Mining stocks are publicly traded companies focused on finding, extracting, and processing deposits of valuable minerals and materials. These substances include:
- Precious metals such as gold, silver, platinum, and palladium.
- Industrial metals such as iron ore, copper, aluminum, nickel, lithium, cobalt, and zinc.
- Construction materials such as sand, crushed stone, and limestone.
- Energy materials, including coal, oil sands (bitumen), and uranium.
- Fertilizers such as boron, potash, and phosphate.
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Many of these metals and materials are crucial to the global economy. Industries need the raw materials to build and manufacture goods, products, and infrastructure. When the economy is expanding, mined materials are in high demand, which boosts prices.
However, the mining industry is cyclical. Demand for mined materials tends to fall when the economy slows down. Mining stock prices typically decline during a recession. That’s a concern for investors in 2022 given the worries that surging inflation will force central banks to raise interest rates, which could tip the global economy into a recession.
One factor causing inflation is Russia’s invasion of Ukraine. Both countries play a major role in the iron and steel industries and are significant fertilizer producers. If the war continues, it could keep the upward pressure on those commodity prices.
Given the mining industry’s cyclicality, investors need to focus their attention on mining stocks that can weather future economic storms. Let's dig into some of 2022’s best mining stocks and take a closer look at investing in the mining industry.
Top mining stocks to buy in 2022
These are some of the top mining companies:
|Barrick Gold (NYSE:GOLD)||Gold and copper mining|
|BHP Group (NYSE:BHP)||Diversified mining operations|
|Rio Tinto (NYSE:RIO)||Industrial metals mining|
Source: Company websites
Here's a closer look at these top mining companies.
1. Barrick Gold
Barrick Gold is one of the largest gold miners in the world, with operations in more than a dozen countries. It's also a leading copper producer.
One thing that sets Barrick Gold apart from other precious metals companies is its focus on Tier One mining assets. It defines a Tier One mine as one that:
- Produces more than 500,000 ounces per year.
- Has at least 10 years of productive life remaining.
- Delivers total cash costs per ounce in the lower half of the industry cost curve.
Tier One mines produce a relatively steady supply of low-cost gold and copper, enabling Barrick to continue making money when prices are low.
Barrick Gold’s Tier One mines can generate lots of cash, allowing it to pay an attractive base dividend payment that it complements with a quarterly performance dividend payment that fluctuates with its cash balance.
|Performance Dividend Level||Threshold Level||Quarterly Base Dividend||Quarterly Performance Dividend||Quarterly Total Dividend|
|Level I||Net cash <$0||$0.10per share||$0.00per share||$0.10per share|
|Level II||Net cash>$0 and <$0.5B||$0.10per share||$0.05per share||$0.15per share|
|Level III||Net cash>$0.5B and <$1B||$0.10per share||$0.10per share||$0.20per share|
|Level IV||Net cash >$1B||$0.10per share||$0.15per share||$0.25per share|
2. BHP Group
BHP Group is a diversified resources company. It operates fully integrated mining assets that extract and process copper, iron ore, coal, nickel, zinc, and potash. Its mining assets span the globe. BHP Group also had an oil and natural gas business but merged those assets with Woodside Petroleum (NYSE:WDS) in a deal that closed in 2022. The merger transformed BHP into a pure-play mining company.
Although BHP Group produces several commodities, it primarily aims to be a low-cost producer. It efficiently operates large resource-rich mines and uses technology such as autonomous vehicles to reduce costs. The mining company's focus on minimizing expenses also helps to mute the impact of inflation.
BHP Group combines its low-cost operations with a strong balance sheet, which it strengthens by routinely selling its least-profitable mines and non-core assets.
The mining company is well-positioned to invest in high-return expansion projects even when commodity prices are low. Its production volumes are relatively stable. Although there’s some variability to its cash flow, BHP’s low costs enable it to generate free cash flow to reliably pay dividends and repurchase stock.
Like Barrick, BHP Group’s dividend has some variability. The company pays out at least 50% of its profits each reporting period in dividends, so its dividend outlay will rise or fall with its cash flow.
3. Rio Tinto
Rio Tinto is a diversified mining company. It's a leading producer of the three most-consumed industrial metals -- iron ore, aluminum, and copper. Rio Tinto also mines a variety of other metals and minerals, including boron, salt, diamonds, and titanium.
Like BHP Group, Rio Tinto aims to be a low-cost producer of metals and minerals. It's able to keep costs down by operating mining assets that are integrated and big. Rio Tinto's investments in new technologies, such as autonomous vehicles and renewable energy, reduce costs and increase productivity.
Rio Tinto has proven its ability to make money even during weak market conditions. It has a strong balance sheet and routinely sells non-core mines to reallocate cash to better opportunities. For example, in recent years, it has exited the coal mining business due to the sector’s dwindling prospects amid climate change concerns. Meanwhile, in 2022, it offered to buy the outstanding shares of copper miner Turquoise Hill Resources (NYSE:TRQ) that it doesn’t already own. The deal would simplify its ownership of the massive Oyu Tolgoi mine in Mongolia, making it easier to develop its extensive copper resources.
