This key electric conductor is seeing big demand growth.
By industry estimates, copper demand is on track to double over the next 20 to 30 years. That’s driven by the metal’s use in traditional industries like plumbing and construction, but all thanks to a push for a low-carbon economy. Copper is one of the most affordable conductors out there, which makes it a crucial metal for the electrification of the modern economy. Throw in the recent reopening efforts in China, one of the largest markets for copper on the planet, and it’s hard to see the outlook for this industry as anything but bright. If you’re looking to play these trends, here are a handful of dedicated copper investments that may be worth a look in 2023.
BHP Group Ltd. (ticker: BHP)
Clocking in at a $240 billion market capitalization, Australia’s BHP is one of the largest materials and mining companies on the planet. It has diversified operations that span the globe and mines that extract everything from copper to iron ore to gold to coal. Specifically for its copper business, BHP tallied more than 1.5 billion tonnes of the metal in fiscal year 2022 alone. For investors looking to play copper but not go all-in on a smaller miner with volatile operations, world-class BHP is a good investment to consider. It’s also worth noting that while payouts can be volatile, the trailing yield of 9.5% from this mining giant also adds to its appeal.
Rio Tinto PLC (RIO)
Though it’s half the size of BHP, diversified miner Rio Tinto is also worth a look. It’s not exactly small potatoes, with a $120 billion market value at present. Like BHP, it mines a bunch of materials including aluminum, gold, diamonds and lithium in addition to copper. In late 2022, Rio Tinto approved a new $55 million investment in Utah to begin mining copper in the region. The first ore is expected in 2023, with full production to be achieved in the second half of the year. If you’re looking to play a big miner that is increasingly getting into copper, then Rio Tinto’s recent investments could make it a good candidate. Beyond the immediate production coming this year, RIO stock should benefit from industry tail winds for decades to come.
Freeport-McMoRan Inc. (FCX)
At $63 billion in market value, FCX is the largest dedicated copper miner on this list. While it does extract other materials from its properties, including gold and even oil, its primary business is this base metal. In fact, its corporate slogan is “Foremost in Copper.” In its last annual report for fiscal year 2021, FCX recorded 3.8 billion pounds of copper sold that year. Based on this strong history as well as future growth potential for copper consumption worldwide, there’s little doubt that Freeport-McMoRan will have plenty of customers in the years ahead.
Southern Copper Corp. (SCCO)
As the name implies, SCCO is a copper company that operates mainly in South and Central America. Through both its outright ownership as well as mineral interests, the company has some 3,300 square miles of explorable land in Peru, Argentina, Chile, Ecuador and Mexico. For comparison, that’s on par with the size of Miami-Dade County or San Diego County in size. With regional expertise as well as specialization in copper, SCCO is a great option for investors who want to play emerging-market demand for this metal in the years ahead.
Teck Resources Ltd. (TECK)
Teck is a kind of “goldilocks” copper play that is neither too big nor too small. It is a diversified Canadian mining company valued at about $20 billion, and about 25% of all its revenue comes from copper at present. It’s also investing heavily in future production, including at home via mines in British Columbia as well as newer mines in Chile and Peru. That includes its Quebrada Blanca Phase 2 Project, currently under construction to help meet future demand. If and when copper demand or copper prices rise, it may not be immediately apparent in the balance sheet of larger and more diversified miners. But Teck is a midsize company that may see a bigger lift if the market changes in a significant way to favor its operations.
Hudbay Minerals Inc. (HBM)
The smallest individual stock on this list, diversified mining company Hudbay mainly mines copper, but like other picks here it also extracts gold, silver and other metals as part of its operations. In its 2022 annual report, HBM noted that its Constancia mine in Peru is expected to average 105,000 tonnes of copper production over the next seven years, a 35% increase from 2021 levels. The company also continues to expand its North American operations, including profitable Rosemont and “Copper World” sites in Arizona, where Hudbay purchased the underlying minerals but left the privately owned lands with the original property owners. This pair has proven and provable reserves of almost 540 million tonnes, which could really have an impact on this $2 billion mining stock as it brings that metal to market in the years ahead.
Global X Copper Miners ETF (COPX)
Can’t decide from among these individual names? Well, thankfully there is an established exchange-traded product to offer exposure to these stocks and others in the copper sector. COPX is a roughly $2 billion ETF that is composed of about 40 companies, including international names like Eastern Europe’s KGHM Polksa Miedz SA (KGHPF) or Asia’s Zijin Mining Group Co. Ltd. (ZIJMF), that aren’t easily accessible by Western investors. If you truly want to play global copper trends without worrying about which specific company is a winner and which one is a loser, then COPX is a good one-stop shop.
7 best copper stocks for 2023:
— BHP Group Ltd. (BHP)
— Rio Tinto PLC (RIO)
— Freeport-McMoRan Inc. (FCX)
— Southern Copper Corp. (SCCO)
— Teck Resources Ltd. (TECK)
— Hudbay Minerals Inc. (HBM)
— Global X Copper Miners ETF (COPX)
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7 Best Copper Stocks for 2023 originally appeared on usnews.com
Update 01/18/23: This story was published at an earlier date and has been updated with new information.
