April 28th, 2026 | 07:20 CEST
A More Defensive Approach to Investing in Commodities: How Franco-Nevada, Globex Mining, and BHP Diversify Their Risk
Investors looking to avoid single-stock exposure in the commodities sector can turn to broadly diversified companies. These companies typically provide capital and, in return, receive license fees—so-called royalties. The advantage: they do not bear the operational risks of running a mine. In addition, royalties are generally calculated based on revenue rather than profit. When costs rise—such as in the current environment of higher energy prices—the impact falls primarily on the mine operator, not the royalty holder. With this business model, Franco-Nevada has grown into one of the largest royalty companies in the industry. However, smaller players like Globex Mining are also worth a closer look. Meanwhile, mining giant BHP represents an alternative approach through scale and diversification across multiple commodities.
time to read: 4 minutes
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Author:
Tarik Dede
ISIN:
GLOBEX MINING ENTPRS INC. | CA3799005093 | TSX: GMX. OTCQX: GLBXF , FRANCO-NEVADA CORP. | CA3518581051 , BHP GROUP LTD. DL -_50 | AU000000BHP4
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Author
Tarik Dede
Even as a high school student in northern Germany, he developed a strong interest in the “Neuer Markt” and the dynamics of the equity markets. Small- and mid-cap companies were at the center of his focus from the very beginning. After completing his training as a certified bank clerk, he deepened his economic expertise through formal studies in economics as well as through various positions within Frankfurt’s financial sector. Today, he has been actively involved in the capital markets for more than 25 years, both professionally and as a private investor.
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Franco-Nevada: The Royalty Champion
Franco-Nevada is the blue-chip company among royalty firms. In 1983, renowned mining engineer Pierre Lassonde ("Lassonde Curve") and investment banker Seymour Schulich adapted a business model from the oil and gas industry for the mining sector. Today, the company has a broad portfolio and, with a market capitalization of nearly USD 47 billion, is the second-largest listed royalty company in the world behind Wheaton Precious Metals. For decades, Franco-Nevada has acquired royalties from smaller mining companies at favorable terms and provided capital in return. One of its best "investments" was a deal involving the Goldstrike deposit in Nevada just three years after the company's founding. They secured a royalty of just USD 2 million. Goldstrike developed into one of the world's largest gold deposits, and Franco-Nevada has earned a share of the profits every year.
The company now owns more than 400 assets worldwide, including 25 producing gold mines and around 35 energy assets. The remaining assets consist of hundreds of projects in the exploration and development phases, representing future growth at no additional cost. The group will not publish its Q1 figures for another two weeks or so. However, 2025 is already going down in history as a record year, with Franco-Nevada achieving a record revenue of approximately USD 1.82 billion. In Q4, earnings per share reached USD 1.85, and operating cash flow amounted to a whopping USD 2 billion. The company is using its high liquidity for distributions. In January 2026, the dividend was increased for the 19th consecutive time (on an annual basis). Most recently, it stood at USD 0.44 per quarter. The high liquidity of currently around USD 3.1 billion is being used to acquire new licenses.
Franco-Nevada shares are only suitable for long-term investors. The stock has increased in value by about eighteenfold since its 2008 low. Since the beginning of 2024, the share price has more than doubled. For those who expect gold prices to rise in the long term, the stock is suitable for portfolio diversification.
Globex Mining: Royalties, Interests, and More
Globex Mining follows a business model similar to Franco-Nevada's but has a broader sector exposure. The model is based on a "project generator" approach. Globex acquires properties cost-effectively and also conducts basic geological work such as mapping, sampling, etc. If a project shows potential, it is optioned out to other companies. Globex Mining thus avoids bearing the expensive and risky exploration costs. In exchange for handing over a project, Globex is paid in shares and cash, and often receives a royalty stake in potential future production. However, the partner must commit to investing certain amounts in the property. Therefore, the company does not view itself as a pure royalty company, but rather as a mix of that and a commodities bank. The commodities mix is also quite broad: the portfolio ranges from gold, silver, platinum, copper, and zinc to antimony, manganese, and rare earths.
Under CEO and founder Jack Stoch, Globex Mining has accumulated around 270 projects in its portfolio by the end of 2025, with a clear local focus on Canada and the US. Of the 106 royalties, some are held by well-known companies such as Agnico Eagle, Eldorado Gold, or IAM Gold. With this approach, the company is in excellent financial shape: it is debt-free and has a cash position (+ shares) of approximately CAD 40 million. Additionally, it holds stakes in billion-dollar corporations, including Pan American Silver (100,316 shares), Agnico Eagle Mines (22,000 shares), and Alamos Gold (18,000 shares).
Globex uses its available funds to advance three 100% owned projects in Quebec independently. In this respect, it clearly differs from Franco-Nevada. The stock has potential due to several factors: higher or high commodity prices, royalties from mines entering production, and success with its own projects. Anyone investing here should adopt a long-term investment approach, just as with its "big brother" Franco-Nevada.
BHP: The Mining Giant
A third alternative for a more defensive investment in the commodities sector is BHP. The Australian company is the world's largest mining group, ahead of Rio Tinto and Southern Copper. In recent years, the Melbourne-based company has changed its strategy: the focus is now on copper, iron ore, and potash. Currently, the high price of copper is the main driver for the stock. However, the market could also factor in potash amid rising fertilizer prices. Just a few days ago, BHP released its Q3 results (on a staggered fiscal year basis). Between January and March 2026, approximately 477,000 tons of copper were mined. That represents a 3% increase from the previous quarter. On a 9-month basis, the company is on track to produce 1.9 to 2 million tons in the fiscal year. Since BHP only reports earnings figures half-yearly, the 6-month figures show a clear upward trend. Revenue rose by 11% to USD 27.9 billion, and profit amounted to USD 5.6 billion for the half-year (+28%). 50% of the group's EBITDA came from the copper business. In addition, an interim dividend of USD 0.73 per share was paid. BHP aims to return 60% of its profits to shareholders. The stock is suitable for investors who believe copper prices will rise and want to maintain broad market exposure.
With Franco-Nevada, investors can invest broadly in the gold market without taking on significant operational risks. The stock is traditionally highly valued and is suitable for the long term. Globex Mining's portfolio offers not only royalties but also equity stakes and proprietary projects. Here, too, the success of a single project is not decisive for long-term investment success. The stock is still flying under the radar of many investors, so the potential is correspondingly high. BHP focuses primarily on copper, which benefits from the energy transition. Through Escondida, the company holds stakes in the world's largest copper mine. As a long-term play, the stock is particularly suitable for diversification.
Conflict of interest
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