In Depth: Mining Giants Pivot as China’s Real Estate Slump Weighs on Iron Ore

As global demand for iron ore declines due to factors such as China’s real estate downturn, the world’s leading mining companies—BHP Group, Rio Tinto, Vale, and Fortescue—are seeking new growth opportunities by focusing on minerals essential for the global energy transition and artificial intelligence (AI). These minerals include copper, aluminum, lithium, and potash, which are increasingly needed for infrastructure such as power grids, batteries, electric vehicles (EVs), and data centers [para. 1][para. 2].

The CEOs of these top miners, speaking at the China Development Forum in Beijing, emphasized the ongoing shift from traditional sectors to new demand drivers, particularly in copper. BHP’s CEO Mike Henry outlined the company's strategy to double copper output within 15 years, highlighting copper’s resilient demand profile. Factors contributing to this growth include both foundational industries—such as construction and consumer goods—and emergent ones like the energy transition and AI [para. 3][para. 4][para. 6]. BHP estimates that global copper demand could grow by 70% by 2050, with AI-related demand alone expected to increase fivefold in data centers, from about 500,000 tons annually today to nearly 3 million tons by 2050. Satisfying this surge would require about 10 million more tons of annual copper capacity worldwide by 2030, equivalent to building 10 new large-scale mines and potentially costing up to $250 billion [para. 7]. To capture these opportunities, BHP has invested in acquisitions, such as the $5.9 billion purchase of OZ Minerals Ltd. in 2023 and a stake in Filo Corp. in 2024 [para. 8].

Rio Tinto is taking a similar approach, expanding aggressively into lithium despite a significant price slump—battery-grade lithium carbonate in China dropped over 65% to about $12,600/ton in 2024. The company completed a $6.7 billion acquisition of Arcadium Lithium Plc in March 2024 and started lithium production at its Rincon project in Argentina. It aims to rank among the top global lithium producers by 2028 [para. 9][para. 10][para. 11]. On copper, Rio Tinto produced 697,000 tons in 2024 (up 13% year-on-year), participates in the major Escondida mine, and is developing Oyu Tolgoi, poised to be the world’s fourth largest copper mine [para. 12]. Vale plans to double its annual copper output to 700,000 tons in the next decade to support renewable energy and electrification trends [para. 13], while Fortescue is actively exploring new copper, lithium, and rare earths projects in South America [para. 14].

Historically, these miners have relied on iron ore, supplying around 70% of global seaborne shipments. However, as China’s demand plateaus—steel consumption dropped from its 2020 peak of 995 million tons to an estimated 863 million tons in 2023—the companies face shrinking profits. In 2024, BHP’s EBITDA was down 4%, Rio Tinto’s by 2%, while Vale and Fortescue, more reliant on iron ore, saw drops of 22% and 26.7%, respectively [para. 17][para. 18]. Weakening demand, increased steel recycling, and potential oversupply pressures are driving a shift toward efficiency and high-grade ore investments, with limited large-scale expansion expected [para. 22][para. 23][para. 24][para. 25][para. 26].

Collaboration with China remains critical, particularly as miners target decarbonization and energy transition. Companies are trialing advanced technologies like EV battery-swapping, participating in green iron projects, and relying on China’s manufacturing strengths for ambitious carbon reduction targets. Partnerships include Rio Tinto working with State Power Investment Corp. on electric trucks, Vale collaborating with BYD and Jinko Solar on electrification and renewable energy, and Fortescue joining Chinese steelmakers in Australia to produce green iron using renewable energy [para. 29][para. 30][para. 31][para. 32][para. 33][para. 34][para. 35].