Iron ore recedes, copper takes over: Australian mining stocks find a new growth story.

Analysts say that surging copper demand driven by power infrastructure and artificial intelligence (AI) has provided investors with a new rationale for allocating to the mining sector, and Australian mining stocks are expected to extend their rally. Over the past year, the mining sector has been the strongest sub-sector of the S&P/ASX 200, and it is now gradually moving away from the long-dominant iron ore, with miners turning to copper in search of growth. BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs (BHP.US.) has benefited from copper prices hitting new highs, with copper revenue accounting for more than half of total annual revenue for the first time; while Fortescue Ltd., whose main business is iron ore, is still seeing declining profits. As AI data centers, electrification, and power grid expansion drive copper demand, while the property market downturn weighs on iron ore demand, this shift in the sector's center of gravity will accelerate further. Australia's leading miners are gradually increasing their copper asset exposure, moving away from a singular reliance on traditional pillar commodity iron ore. "The key point is that copper demand is growing, while iron ore is not, and the market is pricing that in," said David Tuckwell, chief investment officer at ETF Shares in Sydney. Judging from the latest financial reports of Australia's leading miners, "the shift toward copper has already become a reality." BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs is not the only company seeking to expand its share of the global copper market. Peers such as Rio Tinto plc Sponsored ADR (RIO.US) are also pursuing similar strategies, trying to seize the upside in copper prices brought by tight supply, demand boosted by the AI boom, and tariff-related trade disruptions. BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs's move to increase its copper exposure was the motivation behind its attempt to acquire Anglo American Plc, although that takeover proposal fell through last year. The divergence between copper and iron ore is becoming increasingly obvious. As major Asian property markets struggle to recover from the post-pandemic downturn, iron ore prices have remained relatively weak. However, some analysts believe that in the Australian market, investors have limited options if they want to find pure-play copper exposure. "If you want large-scale, high-quality copper mining assets, the ASX is not the first choice," said Dylan Kelly, head of research at Terra Capital Holdings. For "large copper producers with long mine lives, very low costs, and abundant targets, you need to look to Canada," he said, adding that the company holds a small position in Perth-based FireFly Metals Ltd. Even so, increasing copper mining assets still offers investors a new way to participate in this AI bull marketa boom that is driving global stock markets to repeatedly set new highs and also providing room for further gains in Australian mining companies. As investment in data centers and power grid construction accelerates, copper demand is expected to continue rising, while proposed U.S. tariff policies and declining copper output in Chile further intensify supply-side pressure. "The copper industry as a whole is already experiencing a structural supply gap," said Jessica Leung, portfolio manager at Global X Management. Combined with the metal's growing demand from AI buildout, Australia's mining sector is now turning toward "what they see as the next phase of growth."