BHP and Rio Tinto surge on ASX as copper prices near record highs amid super-cycle debate

Copper’s surge towards a record high this week has investors split over whether the price move signals a new commodity super-cycle, or excess enthusiasm for a wildly popular trade among retail investors.

The metal hit $US6.22 a pound on Friday, near January’s record high and up 12 per cent over a month-long rally on bets that rising demand will boost prices and create wealth for investors.

The soaring price helped push giant miner BHP Group up 3.8 per cent on Thursday to mark four gains in five sessions, with Rio Tinto shares adding 5.5 per cent in two sessions to a record high of $180.24 per share.

‘Very, very bullish’

According to Charlie Aitken, the Investment Director at high-flying hedge fund Regal Partners, copper’s rise is just one of several ways to create wealth from booming demand for industrial metals required for data centres and the transition to renewable energy. Copper is commonly used in cables, electronics, construction, transportation and infrastructure linked to demand for clean energy.

“The performance of copper over the last month has been very, very bullish,” said Mr Aitken.

“Copper is at the intersection of everything and critically under supplied. On my screens it’s without doubt that a commodity price super cycle is underway. This is the early innings, and it’s spreading to all of the industrial, bulk, precious, energy, uranium, critical mineral, water, and agricultural sectors.”

S&P/ASX 200 heavyweight, BHP now earns more than half its profits from copper mined largely in South America. Outside the majors West Australian miner Sandfire Resources added 5.7 per cent on Thursday to take its 12-month gain to 73 per cent on a market value near $8.4 billion. While Capstone Copper jumped 6.8 per cent to $12.50 per share on a value around $9 billion.

Among the junior explorers, shares in Chile-focused Cobre Ltd have more than doubled from 10 cents at the start of 2026 to 23 cents on Thursday.

Doubts around bubble, Rio hits $252b valuation

Some professional mining investors are more cautious than Mr Aitken, who is known in the market for his direct calls on where to invest on the ASX.

Jon Mills, a mining and equity analyst at Morningstar cautioned that the popularity of the copper trade among retail investors means valuations may have raced too high.

“Everyone’s bullish on copper because of the energy transition and data centres,” said Mr Mills.

“But the price has responded to that. It’s now above $US6 a pound. So, all the copper miners led by BHP and Rio are near record highs, and it’s not because of iron ore.”

Mr Mills added that the market is pushing the price higher because it expects more strong demand from China and a total supply shortfall given copper mines are expensive to develop on long time frames of five years, or more.

“Every man and his dog in the copper space led by BHP is trying to increase copper production right now and given how capitalism works, there’s every incentive to solve this problem and I’d back capitalism to sort it out,” he said.

Equity investment research house, Morningstar, currently views BHP and Rio Tinto as slightly overvalued. Mr Mills pointed out Rio is getting an additional tailwind from strong aluminium prices due to the war in the Middle East as its total market value hit a record $252 billion on Thursday.

Rare earths critical to US military power

Australian shares rose 1 per cent on Thursday for their fourth straight day of gains on optimism over a Middle East peace deal, although Mr Aitken told investors that massive US government spending on its military is still an unbreakable long-term trend to profit from.

“The inventory rebuild of US precision guided munitions is expected to take a minimum of six years,” he said.

“At the same time, all G7 governments globally are increasing their defence budgets absolutely and as a percentage of GDP.”

According to the hedge fund investment chief, the simplest way to profit from the trillions of US dollars spent on defence is to buy ASX-listed rare earths miners such as Lynas Corporation, Brazilian Rare Earths, or WA1 Resources.

Currently, around 93 per cent of refined rare earth supply comes from China.

Rare earths like neodymium-praseodymium (NdPr) are a key ingredients in the magnets used to guide missiles, or other high-tech military hardware.

This means the US currently faces significant supply chain risk if it cannot source more supply outside of China.

“There is not a single precision guided munition or guidance system that can be manufactured without refined rare earths,” said Mr Aitken.

“I very much doubt that Beijing will be selling any refined rare earths to the US defence sector which makes the investment case for the ex-China rare earths miners and refiners stronger than ever.”

Shares in Malaysia-based, ASX-listed rare earths refiner Lynas jumped 3.6 per cent on Thursday and have now rocketed 63 per cent in 2026 on a market cap of $20.1 billion.

While junior explorer Brazilian Rare Earths has added 28.5 per cent year to date to close at $4.91 per share on Thursday.

Beijing has tightened its control of rare earths exports since April, 2025, as retaliation for the trade tariffs imposed by US President Donald Trump.

Later this month, Mr Trump is scheduled to meet his Chinese counterpart Xi Jinping, with rare earth supply expected to near the top of the agenda.

Both Mr Aitken and Mr Mills believe the US government will continue to offer heavy subsidies to rare earths miners and refiners that can offer it secure supply outside of China.

“Rare earth prices are pretty high at the moment, but the US government has offered price floors [for supply] to Lynas and MP Materials,” said Mr Mills.

“So prices are rising as a result of the desire to reduce dependence on China. The US needs rare earths for military applications, defence is a small portion of rare earths demand. But it’s very critical for obvious reasons. On the miners, Lynas is above our fair value, even as we assume a pretty decent increase in sales volumes.”