5 key drivers of the new commodities ‘supercycle’: experts

Paul Wong and Jacob White from Sprott Asset Management say the market has entered “a new kind of commodity supercycle”.

This one will not involve bulk commodities, but rather, critical materials tied to electrification, power generation, and energy security.

The market strategists name copper, uranium, lithium, rare earths, and silver as the prime commodities involved.

The commodity prices of many critical materials soared in 2025 amid rising demand and low supply.

The momentum continued into 2026, with a dramatic upswing in January ending with a short and sharp correction.

Despite that, the key drivers of a new long-term mining boom in Australia powered by higher commodity prices remain firmly in place.

Let’s take a look at them.

Multi-decade drivers of this commodities supercycle

1. Green energy transition

Our article on the 12 fastest rising commodities of 2025 showed which metals have the strongest supply/demand dynamics today.

The copper price rocketed because the red metal is a key input in much of the new infrastructure required for the green energy transition.

It’s used in electric wiring, electric vehicles (EVs), wind turbines, solar energy systems, telecommunications, and electronic products.

The copper price is US$5.85 per pound, up 23% over 12 months and up 3% in the year-to-date (YTD).

Copper hit a record US$6.11 per pound in January.

Silver is a key input in solar panels, tech devices, EVs, and data centres due to its superior electrical conductivity to copper.

Like gold, it’s also considered a safe-haven asset, although it tends to lag gold in commodity price runs because it’s inferior and cheaper.

The silver price is US$88.53 per ounce, up 170% over 12 months and up 24% YTD.

Silver also reached a record US$117 per ounce in January.

Lithium is used in batteries and EVs, while uranium is used to create virtually emissions-free nuclear power.

The lithium carbonate price is at a two-and-a-half-year high of US$22,934 per tonne.

Lithium carbonate has risen 112% over 12 months and 34% YTD.

The uranium price is US$85.90 per pound, up 33% over 12 months and 5% YTD.

Yellowcake reached a two-year high of US$101.5 per pound in January.

2. Volatile geopolitics amplifying demand for resources

Geopolitical defragmentation is prompting many nations to shore up their supply chains for critical materials.

Post-COVID, there was already an appetite to reestablish local manufacturing of crucial goods.

However, rising international tensions have encouraged nations to also focus on securing long-term supplies of metals and minerals.

Countries like the US, and organisations like NATO, are ramping up defence spending and construction, which requires critical materials.

Nations are now stockpiling commodities and doing supply deals with security partners, like Australia has done with the US.

US tariffs have also altered world trade order and impacted relationships between nations, adding further pressure to lock down new resources supply arrangements.

Wong and White say:

Critical materials have become instruments of national security, reinforcing scarcity premiums and volatility.

Many nations, including the US and Australia, have developed critical minerals lists and are offering incentives to miners to help them set up and fast-track new mines.

All of this means demand for Australia’s minerals and metals is likely to rise.

3. Iran war highlights value of nuclear power over oil

The war in Iran highlights the vital role domestically-produced nuclear power is likely to play in countries’ energy security in the future.

Oil and European gas prices skyrocketed after the US and Israel attacked Iran, resulting in disrupted shipping through the Strait of Hormuz.

That’s a big problem given more than 20% of global oil and gas exports pass through the strait.

But in the future, nations may be less hamstrung by Middle East conflicts if they’re generating reliable nuclear power at home.

Wong and White said the switch to nuclear power is gaining momentum, which is strengthening uranium demand relative to oil.

They said:

In a world increasingly defined by energy security concerns, nuclear power remains the most secure energy source.

Furthermore, recent geopolitical developments in Venezuela and Iran highlight the growing risk of crude oil interdiction.

As competing global power blocs develop, securing one’s domestic energy supply while denying one’s adversary access to energy can often serve the same strategic end.

4. Capital investment in artificial intelligence (AI)

Wong and White said a surge in artificial intelligence (AI) spending is also reshaping demand for minerals and metals.

Massive investments in data centers, electrification and infrastructure are resource-intensive, driving multi-year structural demand for copper, aluminum, silver, platinum-group metals and energy.

This resource-intensive spending is a secular trend tied to the AI technological transformation, as well as national security imperatives.

Platinum is US$2,191 per ounce, up 123% over 12 months and up 6% YTD.

The platinum price reached a record US$2,800 per ounce in January.

Aluminium is at a near four-year-high of US$3,384 per tonne, up 26% over 12 months and 13% YTD.

5. Supply-side constraints

Wong and White said a shortage of global supply amid much higher demand is another factor pushing commodity prices up today.

Critical minerals, including copper and silver, as well as other metals, face multi-year structural deficits due to chronic underinvestment in mining, geopolitical bottlenecks and volatile tariff policies.

The energy transition and decarbonization push further elevate demand for uranium, battery metals and PGMs, assets that increasingly carry strategic and national security value.

In extreme scenarios, these resources risk becoming unobtainable, reinforcing scarcity premiums across commodity markets.

What about gold?

It could be argued that gold is part of the current commodities supercycle.

However, gold has nothing to do with electrification, power generation, and energy security, which Wong and White say are the key themes of this supercycle.

Gold is benefiting from strongly increased central bank buying as nations seeks to diversify their reserves away from the US dollar.

Investors have also aggressively bought gold due to its safe haven appeal amid turbulent global geopolitics, the US dollar’s weakness, and falling interest rates in most western nations (except Australia!)

Some experts think the gold price could go higher than US$7,000 per ounce this year.

Impact on ASX mining shares

This new commodities supercycle has lifted many ASX mining stocks over the past year and created new share price records.

The BHP Group Ltd (ASX: BHP) share price is up 31% over 12 months and soared to its highest level in 140 years at $59.39 this month.

The Rio Tinto Ltd (ASX: RIO) share price also reached a record high of $170.71, as did Northern Star Resources Ltd (ASX: NST) at $31.96.

Find out how other ASX mining shares have fared over the past year here.

The post 5 key drivers of the new commodities ‘supercycle’: experts appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in BHP Group. 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 recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.