J.P. Morgan raises CY27E spot-scenario EBITDA for lithium and copper, while gold remains under pressure
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J.P. Morgan raises CY27E spot-scenario EBITDA for lithium and copper, while gold remains under pressure
The report rolls the spot scenario forward to CY27, concluding that a rebound in spodumene and copper prices will drive earnings upgrades for companies including PLS, MIN, IGO, SFR, and CSC, while gold-covered companies still show sequential downgrades of 4%-24%.
- The Platts spodumene price has recovered to approximately $2,400/t, driving CY27E MtM EBITDA upgrades of 43%, 34%, and 29% for PLS, MIN, and IGO, respectively.
- A copper price of approximately $6.05/lb leads to CY27E EBITDA upgrades of approximately 18% for SFR and CSC.
- After iron ore fell below $100/t, CY27E EBITDA was upgraded by only 2% and 7% for BHP and RIO, respectively, while FMG was downgraded by 11%.
- At a gold price of approximately $4,100/oz, gold-covered companies still show MtM downgrades of 4%-24%, although the declines have narrowed from the previous version.
Report interpretation
Overview
This report provides J.P. Morgan's CY27E spot-price scenario update for its Australian metals and mining coverage. The key change is rolling the Spot Scenarios date forward to CY27 and reassessing covered companies' MtM EBITDA, NPAT, EPS revisions, EV/EBITDA, FCF yield, P/NPV, and leverage under lithium, copper, iron ore, and gold price assumptions.
Core views
Lithium and copper are the main sources of CY27E EBITDA upgrades in this round: the recovery in spodumene prices produces the most significant earnings upgrades for PLS, MIN, and IGO, while a copper price of approximately $6.05/lb drives upgrades for SFR and CSC. After iron ore fell below $100/t, BHP and RIO still receive modest upgrades, while FMG has been downgraded. Although gold remains at approximately $4,100/oz, gold-covered companies still show broad MtM downgrades under the spot scenario, albeit with narrower declines than in the previous version.
Analysis framework
The report marks to market CY27E financial forecasts using spot commodity prices and compares the results with Bloomberg consensus and J.P. Morgan's base case, focusing on EBITDA, NPAT, EPS revisions, valuation multiples, free cash flow yield, P/NPV, and balance-sheet leverage.
Methodology notes
Spot-price scenario revaluation
Spot prices for commodities including lithium, copper, iron ore, and gold are extrapolated to CY27E to revalue covered companies' EBITDA, NPAT, and valuation metrics.
CY27E EBITDA marked to market
Current commodity spot prices are substituted for or compared with the original forecast prices to measure upgrades and downgrades in earnings forecasts relative to the previous version or base case.
Relative valuation and cash-flow comparison for mining companies
The report uses EV/EBITDA rankings, free cash flow yield, P/NPV, and leverage ratios to compare the attractiveness of covered companies under the spot scenario.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- PLS, MIN, IGOBeneficiaries of spodumene prices
- Strengths
- A spodumene price of approximately $2,400/t produces significant CY27E EBITDA upgrades, with PLS, MIN, and IGO upgraded by 43%, 34%, and 29%, respectively.
- Weaknesses
- Earnings sensitivity is highly dependent on lithium prices and capacity assumptions.
- Comparison
- Lead the covered companies in CY27E MtM EBITDA upgrades.
- Risks
- A decline in lithium prices, failure of the full-capacity assumption at Wodgina, or rising costs could reduce the magnitude of the upgrades.
- SFR, CSCBeneficiaries of copper prices
- Strengths
- A copper price of approximately $6.05/lb drives an approximately 18% CY27E EBITDA upgrade.
- Weaknesses
- Highly sensitive to the copper cycle and mine execution.
- Comparison
- Show strong spot-scenario earnings sensitivity among copper-related covered companies.
- Risks
- Copper prices below the spot scenario, project execution issues, or cost inflation could result in forecast downgrades.
