characterised the copper rally as structural, citing tight mine supply alongside energy-transition demand. UBS has described copper as a “better bet” than iron ore and lithium for commodity exposure.

Energy-transition commodity demand is not limited to a single geography; Europe and Canada have both launched industrial policy programmes that are adding a geopolitical layer to copper and critical mineral supply projections that did not exist in prior commodity cycles.

On the supply side, major disruptions have removed meaningful tonnage at exactly the wrong moment. The closure of First Quantum’s Cobre Panama mine and output reductions at Anglo American have tightened an already constrained market.

Iron ore’s China dependency and why it limits upside

Iron ore demand remains overwhelmingly tied to Chinese steel production, which depends heavily on construction and property development. A prolonged property downturn has capped steel demand, keeping iron ore prices trapped in their range. Supply has not contracted enough to generate a structural shortage, so the market remains cyclical and stimulus-dependent rather than supported by durable demand growth.

Inside the earnings shift: copper now leading at both majors

Standout figure: Rio Tinto’s copper EBITDA surged 84% in the first half of 2026, while iron ore EBITDA slipped 1%.

The numbers at both companies are striking. In BHP’s half-year to 31 December 2025, copper (including by-products) contributed $7.95 billion to operating earnings versus $7.50 billion from iron ore. Copper accounted for 51% of underlying operating earnings, the first time it had surpassed iron ore as BHP’s primary profit driver.

Rio Tinto’s half-year results to 30 June 2026 (released 29 July 2026) showed underlying earnings up 43%, the company’s biggest jump in four years. Copper alone accounted for 39% of underlying earnings.

These are not one-off quarters. They reflect a structural portfolio and price shift that is changing what these businesses look like from the inside out.

Iron ore margin pressure is not confined to the commodity price; cost inflation and project write-downs at major producers have compounded the effect of flat benchmark prices, illustrating why the earnings gap between iron ore and copper divisions has widened beyond what spot prices alone would suggest.

How shares moved: the ASX market is pricing in the copper story

The equity market has voted with capital. The key data points since copper’s rally began in April of last year:

• BHP: up 74.1%, closing at A$60.18 on 2 August 2026
• Rio Tinto: up 51%, reaching an all-time high of A$195.84 (approximately US$136.30) on 3 June 2026 before retreating to A$165.39 by 2 August
• Copper: up 68% over the same period

BHP has actually outperformed the copper price itself. Rio Tinto has tracked closer to copper’s trajectory than to iron ore’s flat range.

What the outperformance signals about investor framing

Reuters columnist Clyde Russell has noted that these stock moves “appear to be more reflective of copper’s strength than the relative stability of iron ore prices,” concluding that BHP and Rio Tinto are “morphing into copper plays.”

The logic holds: if iron ore were the dominant driver, share performance should be muted given the commodity’s narrow trading band. Instead, shares have re-rated in line with copper, consistent with the market discounting a future earnings mix where copper sits at the centre.

What copper as a “critical mineral” means for valuation multiples

The mechanism behind the re-rating is straightforward. Earnings tied to structural, policy-supported demand attract higher price/earnings and EV/EBITDA multiples than earnings tied to cyclical bulk commodities. The distinction between the two earnings types, as the market is pricing them:

• Structural (copper): demand underpinned by energy transition, electrification, and AI build-out; supply constrained by mine disruptions and long development lead times; policy tailwinds from multiple governments
• Cyclical (iron ore): demand tied to China’s property and construction cycle; supply adequate; price trajectory dependent on stimulus decisions in Beijing

UBS has publicly argued that copper is a “better bet” than iron ore and lithium for commodity exposure, given dwindling supply and strong energy-transition demand.

Bloomberg Intelligence projects that copper could account for more than 35% of diversified miners’ EBITDA in 2026, up approximately 14 percentage points over eight years (this projection has not been independently verified by the editorial team). The same research suggests 18-21% implied EBITDA upside if spot prices hold (also unverified), indicating the re-rating process may not be complete.

Large diversified miners with tier-one copper resources in politically stable jurisdictions are increasingly benchmarked against critical-minerals peers, not bulk-commodity pure-plays. That shift in peer group carries real valuation consequences.

What Australian investors need to weigh before acting on the re-rating thesis

The bullish case is real and the data supports it. The risks are equally specific:

1. Iron ore downside remains material. Both companies are still large iron ore exporters. A sharp China-driven fall in iron ore prices would hit earnings and could drag shares, even with copper providing a partial offset. Iron ore’s 12.3% decline from its 2026 peak to $98.20/t illustrates ongoing vulnerability.
2. Copper consolidation risk is real. After a 68% run to a record, retracement from elevated levels is normal commodity behaviour. Sustainability depends on the pace of energy-transition spend, AI build-out, and whether new mine supply emerges.
3. Chinese stimulus could narrow the gap. If stimulus eventually gains traction, iron ore could re-rate from current levels, adding incremental upside for BHP and Rio Tinto on top of copper-driven gains.
4. Entry valuation matters. With BHP up 74.1% and Rio Tinto up 51% since copper’s rally began, the decision investors face is whether the copper-driven re-rating is largely priced in or whether the market is still underestimating the long-term earnings shift.

Pure-play iron ore names remain more tightly tethered to iron ore’s trading range and China’s property cycle. Diversified miners with meaningful copper exposure present a different risk and return profile.

The copper explorer re-rating dynamic has been uneven across the market, with junior and mid-cap names lagging the commodity price move in ways that create a different set of opportunities and risks compared with the large diversified miners already pricing in the structural shift.

The earnings mix has shifted, and the investment case has shifted with it

The key analytical question for BHP and Rio Tinto has moved. It is no longer primarily “what is the iron ore price?” but “what does the earnings mix look like in five to ten years, and how much of it is copper and other critical minerals?”

Copper overtaking iron ore at BHP (51% of earnings) and approaching parity at Rio Tinto (39%) is structural evidence that the framing has already changed in the earnings accounts, not just in market sentiment. Based on current sector research (including unverified Bloomberg Intelligence projections), the re-rating process may not yet be complete if copper prices remain elevated.

For Australian investors, this has practical implications. Comparing diversified miners against pure-play iron ore names or dedicated copper plays requires a different framework than the one that held when iron ore dominated the earnings mix. The market is actively building that framework now.

“BHP and Rio are morphing into copper plays.” — Reuters

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions. Past performance does not guarantee future results. Financial projections cited in this article, particularly those attributed to Bloomberg Intelligence, have not been independently verified and are subject to market conditions and various risk factors.