AUSTRALIA METALS & MINING: Remain positive copper, revisiting base metal vs. diversified valuations and Global Mining M&A landscape; preview Sep Q

The global mining sector continues to benefit from tight refined metal markets, a positive earnings upgrade cycle despite higher energy costs, and ongoing sector M&A and portfolio optimisation. We remain positive on copper near term on low global inventory and the possibility of a US tariff on copper and have modestly upgraded our 2027 forecast to US$6.3/lb (US$13,900/t). Broadly, relatively weak real global demand for metals of around 0-2% is being offset by supply disruptions (met coal, aluminium), stockpiling (copper), decoupling from China (rare earths and minor metals) and cost curve pressure from rising freight rates and raw material input costs. Sector multiples have expanded over 2026 with diversified miners trading up to ~7-8x NTM EBITDA, above the 25-yr historical average of ~6.5-7x, and catching up to pure play base metal companies. Large cap mining M&A and sector consolidation remains in focus. Our key Buy calls are RIO & BHP, we are also Buy rated on BSL and the rare earth