Due to Donald Trump’s tariff threats, copper from all over the world is flooding into the United States, leading to potential supply shortages in other countries. Therefore, copper prices scored another record on Wednesday to roughly $11,840/tonne.
Meanwhile, shares of copper miner Freeport-McMoRan’s (FCX) are still down 37% from their all-time high. However, since neither of the two reasons for Freeport’s share price decline stand up to scrutiny, it actually presents an excellent buying opportunity for investors.
The first was a recent fire at one of Freeport’s smelters in Indonesia. Indonesia’s ban on copper concentrate exports has already come into effect on January 1, 2025, so Freeports now need to obtain permission to export copper concentrate. But Indonesian Energy Minister Bahlil Lahadalia has said the government will issue a concentrate export license for six months while Freeport repairs the smelter.
Second, Freeport shares sold off on concerns that the recent rise in US copper prices was largely due to importers and speculators buying ahead of possible tariffs on copper imports. But the real situation is that the global copper price (represented by the London Metal Exchange price) will continue to rise significantly in 2025.
The logic behind copper’s rise is not complicated at all, as copper is an essential and irreplaceable component behind all these trends, from electric vehicles, renewable energy, the Internet of Things, the fourth Industrial Revolution, and more recently, the boom in artificial intelligence data centers.
It can be said that the trend of “electrification of everything” has ensured a long-term rise in copper prices.
And Freeports are in the sweet spot of neither importing much into the United States nor exporting what they produce there. The company’s international products are sold internationally, for example, those produced in Indonesia are sold exclusively to Asia. And Freeport already has plans to expand an existing mine in Arizona, where management believes future copper production could increase by 650 million pounds a year.
By 2030, the company’s U.S.-focused leaching program (recycling copper from existing stocks) will recover 800 million pounds of copper per year. That means something for a miner that plans to produce 4 billion pounds of copper by 2025.
The combination of these factors makes Freeport-McMoRan a super stock to buy right now. The surge in copper prices, the prospect of increased production and potential long-term demand for copper are all reasons to buy the stock while the price is struggling.
