3 ASX mining shares billionaire John Hancock is buying for rising inflation and the energy transition

Commodities tend to perform well during inflationary periods.

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ASX mining shares have, as a whole, well outpaced the benchmark index so far in 2022.

While the All Ordinaries Index (ASX: XAO) remains down by more than 5% for the calendar year, the S&P/ASX 300 Metals & Mining Index (ASX: XMM) has charged ahead, up 7.4%.

ASX mining shares, as you're likely aware, have received some welcome tailwinds from soaring commodity prices.

That's in part due to constricted supply chains amid rising demand as the world reopens from its lengthy COVID pause. It's a situation that's been exacerbated by Russia's invasion of Ukraine.

But commodities aren't the only area seeing big price increases.

The broader impact of rising inflation

While rising commodity prices are adding to the leap in inflation across most of the world, there are other factors at work sending inflation figures to their highest levels in decades. Like the bill coming due to years of historically low interest rates and unprecedented quantitative easing (QE) from global central banks.

And as well as benefiting from the price rises in the commodities they dig from the ground, ASX mining shares are likely beneficiaries of this fast-rising broader inflation.

As billionaire John Hancock, adviser to New York fund manager Lind Partners, pointed out (courtesy of The Australian Financial Review), "Commodities traditionally perform well in periods of inflation".

3 ASX mining shares John Hancock is buying

Hancock named three specific ASX mining shares he believes are well positioned for not just higher inflation but also the ongoing global energy transition.

These are:

  • Kuniko Ltd (ASX: KNI), a small-cap ASX mining share focused on nickel, copper, and cobalt exploration
  • Vulcan Energy Resources Ltd (ASX: VUL), which is primarily focused on lithium supply solutions for the electric vehicle markets
  • Aura Energy Limited (ASX: AEE), a uranium, vanadium, and gold explorer

"I'm focused on commodities, particularly those required for energy transition such as lithium, nickel, cobalt, and copper," Hancock said.

He continued:

Commodities traditionally perform well in periods of inflation, but I'm more focused on the over-riding paradigm shift of energy transition, of which uranium has a role too. My investments in Vulcan Energy, Norway cobalt explorer Kuniko and Aura Energy, with its low cost Tiris project, reflect my views.

While these three ASX mining shares have all underperformed the benchmark in 2022, they have outperformed over the past 12 months.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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