Avoiding a climate crisis presents significant challenges, especially in transitioning power and transportation systems to renewable and clean energy. This transition will vastly increase copper demand, surpassing current production levels, and giving major stocks a big lift.
Copper’s exceptional conductivity makes it crucial for the energy transition. Copper is found in most appliances like toasters, air conditioners, microchips, cars, and homes.
- Interesting fact: The average car contains 65 pounds of copper, while a typical home has over 400 pounds.
Constructing advanced grids for decentralized renewable sources and stabilizing their supply requires extensive copper wiring. Solar and wind farms, which cover large areas, demand more copper per power unit than centralized coal and gas plants. Electric vehicles (EVs) use over twice as much copper as gasoline cars.
Meeting net zero carbon emission targets by 2035 may require doubling annual copper demand to 50 million metric tons. Even conservative estimates foresee a one-third demand increase over the next decade.
What more is the recent surge in copper prices starting early this year as you can see below. In May 2024, it reached almost $5 per pound in LME.
So, there could be no wiser move than investing in copper to ride along this rising demand. We believe so, too, that’s why we have considered some of the best copper stocks in 2024. Here are the top three copper stocks that would be worthy to add to your investment portfolio this 2024.
The World’s Largest Copper Reserve Holder: Southern Copper
Market Cap: US$85.24 billion
For investors seeking substantial exposure to copper, Southern Copper Corporation’s reliance on this metal can be appealing. The prominent Mexican mining company primarily focuses on copper production, boasting the largest reserves of the metal globally.
However, its operations extend beyond copper, producing valuable by-products such as silver, zinc, and molybdenum. This diversification, while significant, doesn’t overshadow its primary reliance on copper, which accounted for about 79% of the company’s net sales over the 3 years ending December 31, 2022.
Southern Copper’s stock has experienced notable volatility over the past few years. After a stellar performance in 2020, where the share price surged over 50%, the company saw a decline of more than 7% over the subsequent 2 years.
However, 2023 marked a recovery, with the share price climbing nearly 25% in the first nine months. And it further skyrocketed in the beginning of 2024 and reached the first-time high in May.
The recent uptick in copper prices has not only bolstered the company’s market performance but also enabled it to increase dividend payments significantly. At its current share price, the stock offers an attractive dividend yield of 5.4%, making it appealing to income-focused investors.
Strategic Investments and Project Development
Holding the largest copper reserves globally, Southern Copper is also operating top-tier assets in investment-grade countries like Mexico and Peru.
The company’s commitment to expanding its portfolio and reserves is evident through its significant capital investment program, exceeding $15 billion, planned for this decade. It aims to enhance and expand its operations across several high-potential projects, including:
- Buenavista Zinc, Pilares, El Pilar, and El Arco Projects in Mexico: These projects are crucial for the company’s growth strategy. El Arco, in particular, benefits from significant infrastructure investments aimed at enhancing its competitiveness.
- Tia Maria, Los Chancas, and Michiquillay Projects in Peru: These projects further diversify the company’s portfolio and strengthen its position in the global copper market.
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Southern Copper’s operations in Mexico and Peru provide a strategic advantage due to the stability and investment-grade ratings of these countries. This geographical diversification into regions with favorable mining regulations and robust infrastructure supports the company’s long-term growth and sustainability.
BHP Group: Casting A Wide Net in Copper
Market Cap: US$142.99 billion
BHP Group is a world-leading resources company engaged in the extraction and processing of minerals, oil, and gas. As a major player in the global copper market, the Australian miner is committed to innovative practices and sustainability, aiming to supply essential resources efficiently and responsibly.
BHP owns and operates several copper mines in Chile and the Olympic Dam in South Australia.
Copper is BHP’s second-largest revenue generator after iron ore. This mineral segment plowed over US$16 billion into the company’s income in 2023, with 1,716.5 kilotons of copper production.
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The world’s largest mining company seeks to cast a wide net in copper with its exploration project in the high Arctic known as Camelot Project.
BHP launched this program early this year, covering the Queen Elizabeth Islands in the Northwest Territories and Nunavut. The project aims to assess the potential for copper across six locations, spanning thousands of square kilometers. Exploration sites include Ellesmere Island, approximately 800 kilometers from the North Pole, Melville Island, Ellef Ringnes Island, and Axel Heiberg Island.
