Australian small-cap resources companies, particularly those in gold and critical minerals, are positioned to potentially benefit from a multi-year resources cycle. This cycle is driven by increasing investments in artificial intelligence and the growing demand for energy transition, according to Rory Hunter, head of emerging and small companies at SG Hiscock. He noted that rising interest rates may present short-term challenges for smaller industrial companies. SG Hiscock is an investment management firm, offering a range of Australian equities and fixed income funds. They aim to deliver sustainable returns for their clients through active management and rigorous research.
Hunter highlighted the significant opportunity within the critical minerals sector, stating, “The opportunity in critical minerals today is one of the most compelling themes we see anywhere in global markets.” He believes the structural forces driving this sector are robust and are expected to persist in the coming years. Many Australian small companies listed on the ASX are involved in critical minerals and gold mining.
Resources comprise more than 30 per cent of the S&P/ASX Small Ordinaries index, representing a substantial area of opportunity. Hunter emphasized the durable long-term tailwinds in gold and critical minerals. Global trends indicate that the scale of AI-related capital spending and the necessary energy generation and transmission infrastructure will significantly bolster demand for key commodities such as copper, silver, uranium, and various niche critical minerals.
Prices for silver reached record highs in early December, around $US58.84, according to Bloomberg, while copper also surged to a record of US$11,334 a tonne on the London Metal Exchange on December 1. Copper’s critical role in the clean energy transition has fueled investor optimism, driving its price up nearly 30 per cent this year. Uranium prices have also seen gains, reinforcing the potential for ongoing growth in critical minerals companies.