The company regularly expands its best mines and aggressively repays debt. Rio Tinto is another mining company that pays dividends to shareholders and repurchases its own shares throughout the economic cycle. It tries to pay 40% to 60% of its cash flow in dividends, with payments varying each period depending on its earnings.
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Should you buy mining stocks?
The mining industry is cyclical and capital-intensive. Mining companies have more money to invest in new mines and expansion projects during periods of economic expansion. However, the long lead times required to complete projects often cause problems for mining companies. Projects developed during boom times frequently don’t come online until after the cycle changes, which affects returns.
Investors in mining stocks should also pay close attention to the amount of debt carried by a mining company. Companies with high amounts of debt often struggle during economic downturns, while companies with low production costs are the most profitable and least likely to heavily rely on debt to fund growth.
Given these challenges, investors should focus on the top mining companies. They have proven their ability to generate profit regardless of economic conditions. If you are comfortable with some volatility and if receiving dividends is a priority for you, then adding some high-quality mining stocks to your portfolio might be the right move.
Mining Stock FAQs
Investors in mining stocks should be keenly aware of both the mining industry's cyclicality and its capital-intensive nature. The best mining companies have proven abilities to generate profit regardless of economic conditions. If you are comfortable with some volatility, and, if receiving dividends is a priority for you, then adding some high-quality mining stocks to your portfolio might be the right move.
There are many benefits to buying gold stocks instead of the physical metal. Gold companies can likely generate higher total returns than simply an investment in physical gold because, when the price of gold rises, these companies can expand their operations and their profits. This growth should enable their stocks to outperform the price of gold. But not all gold stocks outperform the price appreciation of the precious metal, which means that investors need to choose their gold stocks carefully.
Matthew DiLallo has positions in BHP Group Ltd. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Although investing in mining stocks can be highly volatile, they often make good long-term investments. They may be well-known stars or quiet gems, but they do share one common attribute—they have grown at higher-than-average rates within the mining industry, or within the market as a whole, for years or decades.Is gold stock worth buying? ›
Gold holds a valuable place in asset allocation for investors, especially in times of high inflation and economic uncertainty. Investing in gold can be tricky, but one of the best investments to gain exposure to gold is through the S&P Gold Shares ETF (GLD).What is the highest mining stock? ›
|Mining Stocks with the Most Momentum|
|Price ($)||12-Month Trailing Total Return (%)|
|Alpha Metallurgical Resources Inc. (AMR)||174.01||757.2|
|Lake Resources NL (LLKKF)||1.04||412.1|
|Asante Gold Corp. (ASE.CX)||CA$1.65||340.0|
We rate GOLD as a buy with a bullish outlook on the gold metal price. We expect the stock to outperform the upside in percentage terms. There's a lot to like about Barrick Gold as an excellent way to capture exposure to themes in precious metals.What is the best mining company? ›
- Freeport-McMoran Inc (NYSE: FCX) ...
- Barrick Gold Corp (NYSE: GOLD) ...
- Franco Nevada Corp (NYSE: FNV) ...
- Newmont Corporation (NYSE: NEM) ...
- Rio Tinto Limited (OTC: RTNTF) ...
- Wheaton Precious Metals Corp (NYSE: WPM) ...
- Kirkland Lake Gold LTD (NYSE: KL)
The 20 analysts offering 12-month price forecasts for Barrick Gold Corp have a median target of 25.50, with a high estimate of 29.00 and a low estimate of 17.00. The median estimate represents a +63.75% increase from the last price of 15.57.Is Rio Tinto a good buy? ›
Should I buy Rio Tinto stock? If you're looking for a stock with good yields, Rio Tinto stock is ideal with a regular and significant dividend. Rio Tinto shares offer a dividend yield expected to exceed 13% in 2022, making them one of the most attractive stocks on the market for generating regular income.What is the best mining ETF? ›
The Bottom Line
Silver is more volatile, cheaper and more tightly linked with the industrial economy. Gold is more expensive and better for diversifying your portfolio overall. Either or both may have a place in your portfolio.
- TIPS. TIPS stands for Treasury Inflation-Protected Securities. ...
- Cash. Cash is often overlooked as an inflation hedge, says Arnott. ...
- Short-term bonds. ...
- Stocks. ...
- Real estate. ...
- Gold. ...
- Commodities. ...
