Entering the commodity supercycle with Rio Tinto, Power Metallic Mines, and Glencore: Three stocks for the portfolio

Rio Tinto – The transformation into an energy transition winner is paying off

In 2025, Rio Tinto impressively demonstrated that its strategic realignment away from the pure iron ore business is bearing fruit. Copper-equivalent production rose by 8%, driven by record volumes of copper and bauxite. The Oyu Tolgoi underground mine in Mongolia, in particular, performed at its best, with a 61% increase in production. At the same time, the group reduced its operating costs by 5% per unit. This is a clear sign that it is not simply extracting more, but also working more efficiently. The operational excellence strategy is proving effective, even though the first half of the year was marked by cyclones in Western Australia.

Rio Tinto is in a robust financial position. Underlying EBITDA climbed 9% to USD 25.4 billion, while revenue rose to USD 57.6 billion. The shift within the portfolio is noteworthy. While the iron ore business came under pressure, with prices and margins declining, copper's profit contribution exploded. The division doubled its EBITDA to USD 7.4 billion. Aluminum also grew by 20%. Net profit fell short of expectations at just under USD 10 billion, mainly due to higher investments and special effects. However, dividend continuity remains impressive. For the tenth consecutive year, Rio Tinto is distributing 60% of its profits.

It is becoming increasingly clear to investors why Rio Tinto will benefit from the ongoing commodity supercycle. The group has done its homework. With the Arcadium acquisition, it secured access to lithium, while its entry into Brazil's CBA not only brings aluminum capacity but also 1.6 GW of renewable energy. Demand for copper for electrification and AI infrastructure remains strong, while supply is tight worldwide. Rio Tinto can rely on fully operational facilities such as Oyu Tolgoi, while its competitors are still in the planning phase. Although debt has increased as a result of the acquisitions, it remains at a comfortable level of USD 14.4 billion. The share is currently trading at EUR 84.16.

Power Metallic Mines – An exploration company on the rise

Power Metallic has made a name for itself in the Canadian mining landscape. With the Nisk project in Québec, the company owns a promising area rich in copper, nickel, silver, gold, and platinum group metals. These raw materials are not a fad, but hard currency in the energy transition. And this is exactly where the current commodity supercycle comes in. Demand for electric vehicles and green infrastructure is driving metal prices. With its portfolio, Power Metallic is right at the source of this development. Added to this is the location advantage. Québec offers not only political stability, but also existing infrastructure and access to green electricity. These are factors that are becoming increasingly important in the industry.

On February 18, the company released fresh drilling data that sharpens the picture. The latest results from the Lion Zone not only show the expected continuity of mineralization, but in some cases exceed it. Particularly striking is a section of over 20 m with a copper equivalent of over 4%, which contains a high-grade core of over 8 m with 8.05%. The key insight is that the true values often lie deeper. A hole that initially appeared unspectacular turned out to be high-grade thanks to high platinum and palladium contents. This shows that the geological team is gaining a better understanding of the system and refining its evaluation methods.

While the focus is on the domestic market, interesting prospects are emerging elsewhere. The Chilean subsidiary Chilean Metals has been listed on the TSXV since February 19. Its concessions are located near significant discoveries by Rio Tinto. This is attracting attention. Even more exciting is the move to Saudi Arabia. The company has obtained a license for a property covering over 200 sq km. Drilling costs are only half as high as in Canada, and the state supports exploration with subsidies and favorable loans from the sovereign wealth fund. If economic mineralization is found there, a local listing at valuations that are difficult to achieve in North America would be conceivable. For investors, these international activities offer favorable additional options to the core commitment in Québec. The share is currently trading at CAD 1.35.

Glencore – Commodities giant benefits from supercycle

Glencore ended the past financial year with a strong finish. After a rather mixed first half, core earnings rose by an impressive 49% in the second half of the year. The development in the copper business was decisive in this regard. Higher ore grades and better yield rates in several mines caused production to surge to over 500,000 tons in the second half of the year. This is almost double the figure at the start of the year. The price rally for copper, which rose by over 40% within a year, also brought the group substantial valuation gains on its inventories.

Glencore is positioning itself specifically for the upcoming commodity supercycle. Copper is the key metal for electrification, whether for grid expansion, renewable energy, or the growing number of electric vehicles. The group aims to double its copper production to around 1.6 million tons by 2035, making it one of the largest producers worldwide. An important milestone in this regard is the agreement now reached with the Congolese state-owned mining company Gécamines. It secures long-term access to rich ore zones for the joint venture KCC and extends the mine's life through the mid-2040s. This paves the way for increasing production there to around 300,000 tons per year.

Despite a slight decline in profits, Glencore is being generous to its shareholders. USD 2 billion will be distributed, which is a minimal decrease compared to the previous year. The base dividend of USD 0.10 will be supplemented by an increase of USD 0.07, which will be financed by the increased value of the Bunge stake. At the same time, talks are ongoing with the US government regarding the sale of 40% of the Congolese copper and cobalt assets to the Orion consortium. However, the recently failed merger negotiations with Rio Tinto show that the group is going its own way for the time being. The focus is now clearly on organic growth and operational excellence. The share price is currently trading at EUR 6.028.

Entering the commodity supercycle requires a diversified portfolio. Rio Tinto has impressively completed its transformation from an iron ore giant to a profitable energy transition winner with record copper production and operational excellence. Power Metallic Mines, as an agile explorer with promising drill results in Québec and international expansion potential, offers significant upside within a portfolio. Glencore, on the other hand, is leveraging its unique trading and production structure to benefit from the copper rally and generously reward shareholders.