BHP

3 Copper Miners to Buy as Supply Crisis Sends Prices Soaring

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As global demand for copper prices skyrockets amid an unfolding supply crisis, savvy investors are looking for copper mining stocks to buy. Copper prices have experienced a price surge as supply struggles to keep pace with the growing demand. Bank of America and Citi Bank’s analysts are forecasting significant price increases for copper going forward. Bank of America specifically expecting prices to reach $10,250 per ton by the fourth quarter of this year.

The essential role of copper in electric vehicle batteries and renewable energy solutions has increased the demand for the metal. The lack of new mines and expansions, particularly in South America, has raised alarms about a potential supply shortfall in the coming years. McKinsey & Co. forecasts a 6.5 million ton shortfall in copper supply by 2031 compared to demand projections.

Copper’s significance in the green transition and the lack of supply makes the metal an increasingly attractive investment. Thus, here are three copper stocks that are well-positioned to benefit from the rising prices of the metal.

BHP Group (BHP)

Stacks of copper tubing

Source: Shutterstock

BHP Group (NYSE:BHP) is one of the biggest mining company in the world. The company operates several copper mines, including Spence and Minera Escondida in Chile and Olympic Dam in South Australia. The company is poised to surpass Codelco as the world’s largest copper producer this year. This is largely due to increased output from its Escondida mine in Chile.

In the fiscal year 2023, BHP produced 1,716.5 kilotons of copper. The company plans to extend the life of its Spence mine in Chile by 50 years. This was in response to the expected doubling of copper demand over the next 30 years. Furthermore, this was due to increasing needs for renewable energy and urbanization in Asia.

In the previous quarter, BHP Group reported record annual production in its copper operations, notably at Olympic Dam. Although the company’s stock has not performed well in 2024, analysts have an average price price target of $64.2 on the stock. This presents a 9.7% upside from the current level.

Southern Copper (SCCO)

Source: iStockphoto

Southern Copper (NYSE:SCCO) is known for its substantial copper reserves and significant production output. SCCO’s financial health is robust, characterized by by high profitability and efficient operations. The company’s focus on maintaining low production costs while maximizing output has allowed it to achieve superior margins compared to its peers. For instance, Southern Copper’s gross, operating, and net margins significantly surpass industry averages, underscoring its operational success.

Southern Copper has outlined ambitious plans to increase its production capacity, including extending the the life of existing mines and developing new mining projects. These initiatives are designed to ensure that Southern Copper can meet the increasing global demand for copper, particularly from emerging markets and sectors like electric vehicles and renewable energy installations.

SCCO has continued to outperform the market in 2024, up 36% in 2024. Analysts are bullish on the stock and have a price target of $115. This provides a 40% upside potential in the near-term.

Freeport-McMoRan (FCX)

Source: iStockphoto

Freeport-McMoRan (NYSE:FCX) is one of the world’s biggest natural resources companies. With a robust presence in the Americas and an expanding global footprint, Freeport-McMoRan is strategically positioned to benefit from the growing demand for copper.

The company has continued to post robust financial results. In Q4 2023, FCX FCX posted revenue $5.9 billion, surpassing market expectations. Copper made up approximately 75% of FCX’s revenue in fiscal year 2023, emphasizing the company’s reliance on this essential metal.

The CEO, Richard Adkerson, remarked that that the copper inventories remain low due to higher-than-expected demand and supply shortfalls. He further mentioned that the long-term outlook for copper remains strong due to growing global electrification and insufficient industry investment in new production. Freeport-McMoRan is well-positioned to benefit from this with sustainable large-scale production and innovative leaching techniques that promise substantial copper yield with low capital intensity.

On the date of publication, Mohammed Saqib did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mohammed Saqib is a research analyst with experience in equity research and financial modeling. He has extensively covered stocks listed in the tech sector using fundamental analysis as the cornerstone of his approach. Currently pursuing a master’s degree in finance, Saqib is dedicated to obtaining the CFA charter to augment his expertise in the field further.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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