1. Glencore. Glencore, which was founded in 1974 and is headquartered in Baar, Switzerland, is the largest mining company in the world. The Anglo-Swiss multinational miner brought in $215bn at the end of the 2019-20 fiscal year, placing it as the 17th-largest company overall on the 2020 Fortune Global 500 list.Are mining stocks good for inflation? ›
Mining stocks are well known for their ability to capitalize on inflationary situations as they tend to rise alongside commodity prices.What is wrong with Barrick Gold stock? ›
Barrick's gold production over Q1 also fell 10% versus last year, on account of lower output at its Carlin and Cortez mines in Nevada, while the company's profits have also come under some pressure due to supply chain issues and an increase in costs related to Covid-19.Is Barrick Gold a buy sell or hold? ›
Barrick Gold has received a consensus rating of Buy. The company's average rating score is 2.50, and is based on 7 buy ratings, 4 hold ratings, and 1 sell rating.Is Newmont mining a good stock to buy? ›
Furthermore, Newmont's stock exhibits good qualities from a pricing and dividend perspective. It's a well-rounded asset and a "best-in-class" investment if you're seeking to hedge inflation.Are mining stocks undervalued? ›
Gold mining stocks are historically undervalued as a whole, but a few names, in particular, are substantially discounted.Why are mining shares rising? ›
Miners are cyclical businesses, meaning when economies run hot, demand for the commodities they produce rises. The reopening of economies following the pandemic provided the perfect catalyst for increased demand.What is the price target for Barrick Gold? ›
First Quarter 2022 Results
Toronto — Barrick Gold Corporation (NYSE:GOLD)(TSX:ABX) today announced a $0.20 per share quarterly dividend, the first to include a $0.10 per share performance component in line with its new dividend policy.
Gold ETFs that hold the physical precious metal or that hold gold futures contracts do not offer dividend yields.
Rio Tinto Group has received a consensus rating of Hold. The company's average rating score is 1.88, and is based on 2 buy ratings, 3 hold ratings, and 3 sell ratings.Is Glencore a buy? ›
Glencore has received a consensus rating of Buy.How much is Rio Tinto next dividend? ›
|Summary||Previous dividend||Next dividend|
|Pay date||21 Apr 2022 (Thu)||22 Sep 2022 (Thu)|
GOAU, SGDM, and RING are the best gold miner ETFs for Q2 2022.Who is the best gold miner? ›
1. Barrick Gold Corporation. Barrick Gold is striving to be the most valuable gold mining company in the world.Is there a graphite ETF? ›
Amplify Advanced Battery Metals and Materials ETF (BATT)
BATT is a professionally managed ETF that seeks to provide exposure to lithium, cobalt, nickel, manganese and graphite via publicly-traded stocks (mostly miners).
If inflation continues to rise and reaches double-digit values through 2022 and 2023, the price of $100 an ounce for silver could be possible. Consider that in 2021, we saw inflation rates averaging around 5%, which was the highest rate since 2008.Can the government confiscate your silver? ›
The United States does not dictate the price of gold. Unlike in 1933, the government has no way to control the price of gold and, therefore, confiscation could come with potential price risks. Some state governments are now legalizing gold and silver as legal tender or money.What is the best precious metal to buy right now? ›
Gold. Gold is the most well-known and investable precious metal. It's unique for its durability (it doesn't corrode), shaping capability, and ability to conduct heat and electricity. While it has some industrial uses in dentistry and electronics, it's primarily used to make jewelry or as a form of currency.What should I buy before hyperinflation hits 2022? ›
Other food items to purchase when preparing for hyperinflation are wheat, corn, potatoes, and dairy. Another essential commodity to buy before hyperinflation hits is canned foods, including vegetables, fruits, and meats. These foods are easy to store and use in different ways. For example, you can dry or buydried meat.
- Communication Services, Health Care, and Utilities sectors tend to see a boost as heightened volatility drives investors toward stabler options. ...
- Energy stocks are supported by higher oil prices—which help drive up inflation, a key factor in the Fed's interest rate policy.
|1||BHP Group 1BHP||$135.22 B|
|2||Rio Tinto 2RIO||$96.29 B|
|3||China Shenhua Energy 3601088.SS||$80.01 B|
|4||Glencore 4GLCNF||$72.48 B|
Mining. China is not only a big user and exporter of minerals – it is also the world's biggest miner as far as countries go. In 2018, the latest year available with the World Mining Congresses, China excavated almost 4.1 billion metric tons of fossil fuels and iron as well as non-ferrous and other metals.What is the best mining ETF? ›
Should I buy Rio Tinto stock? If you're looking for a stock with good yields, Rio Tinto stock is ideal with a regular and significant dividend. Rio Tinto shares offer a dividend yield expected to exceed 13% in 2022, making them one of the most attractive stocks on the market for generating regular income.What is a Tier 1 mining company? ›
Tier 1 deposits are “Company making” mines. They are large, long life and low cost. Using long run commodity prices it generates >$300-600m pa of revenue (i.e. >200 kt pa Cu or >800 kt pa Zn+Pb or >5kt pa of U3O8 or >250 koz pa Au) for >20 years and is in the bottom quartile of the cost curve.Are mining stocks good for inflation? ›
Mining stocks are well known for their ability to capitalize on inflationary situations as they tend to rise alongside commodity prices.