In response to the surge in copper prices, mining companies are scrambling to increase supply including BHP. The Australian mining giant recently announced a strategic partnership with Ivanhoe Electric to explore copper and other essential minerals.
Their collaboration aims to identify new sources of these critical resources, driven by the global shift towards clean energy and the electrification of various industries.
The exploration agreement with Ivanhoe Electric is structured in two stages. The first phase focuses on project generation, involving exploratory activities by both companies. If successful, the subsequent phase could lead to the formation of joint ventures to develop and operate mining projects.
More recently, BHP has made a bold move to expand its copper exposure by making a $39 billion bid for Anglo American. However, the offer was put off the table, delaying the company’s aim to cement its dominance in the copper market. Still, the Australian miner continues to explore significant copper projects and find ways to deepen its involvement in the sector.
Coppernico Metal: Pioneering Copper-Gold Exploration in South America
Coppernico Metals Inc. is an exploration company dedicated to generating value for its shareholders and stakeholders through meticulous project evaluation and exploration excellence. The company aims to discover world-class copper-gold and nickel deposits in South America, leveraging its experienced management and technical teams’ proven track record in raising capital, discovery, and monetization of exploration successes.
Coppernico is currently centered on two primary projects in Peru: the Sombrero and Takana projects. The company either owns or has the right to purchase up to 100% control of the concessions.
The Sombrero district, in particular, is a major focus due to its promising geological prospects. It features significant copper-gold values from surface samples and historical drilling, targeting skarn, porphyry, and epithermal deposits.
Takana hosts high-grade copper-nickel occurrences with multi-kilometer mineralization trends. Initial dialogues have already started with communities near the Takana project, showing promising signs for future access agreements in the coming months.
Strategic Expansion, Evaluation, and Listing Plans
In its quest to offer diversified upside for shareholders, Coppernico has evaluated numerous exploration opportunities across South America. The company has narrowed its focus to 15 priority projects, aiming to identify additional assets that complement the discovery potential of Sombrero.
Beyond Peru, Coppernico is also concentrating on exploration opportunities in Ecuador. The region has seen considerable success with several companies, including Solaris Resources, SolGold, Cornerstone, Dundee Precious Metals, and Lundin Mining.
The junior exploration company is an unlisted reporting issuer actively seeking listings on Canadian and U.S. stock exchanges. It plans to pursue a stock exchange listing application once it fulfills the requirements, a move that’s part of Coppernico’s broader strategy to enhance its visibility and attract a broader investor base.
In May this year, the company successfully closed its $19.37 million private placement financing. The financing included participation from Teck Resources Limited, a prominent Canadian mining company, under a subscription agreement.
With its robust project pipeline, strategic evaluations, and plans for stock exchange listings, Coppernico is well-positioned to capitalize on its exploration successes and deliver substantial value to its shareholders.
What Comes Next for Copper?
Copper’s pivotal role in achieving net zero emissions is increasingly recognized, especially in renewable energy technologies and electric vehicles (EVs). However, projections indicate a potential supply-demand gap, necessitating substantial investments in production and recycling to meet growing demand and sustainability goals.
Key industries driving copper consumption include equipment manufacturing, construction, infrastructure, and emerging sectors like EVs and green technologies. With the rising adoption of EVs, solar panels, and other clean energy technologies, copper demand is expected to double by 2035.
In light of ambitious net zero targets for 2035, industry estimates suggest that annual copper demand may need to reach 50 million metric tons. Even conservative projections anticipate a one-third increase in demand over the next decade, propelled by significant investments in decarbonization initiatives from both public and private entities.
Meeting this escalating demand presents challenges, such as declining ore grades and environmental concerns around mining. Addressing these requires significant investments, potentially driving copper prices higher.
Analysts predict continued price growth due to supply-demand imbalances and increasing demand from the green energy sector.
Uncertainties surrounding China’s economic recovery and the US Federal Reserve’s monetary policy add complexity to future copper price trajectories. However, analysts remain optimistic about copper’s long-term prospects, driven by the energy transition and increasing demand from sectors like EVs and renewable power.
As nations compete for limited future copper supplies, securing domestic or friendly sourcing and refining capabilities becomes a strategic imperative. Strategic investments in copper production and recycling are crucial to meet growing demand and achieve net zero emissions amidst the expanding renewable energy infrastructure and EV adoption.