Mining Stocks: BHP, Rio Tinto, Glencore and the Permissibility of Extraction

Mining is one of the easier sectors to understand from a Shariah perspective. Extracting minerals from the earth has been done legally in Muslim-majority societies since the earliest days of Islam. Gold, silver, copper, iron, salt, and other minerals were mined, traded, and taxed. Classical Islamic law even has a specific framework for mineral rights and zakat on extracted resources. The sector itself is unambiguously permissible.

The screening question for mining stocks is usually about financial ratios and, in some cases, specific business lines. Let me walk through the major mining names and show you where they land.

The sector screen: mining is clearly permissible

Classical jurists discussed mining extensively. The general rule is that anyone can extract minerals from unclaimed land, subject to local government regulation and zakat obligations. The minerals themselves are not prohibited substances. Iron, copper, gold, silver, aluminum, zinc, lead, nickel, platinum, lithium, uranium, coal, and every other commonly mined material are all permissible to extract and sell.

Processing, smelting, refining, and trading mined materials are all permissible activities too. A mining company's core business is legitimate industrial activity.

Some scholars have raised ethical concerns about specific mining operations (environmental damage, labor practices in certain jurisdictions, indigenous rights) but these are not typically translated into sector-level exclusions in mainstream Shariah screening methodology. Individual investors may apply their own ethical filters.

BHP Group (NYSE: BHP, ASX: BHP)

BHP is the world's largest mining company by market capitalization. Primary businesses include iron ore (Australia), copper (Chile, Australia), potash (Canada, under development), and nickel (though nickel operations were placed in care and maintenance in 2024).

Core business: Mining and mineral extraction. Permissible.

Non-permissible income: Very limited. Small amounts of interest income on cash.

Debt-to-market-cap: Long-term debt around $14 billion against a market cap of ~$160 billion. Debt ratio about 9 percent. Passes.

Result: BHP passes Shariah screening cleanly.

Worth noting: BHP spun off its petroleum business (merged with Woodside) in 2022, making it a pure-play mining company. This simplified the business and arguably made it cleaner from a Shariah perspective, though it was already passing screens before.

Rio Tinto (NYSE: RIO, LSE: RIO)

Second-largest mining company globally. Primary businesses include iron ore (Australia), aluminum (global), copper (Mongolia, US, Chile), and minerals (diamonds, titanium dioxide, borates).

Core business: Mining and mineral extraction. Permissible.

Debt-to-market-cap: Long-term debt around $11 billion against a market cap of ~$110 billion. Debt ratio about 10 percent. Passes.

Result: Rio Tinto passes Shariah screening cleanly.

Glencore (LSE: GLEN, OTC: GLCNF)

Glencore is a bit different from BHP and Rio Tinto. It combines mining operations with a large commodities trading business. The trading arm historically generated significant revenue from marketing and moving physical commodities around the world.

Core business: Mining and commodity trading. Mining is permissible. Commodity trading is generally permissible if it's actual physical trading (buying, storing, and selling real commodities).

The question: Glencore's trading business involves substantial short-term financing and hedging activity, some of which involves interest-bearing instruments. Depending on how this is accounted for, the non-permissible income ratio can move around.

Debt-to-market-cap: Glencore's net debt has been meaningful historically but the company has been reducing it. Current debt-to-market-cap is around 35 percent. Borderline to fail.

Result: Glencore is borderline. Check current figures before buying. Some years it passes, others it fails.

Freeport-McMoRan (NYSE: FCX)

Largest publicly traded copper producer globally. Also significant gold and molybdenum production.

Core business: Copper, gold, and molybdenum mining. Permissible.

Debt-to-market-cap: Long-term debt around $8 billion against a market cap of ~$60 billion. Debt ratio about 13 percent. Passes.

Result: Freeport passes.

Southern Copper (NYSE: SCCO)

Major integrated copper producer with operations in Peru and Mexico.

Core business: Copper, molybdenum, silver, zinc mining. Permissible.

Debt-to-market-cap: Long-term debt around $6 billion against a market cap of ~$90 billion. Debt ratio about 7 percent. Passes.

Result: Passes.

Vale (NYSE: VALE)

Brazilian mining giant. World's largest iron ore producer. Also nickel, copper, and coal.

Core business: Iron ore, base metals, nickel. Permissible.

Debt-to-market-cap: Long-term debt around $14 billion against a market cap of ~$55 billion. Debt ratio about 25 percent. Passes.

Result: Vale passes.

Worth noting: Vale has faced environmental and safety issues including the Brumadinho dam disaster in 2019. These are ethical and legal concerns but don't automatically translate to Shariah exclusion.

Newmont (NYSE: NEM)

World's largest gold mining company after the 2023 acquisition of Newcrest Mining.

Core business: Gold mining. Permissible.

