China’s appetite for commodities and global supply disruptions has led to a standout year for commodity prices across the board.
But not all commodities are created equal. Here are the top performing ASX 200 mining shares that delivered the best returns in 2020.
1. Mineral Resources Limited (ASX: MIN)
The Mineral Resources share price is the best performing ASX mining share after running 127% to a record all-time high of $37.50. The company is involved in both mining services to help clients operate and maintain facilities, establish and manage production, as well as investments in commodity projects including iron ore and lithium assets.
The commodity boom has benefited every aspect of its business, with FY20 being the company’s best full year results to date. It posted earnings before interest, tax depreciation and amortisation (EBITDA) up 77% to $765 million and boasts a return on invested capital of 49.6%. The company is ensuring that its iron ore projects maximise volumes to capitalise on strong iron ore prices.
2. Fortescue Metals Group Ltd (ASX: FMG)
The Fortescue share price comes in at second place after soaring up 115%. This is largely thanks to the iron ore spot price hitting a fresh 7-year high of US$158 per tonne on the back of supply constraints and China’s infrastructure spending.
Looking ahead in 2021, the Australian Government commodity forecaster, the Office of the Chief Economist, sees iron ore prices to remain above US$100 per tonne until mid-2021, before easing gradually to around U$75 by the end of 2022 as supply recovers and Chinese stimulus eases back.
3. Oz Minerals Limited (ASX: OZL)
The Oz Mineral share price finished the year 80% higher thanks to higher copper and gold prices. The company experienced the best of both worlds with copper topping US$8,000 a ton last month for the first time in more than 7 years and gold sitting near record all-time highs of US$1,922/oz.
4. Lynas Rare Earths Ltd (ASX: LYC)
The Lynas share price has hit a 7-year high after its shares surged more than 70% last year. China is the world’s largest supplier of rare earths, but rising global trade tensions between the US and China has helped push prices to multi-year highs. Lynas mainly produces the rare earth compound Neodymium (NdPr) which has soared to a 7-year high.
The combination of a weaker US dollar, Chinese stimulus and rising global liquidity has helped bolster many commodities well above pre-COVID-19 highs. ASX mining shares, especially iron ore and copper producers, will likely continue to benefit from this so called ‘commodity super cycle’ in 2021.
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*Returns as of February 15th 2021
Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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