How to profit from the next copper supercycle

Copper mining has been a standout sector in 2024, bolstered by the copper spot price nearing all-time highs. We believe copper’s growing use as a critical material for surging global energy demand has triggered the next copper supercycle. The proliferation of data centres needed to support artificial intelligence (AI) applications, and the recent increase in their substantive power requirements (and, therefore, their copper requirements) have created a demand shock for the red metal. The growing energy needs of electricity grids, emerging economies and the copper-intensive energy transition have also given miners a major fillip. 

Yet the supply of copper has fallen below expanding demand, which may result in escalating copper deficits in years to come. Copper miners are therefore poised to play a pivotal role in providing a critical material necessary for electrifying the global economy. Here are three copper mining stocks within the Sprott Copper Miners ESG-Screened UCITS ETF exemplifying the industry’s efforts to bolster future supply.

Top copper mining stocks to play the boom

Freeport-McMoRan (NYSE: FCX) is the largest pure-play copper producer in the world, with 1.3 million tonnes of copper output in 2023. FCX is renowned for its geographical diversification (it has mines in North America, South America and Indonesia); strong margins and cash flows; large and liquid stock; and its advancing project pipeline, which provides additional growth opportunities owing to 111 billion pounds of copper reserves. Of the copper producers above one million tonnes, FCX is the only publicly listed pure-play (above 50% exposure to copper). 

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Lundin Mining Corporation (Toronto: LUN) is a prominent Canadian copper producer, with projects in Argentina, Brazil, Chile, Portugal, Sweden and the US. The company hit a record high in copper production in 2023 and its production guidance for 2024 projects a further increase. Moreover, Lundin and BHP Group agreed to acquire Filo for $3billion, giving them each 50% ownership. 

The deal is expected to close in the first quarter of next year, and gives Lundin exposure to the advanced-stage copper exploration project Filo del Sol. It has 4.5 billion pounds of indicated and inferred copper resources, additional gold and silver resources and is located near an existing project owned by Lundin, along the border of Chile and Argentina. More broadly, this acquisition marks a continued strategic interest in pure-play copper miners and provides another tailwind to the industry.

A junior copper stock set to mature rapidly

ERO Copper (Toronto: ERO) is a junior copper producer and developer with operations in Brazil and headquarters in Canada. ERO’s assets are all in Brazil. They include the Caraíba Operations, which contain multiple high-grade copper-producing mines and the Tucumã Project, an imminently producing copper project that is expected to double the company’s total copper production by 2025. 

ERO also owns the Xavantina Operations, an operating gold and silver mine. It boasts a leading sustainability position as a lower carbon-intensity copper producer. Operations located in Brazil benefit in this regard as Brazil is a leader in clean energy, generating 91% of its electricity from it in 2023.

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