Debt-to-market-cap: Long-term debt around $7 billion against a market cap of ~$70 billion. Debt ratio about 10 percent. Passes.

Result: Newmont passes.

Barrick Gold (NYSE: GOLD, TSX: ABX)

Major gold mining company with operations across the Americas and Africa. Also copper.

Debt-to-market-cap: Long-term debt around $5 billion against a market cap of ~$35 billion. Debt ratio about 14 percent. Passes.

Result: Passes.

Anglo American (LSE: AAL)

Diversified mining company with copper, iron ore, platinum, diamonds (via De Beers), and other metals.

Debt-to-market-cap: Long-term debt around $11 billion against a market cap of ~$36 billion. Debt ratio about 31 percent. Right at threshold. Borderline.

Result: Borderline. Check current figures.

Teck Resources (NYSE: TECK)

Canadian diversified mining company. Copper, zinc, coal (until the recent coal business sale).

Debt-to-market-cap: Long-term debt around $5 billion against a market cap of ~$30 billion. Debt ratio about 18 percent. Passes.

Result: Passes.

Alcoa (NYSE: AA)

Aluminum producer. Bauxite mining, alumina refining, aluminum smelting.

Core business: Aluminum value chain. Permissible.

Debt-to-market-cap: Long-term debt around $2 billion against a market cap of ~$8 billion. Debt ratio about 25 percent. Passes.

Result: Passes.

Rio Tinto, BHP, and others' coal operations

Coal mining is a sub-topic that deserves mention. Metallurgical coal (used for steelmaking) and thermal coal (used for power generation) are both permissible to mine from a Shariah perspective. Some ethical investors exclude thermal coal due to climate concerns, but this is not a Shariah requirement.

BHP sold most of its thermal coal operations. Rio Tinto exited coal mining entirely. Glencore still has significant coal operations. Anglo American has been divesting coal.

None of these companies fail Shariah screening because of coal specifically. The divestments are driven by ESG investor pressure and climate commitments rather than Shariah requirements.

Gold and Silver Streaming/Royalty Companies

Franco-Nevada (FNV), Wheaton Precious Metals (WPM), Royal Gold (RGLD), Osisko Gold Royalties (OR).

These companies don't operate mines. They provide upfront financing to miners in exchange for future streams of gold, silver, or other metals at fixed prices, or they hold royalty interests in mining production.

Shariah analysis: Streaming contracts are structured similarly to forward purchase agreements. They involve paying money upfront for future delivery of a commodity. Classical Islamic law distinguishes between different types of deferred-payment contracts. The salam contract permits upfront payment for future delivery of commodities with specific conditions (known quantity, quality, delivery time, etc.). Modern streaming contracts share some features with salam but differ in others.

Most Shariah screening methodologies treat streaming and royalty companies as commodity-related businesses and evaluate them like other mining exposures. Financial ratios are typically clean for these companies because they don't need to fund heavy capex.

Franco-Nevada, Wheaton, and Royal Gold typically pass Shariah screening on financial ratios. The deeper structural question about whether the underlying contract fully complies with salam rules is a scholarly debate that most retail investors don't need to resolve.

Rare earth and lithium miners

Albemarle (ALB): Lithium producer. Long-term debt around $3 billion against a market cap of ~$13 billion. Debt ratio about 23 percent. Passes.

Sociedad Quimica y Minera (SQM): Chilean lithium and specialty chemicals. Passes.

MP Materials (MP): US rare earth producer. Smaller and clean balance sheet. Passes.

Uranium miners

Cameco (CCJ), Kazatomprom (KAP), NexGen Energy (NXE), and others. Uranium mining is permissible. These companies typically have smaller debt loads and pass Shariah screens.

Coal Pure Plays

Peabody Energy (BTU), Arch Resources (ARCH), and other pure-play coal companies. These typically pass financial ratios but have ethical concerns for some investors. Not excluded by mainstream Shariah methodology.

ETFs

XME (SPDR S&P Metals and Mining): Broad metals and mining exposure. Most holdings pass Shariah screening. Not a Shariah-certified ETF.

PICK (iShares MSCI Global Metals & Mining Producers): Global exposure. Similar story.

GDX (VanEck Gold Miners): Gold mining focus. Most constituents pass Shariah screening.

The bottom line

Mining is one of the clean sectors for Shariah investing. BHP, Rio Tinto, Freeport-McMoRan, Southern Copper, Vale, Newmont, Barrick, Teck, and Alcoa all pass Shariah screening. Glencore and Anglo American are borderline on the debt ratio. Streaming and royalty companies (Franco-Nevada, Wheaton, Royal Gold) also pass.

For Muslim investors wanting commodity or materials exposure, mining is a straightforward place to look. You get real economic exposure to industrial demand and inflation protection without compromising compliance.

Run any mining ticker through FaithScreener to check current debt ratios. The sector moves with commodity cycles and individual company debt positions change quickly.