If you want to be poised for the next wave of genuine global growth (i.e., growth based on purchase orders, housing starts and other construction, etc.), you really need to be invested in resources.
Since China might still be too risky a play for many of you, and since I’ve already written quite a bit about Canadian resource companies, I thought it would be a good time to focus on Australia’s mining and resource sector.
What Does Australia Mine?
You should already know that mining is one of the largest sectors in Australia (20% of the ASX by capitalization; one-third by companies listed). Currently, much of that sector’s activity is undertaken on behalf of Chinese investments and purchases of Australian minerals and other mining products.
Like Canada, Australia also exports iron ore, silver, copper, lead, nickel, diamond, opal (the world’s largest producer of it), zinc, uranium (world’s third largest uranium producer after Russia and Canada) and, of course, gold – which was found in 1851. So much so that during the 1850’s, 40% of world gold production came from Australia!
Interestingly, Australia is also the world’s largest exporter of coal.
Top 5 Australian Mining Companies
So if you want to get some exposure to Australia but you want to bypass the fees and index-tracking that go with ETFs, here are 5 great companies to take a look at and invest your money in for direct benefit.
BHP Billiton (ASX: BHP) -You’ve heard of BHP Billiton but did you know that it is now the world’s third-largest publicly traded company by market cap? That tells you how significant a role basic resources play in the global economy. No growth is going to happen without moving through BHP first. Stock up.
Rio Tinto (ASX: RIO) - Technically British-Australian ownership, with headquarters in London and the management office in Melbourne. Rio is the 4th largest publicly traded mining company in the world.
Newcrest Mining Ltd (ASX: NCM) -Newcrest is Australia’s leading gold miner, specializing in gold and gold-copper concentrate, most of which is exported to Japan. It also now has operations in Indonesia, adding to its international profile (Papua New Guinea, Ivory Coast and Chile). Canadians can invest in it directly via the TSX with the ticker of NM.
Oil Search Limited (ASX: OSH) – For something different, Oil Search Limited (founded in 1929) is Papua New Guinea’s largest oil production and exploration company, operating all of Papua New Guinea’s oilfields and alone represents a whopping 13% of Papua New Guinea’s gross domestic product. It also has a significant international portfolio which includes Egypt, Iraq, Yemen and Libya.
Alacer Gold Corp. (ASX: AQG) – This company was only listed in 2011, but already has a good market cap – much higher than the many penny mining stocks that populate the ASX. Rapidly-growing Alacer has 80% ownership of some Turkish gold mines to fill out its international portfolio and is expected to grow almost 200% (organically) between 2011 and 2015. Currently trades at $6.52 (ASX) and $6.92 (TSX).
For Americans (and Canadians), you’ll need to invest in these through the NYSE or TSX – just look up their names and you will get their ADR tickers (in the case of TSX-listings, it will be a direct investment). You will receive an ADR dividend where relevant, along with a withholding tax that will be taken out of the overall dividend.-