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The world’s biggest mining companies are grappling with heightened geopolitical, trade, and economic uncertainty while they continue to bet on the energy transition to grow their portfolios of key transition metals such as copper and lithium.
Both BHP and Rio Tinto said this week that the long-term demand case for transition metals remains strong. But they both flagged global growth concerns as a major unknown in commodity demand in the short to medium term.
The return of tariffs under U.S. President Donald Trump, including on steel and aluminum imports, could boost inflation and ease economic growth, prompting central banks, including the Fed, to pause the current monetary policy easing.
This could increase the risks to the global economic recovery, which would affect demand for key commodities including iron ore, the key ingredient of steel, as well as copper.
BHP and Rio Tinto expect near-term recovery in economic growth in developed economies but flagged the ongoing trade tensions as a downside risk.
BHP, the biggest miner in the world, reported this week an underlying profit of $5.1 billion for the December 2024 half-year of its fiscal 2024/2025. The earnings were 23% lower compared to the same period of the previous financial year, mostly attributable to lower realized prices in iron ore.
In the latter part of 2024, prices for BHP’s key commodities were mixed, with copper rising marginally and steel raw materials trending lower, the company said. Developed economies saw sluggish activity with soft commodity demand.
This year, the ongoing rate cuts “are expected to translate into a recovery for steel and copper demand across the OECD in the near-term,” BHP said.
“However, potential trade tensions present a risk to the recovery in developed economies and across the globe,” it added.
BHP still believes in 3% global economic growth in both 2025 and 2026, “but the impact of policy on trade and inflation remains a key uncertainty, particularly for the United States and its trade partners.”
CEO Mike Henry noted that “in the near term, we do expect a degree of ongoing volatility and uncertainty due to potential policies affecting trade flows and inflation.”
Rio Tinto, for its part, booked underlying earnings of $10.9 billion for 2024, down by 8% from a year earlier. Underlying EBITDA of $23.3 billion fell just by 2% despite an 11% drop in the price of iron ore, of which Rio Tinto is the biggest miner in the world.
Rio Tinto is optimistic about the coming year but also flagged heightened trade and geopolitical upheavals.