Every Australian investor has a stake in mining

Love or loathe him, Australia’s former prime minister Paul Keating was something to remember.

About as bashful and opinionated as they come.

Not one to shy away from a verbal stoush or hand out some astonishingly original insults, like calling his archrival John Howard a ‘desiccated coconut’ live on an ABC interview.

We need more of it.

Sure, it’s all theatrics, but Australian politics today is unbearably dull. Listening to a parliamentary session is an antidote for insomnia.

Paul Keating was one of the few who didn’t fit the typical lifeless politician mould. And he didn’t take his cues from a party script either.

I couldn’t care less whether he was affiliated with the Liberal or Labour Parties; I only cared that he brought some much-needed originality.

Because of those unique perspectives, I’ve continued to follow some of his musings. Recently, he wrote about his superannuation legacy.

Of course, pointing out all the advantages while skirting some recent controversies.

But a couple of his statements stood out to me, like this one:

Currently, France spends 14% of its GDP on public pensions while Germany sits at 10%. The United States at 7%. Australia’s pension call on the budget is currently just 2.3% of GDP – a sunken level, thanks entirely to universal superannuation.

No kidding, France spends almost 14% of its GDP on public pensions!

I almost fell off my chair when I read that.

This isn’t a typical Keating embellishment of the facts; this is real.

So, on that metric, Australia sits in a relatively healthy position, thanks to its ‘self-funded’ pension model, introduced by Keating/Hawke in the early 1990s.

Anyway, why make this point?

Well, superannuation assets in Australia recently pushed past A$4 trillion.

Australia now has the world’s sixth-largest pension system, but it also has the fastest growth.

With the current trajectory, Australia’s superannuation honey pot is expected to reach a mammoth $9 trillion by 2040.

And Global Miners Want Their Slice

Australia has its problems, for sure, falling productivity and uncompetitive manufacturing.

And that’s caused some ASX names to delist and shift offshore.

But in terms of mining, the exact opposite is underway…

The ASX has always been considered a robust place for resource companies to list.

Historically, though, the Canadian and London Stock Exchange have been considered the primary destination for major mining firms.

Yet that trend is changing; more companies are looking to Australia.

The country’s deep pool of retirement capital is undoubtedly helping drive that trend.

In 2022, the world’s largest miner, BHP, chose to have its primary listing on Australian soil.

Since then, a flurry of other international miners, like Canadian uranium developer NexGen Energy and Canadian producer Capstone Copper, have joined the ASX party.

Right now, Canadian billionaire Robert Friedland is putting the final touches on listing his latest venture, Ivanhoe Atlantic, on the ASX—a company developing the Nimba iron ore project in Guinea.

In terms of resource stocks, the ASX is absorbing MORE global market share than any other exchange.

And if that trend continues, it could become the largest exchange for the global resource market, certainly within metals and mining.

So, what does that mean for Aussie Investors?

Whether we like it or not, the Australian market will become even more concentrated in the commodities sector in the coming years.

If you’re living in Australia, there’s a good chance you’re already heavily leveraged to the mining sector through your superannuation.

But that concentration will probably deepen in future years.

Whether you have a passive super fund or hold direct company investments, mining will probably form an essential part of your portfolio.

So, why not learn more about the country’s most crucial breadbasket?

Surprisingly, Australian investors generally have little understanding about this sector.

I try to address that at Mining Memo: I share my industry knowledge as a geologist and resource investor to give you the tools to understand what’s going on.  

A free newsletter that highlights the key events shaping the outlook for certain commodities.