Copper has become a cornerstone of the global energy transition in 2024, as demand for the metal surges alongside soaring energy needs. Investors focusing on commodities should take note—copper miners are benefiting from this trend, particularly as the copper spot price hovers near record highs. Jacob White, ETF product manager at Sprott Asset Management, believes copper’s expanding role in the energy transition has triggered a new supercycle for the metal. This surge in demand, primarily driven by the growing influence of AI applications and the intensifying power requirements of data centers, places copper at the forefront of critical materials for electrification.
The potential for copper to experience sustained supply shortages only adds to the bullish case for the sector. As the global economy continues to shift towards electrification—through grids, renewable energy systems, and emerging markets—copper miners are stepping up to meet this demand. Below, we explore three copper mining stocks that are well-positioned to capitalize on the boom, each of which is included in the Sprott Copper Miners ESG-Screened UCITS ETF.
Freeport-McMoRan (NYSE: FCX) – The Dominant Player
Freeport-McMoRan stands out as the largest pure-play copper producer globally, with a massive output of 1.3 million tonnes of copper in 2023. With diversified operations spanning North America, South America, and Indonesia, FCX offers geographical flexibility that shields it from regional disruptions. The company’s robust margins and cash flows are bolstered by its impressive pipeline of projects and a staggering 111 billion pounds of copper reserves.
For traders seeking exposure to copper, FCX remains a solid option, primarily due to its liquidity and scale. It is the only publicly traded company producing more than one million tonnes of copper annually while maintaining over 50% exposure to the metal. FCX’s dominance in the copper space, coupled with its strategic diversification, offers a reliable growth story as copper demand accelerates.
Lundin Mining Corporation (Toronto: LUN) – Expanding Through Strategic Acquisitions
Lundin Mining Corporation is another notable player in the copper sector, with operations spread across Argentina, Brazil, Chile, Portugal, Sweden, and the US. The company posted record copper production in 2023, and its outlook for 2024 suggests further growth on the horizon. For investors, the highlight is Lundin’s strategic acquisition moves, particularly its partnership with BHP Group to acquire Filo Mining for $3 billion. This acquisition provides Lundin with a 50% stake in the Filo del Sol copper project, which boasts an estimated 4.5 billion pounds of copper resources.
What’s appealing about Lundin from an investor’s perspective is the company’s ongoing efforts to focus more on pure-play copper operations. The Filo acquisition strengthens Lundin’s position within the sector and indicates management’s intention to capitalize on the growing demand for copper. As the deal is set to close in early 2025, investors could see a positive revaluation of the stock as Lundin’s copper production capabilities expand further.
ERO Copper (Toronto: ERO) – A Junior Miner with Growth Potential
For those willing to take on more risk in exchange for higher potential returns, ERO Copper offers a compelling opportunity. Although still considered a junior producer, ERO has laid the groundwork to become a significant player in the copper market. With all its operations based in Brazil, ERO benefits from Brazil’s clean energy initiatives—91% of the country’s electricity came from renewable sources in 2023.
ERO’s key asset, the Caraíba Operations, features several high-grade copper mines, while the Tucumã Project is expected to double the company’s copper output by 2025. This kind of production growth from a junior miner could result in outsized stock gains, especially as the company positions itself as a low-carbon producer. Additionally, ERO’s involvement in the Xavantina Operations, a gold and silver mining project, offers some diversification for investors who value exposure to precious metals alongside copper.
Key Takeaways for Traders and Investors
Copper’s strategic role in the global energy transition underscores the long-term growth potential for the companies mining the metal. From giants like Freeport-McMoRan, which provide liquidity and scale, to junior miners like ERO Copper that offer high-growth potential, there are multiple ways for investors to gain exposure to the copper supercycle. Lundin Mining’s recent strategic acquisitions also highlight the importance of focusing on pure-play copper investments as demand for the metal intensifies.
While the future remains bright for copper miners, the possibility of supply shortages could further drive prices higher, making it an attractive space for traders and long-term investors alike. However, risks remain, including the potential for geopolitical disruptions and slower-than-expected growth in copper demand. Investors should keep a close eye on copper production forecasts and global infrastructure developments, as these factors will likely play a crucial role in determining the trajectory of copper prices in the coming years.
Conclusion
Copper’s importance to the electrification of the global economy cannot be overstated, and the metal’s supply-demand dynamics suggest further upside potential. Freeport-McMoRan, Lundin Mining, and ERO Copper are three companies positioned to benefit from these trends, offering varying levels of exposure and risk profiles. Whether you seek the stability of a large-cap producer or the growth potential of a junior miner, the copper sector offers numerous opportunities for traders and investors as the energy transition continues to unfold.
