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Investing in mining stocks: ASX mining stocks to watch in 2023

From gold to gravel, mining still remains a key pillar of everyday life. Here's what you need to know about the sector.

Australia is known as the lucky country, blessed with an abundance of natural resources. This led to a number of mining businesses that you can invest in.

But before you start buying mining stocks, you should pay close attention to historical prices, the location of mines, materials being exported and changing geopolitical goals that could all impact future returns.

What are mining stocks?

Mining stocks are companies listed on a stock exchange that extract minerals from the earth. Generally, miners do the same thing. They take raw materials out of the ground, but they all specialise in their own areas.

Mined materials vary in composition and can be divided into the following major categories:

  • Energy materials. Bitumen, coal and uranium.
  • Fertilisers. Boron, rock phosphate, potash and sulphur.
  • Industrial metals. Aluminium, cobalt, copper, iron ore, lithium, nickel and zinc.
  • Industrial minerals. Asbestos, bentonite, graphite, gravel, gypsum, limestone, mica, potash, pumice, salt, sand, silica and talc.
  • Precious metals. Diamond, gold, iridium, mercury, osmium, palladium, platinum and silver.

Mining is a critical sector to the Australian economy, making up for a large chunk of our resources, which has helped propel our economy as a whole.

Major and juniors

There are 2 major mining categories known as the majors and the juniors.

Majors refer to mining operations that are well established, usually have decades of history, have operations around the world and have fairly steady cash flows. The majors in Australia include the likes of BHP, Rio Tinto and Fortescue Metals.

The majors have a proven history of making money. They can break down their costs into per tonnage and overall make it easier for investors to evaluate their share price.

On the other hand, juniors are small mining companies with less working capital and shorter histories than their major counterparts. Think of them as a type of growth stock specific to the mining industry.

They are rarely well funded, have short histories and are more based on higher hopes. On the upside though, given they aren't well established, they can have a higher upside should they be able to develop in their field.

Mining stocks

To help you out, here are some example of domestic mining stocks. But remember, if you're interested in a specific material or commodity, take some time to research the company, its history and its financials before you buy in. You can also buy international mining stocks, but you will need a broker that allows you to invest in the country the stock is listed.

Finder survey: Which industries do Australians hold stocks in?

Response
Mining39.22%
Source: Finder survey by Pure Profile of 1145 Australians, December 2023

Which ETFs track the mining category?

Mining ETFs invest in companies that generate revenue from mining natural resources. The following ETFs track companies in the mining sector:

  • BetaShares Gold Bullion ETF (QAU)
  • BetaShares Global Gold Miners ETF (MNRS)
  • VanEck Vectors Gold Miners ETF (GDX)
  • VanEck Vectors Australian Resources ETF (MVR)

Why invest in mining stocks?

The old saying goes: if you can't grow it you have to mine it. Thanks to its long history, economic viability and global demand, the mining industry holds great potential for profit, and mining stocks can pay strong dividends.

Many industries rely on mining efforts to produce the materials needed to manufacture their wares and services. Without cobalt, electric vehicle manufacturers would flounder. Without uranium, we wouldn't have nuclear energy.

Mining is a time- and energy-intensive process, but mining companies continue to expand their reach thanks to the international demand for what they source and produce.

This type of global reliance on mined materials makes this industry among the more powerful and viable investment categories.

Major mining companies offer the opportunity for steady returns and dividends while junior mining companies hold the potential for rapid growth. Before investing, you should research the mining company that interests you and what materials it yields to determine potential benefits specific to the product.

Risks of investing in mining stocks

The mining industry isn't immune to risk and faces several unique challenges, chief among them being economic and geopolitical shifts.

The mining industry tends to do well in an up market because the profitability of this sector is largely tied to the health of the global economy. When demand for mined metals and materials is high, mining companies are well-positioned for strong and consistent cash flow. But when demand is low in response to a down market, mining companies may suffer.

Mining companies are also vulnerable to political regulations depending on where their mines are located. Many mining stocks on the market are international companies with mine locations across the globe. A mine's location can have a big impact on a mining company's profitability as the political environment of the country the mine is located in can impact mining processes and material prices.

Mining companies are also unable to set the price at which they sell their products. The price of, say, iron ore is determined by the future markets. This limits the potential brand power of mining companies.

Compare trading platforms to trade mining stocks in Australia

You'll need a brokerage account to invest in mining stocks in Australia. Compare options by features and fees to find the account that best meets your needs.

1 - 7 of 7
Name Product Price per trade Inactivity fee Asset class International
eToro
Finder AwardExclusive
eToro
$0
US$10 per month if there’s been no log-in for 12 months
ASX shares, Global shares, US shares, ETFs
Yes
Finder exclusive: Get 12 months of investment tracking app Delta PRO for free when you fund your eToro account (T&Cs apply).
CFD service. Capital at risk.
Join the world's biggest social trading network when you trade stocks, commodities and currencies from the one account.
CMC Invest
Finder Award
CMC Invest
$0
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Yes
$0 brokerage on US, UK, Canadian and Japanese markets (FX spreads apply).
Trade over 45,000 shares and ETFs from Australia and 15 major global markets. Plus, buy Aussie shares or ETFs for $0 brokerage up to $1,000 (First buy order of each security, each day - excludes margin loan settled trades).
Moomoo Share Trading
US$0.99
$0
ASX shares, Global shares, US shares, ETFs
Yes
Finder exclusive: Get an additional 30 days on top of the regular brokerage-free period for new accounts. T&Cs apply.
Trade shares on the ASX, the US markets and buy ETFs with Moomoo. Plus join a community over 20 million investors.
Spaceship US Investing
US$0
$0
US shares, ETFs
Yes
Dive into US markets with $0 brokerage, starting with just a $10 investment.
Unlock US stocks and ETFs with minimal entry barriers, offering straightforward, low-cost options for new and seasoned investors.
Tiger Brokers
US$2
$0
ASX shares, Global shares, US shares, ETFs
Yes
Trade Australian, US and Asian stocks with no minimum deposit on Tiger Broker’s feature-packed platform.
Webull
US$0.25
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Yes
Sign up & deposit $200 to get $100 of rewards value, or deposit $1,000 to get $200 worth. Up to $5,450 value available. T&Cs apply.
Trade ASX and US stocks and US options, plus gain access to inbuilt news platforms and educational resources. You can also start trading for less with fractional shares.
Saxo Invested
US$1
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Yes
Access 22,000+ stocks on 50+ exchanges worldwide
Low fees for Australian and global share trading, no inactivity fees, low currency conversion fee and optimised for mobile.
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Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

Mining market projections

In 2022, the combined revenue of the largest miners in the world amounted to US$925 billion according to Statista. But the net margins for the miners are continuing to fall. Over the last decade, it has decreased from 25% to 11% by 2020.

That said, Australia has a significant global standing in the mining industry.

And mining remains a key driver of economic growth.

Statista also reports Australia's total revenue in 2022 for mining was $216 billion employing 79,800.

Bottom line

Major mining stocks represent a potential long-term investment with the opportunity for steady gains. Junior mining stocks may have more growth potential but are typically riskier investments. Before you purchase either, review your platform options to find the brokerage account in Australia that's ideal for your investment goals.

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