- BHP, RIODiversified mining top picks and iron ore-related names
- Strengths
- Even with iron ore below $100/t, CY27E EBITDA is still upgraded by 2% and 7%, respectively; RIO also benefits from other premiums and lithium.
- Weaknesses
- Iron ore downside limits the scope for earnings upgrades.
- Comparison
- More resilient than FMG.
- Risks
- A further decline in iron ore prices or weaker Chinese demand could pressure earnings.
- FMGIron ore price-exposed name under pressure
- Strengths
- As an iron ore-exposed name, it has clear earnings sensitivity when prices rise.
- Weaknesses
- CY27E EBITDA is downgraded by 11% under the scenario of iron ore below $100/t.
- Comparison
- Earnings revisions are weaker than those of BHP and RIO under the spot scenario.
- Risks
- Persistently low iron ore prices would continue to weigh on valuation and earnings expectations.
- NEM, GMD, CMM and gold-covered companiesGold-related names
- Strengths
- At approximately $4,100/oz, gold prices remain high and the MtM downgrades have narrowed from the previous version.
- Weaknesses
- Gold-covered companies still show broad MtM downgrades of 4%-24%.
- Comparison
- The gold sector screens less favorably than lithium and copper under this model.
- Risks
- Costs, production, foreign exchange, or model price assumptions could continue to weigh on earnings revisions.
Key data
- Platts spodumene spot priceapproximately $2,400/tMakes PLS, MIN, and IGO the covered companies with the largest CY27E MtM EBITDA upgrades.
- PLS/MIN/IGO CY27E MtM EBITDA change43% / 34% / 29% upgradeThe report assumes that all three Wodgina production lines operate at full capacity in CY27.
- Copper spot scenarioapproximately $6.05/lbDrives an approximately 18% CY27E EBITDA upgrade for SFR and CSC.
- BHP/RIO CY27E MtM EBITDA change2% / 7% upgradeThe upgrades are limited after iron ore fell below $100/t; RIO also benefits from the ally midwest premium and lithium.
- FMG CY27E MtM EBITDA change11% downgradeMainly affected by iron ore falling below $100/t.
- Gold spot priceapproximately $4,100/ozGold-covered companies still show MtM downgrades of 4%-24%, although the declines have narrowed from the previous version.
- J.P. Morgan Global Equity Research rating distributionOverweight 53%, Neutral 36%, Underweight 12%Disclosure data as of 2026-07-04; percentages may not add up to 100% due to rounding.
Impact & implications
For investors, the report indicates that structural divergence in commodity prices is reshaping the earnings-sensitivity ranking of Australian mining companies: lithium- and copper-related names benefit more, dispersion among companies with high iron ore exposure is increasing, and although gold prices remain elevated, gold companies still do not pass J.P. Morgan's positive MtM screen. At the portfolio level, investors may focus on top picks in lithium, copper, and diversified mining while remaining alert to the risk of earnings downgrades for companies exposed solely to iron ore and gold.
Risks
- Volatility in commodity spot prices could cause rapid changes in CY27E MtM EBITDA and NPAT revaluations.
- Assumptions for lithium, copper, iron ore, and gold prices may differ from J.P. Morgan's base case or market consensus.
- Changes in mine capacity, costs, foreign exchange, and project execution will affect earnings sensitivity.
- The continued downgrades shown for gold-covered companies despite high gold prices indicate pressure from model assumptions or costs.
- Regulatory disclosures indicate that research opinions and forecasts reflect views as of the report date and may change in the future.
What to watch
- Whether the Platts spodumene price remains near approximately $2,400/t.
- Whether copper prices remain near approximately $6.05/lb and continue to support earnings upgrades for SFR and CSC.
- Whether iron ore remains below $100/t and how earnings revisions differ among BHP, RIO, and FMG.
- Whether MtM downgrades for gold-covered companies continue to narrow with gold prices around $4,100/oz.
- Valuation methods, target prices, and risk updates in J.P. Morgan's subsequent company-specific reports.