Copper prices may be struggling as demand from China remains weak, but the long-term need for the metal is seeing plenty of M&A activity and a ramp up in future production. Here is a collection of stocks poised to benefit from a recovery in copper demand.
- BHP has partnered with Microsoft to use AI to boost production at its Escondida mine in Chile.
- Glencore has recently acquired a 56.25% stake in Pan American’s Mara project in Argentina.
- Barrick Gold plans to double its copper production by 2031 to £1bn.
The AI Stock
Faced with deteriorating ore grades, Melbourne-based BHP [BHP.AX] has been improving production at Escondida, the world’s biggest ore mine, by utilising artificial intelligence (AI) recommendations, machine learning and data-processing platforms. BHP signed a deal to make use of Microsoft’s [MSFT] Azure Machine Learning service back in May. In its 2023 annual report, the miner said that AI, along with robotics, could help to tap unknown or inaccessible deposits and even result in the development of autonomous mining systems.
The Peru Stock
Mining major Rio Tinto [RIO.L] completed the $105m sale of its 55% of La Granja copper project in Peru to Canadian miner First Quantum Minerals [FM.TO] in August, which it had previously announced in March. First Quantum is to commit $546m to fund the project through a feasibility study. According to Rio Tinto, the mine has the potential to be a long-life operation — indications are that the site could provide 4.3 billion tonnes of 0.51% copper.
The Chile Stock
Canadian miner Teck Resources [TECK-B.TO] lowered its annual copper production guidance for its Quebrada Blanca 2 project in Chile back in July due to delays to construction and commissioning. Production is now forecast to be in the range of 80,000–100,000 tonnes, down from a range of 150,000–180,000 tonnes. CEO Jonathan Price said in a second-quarter 2023 earnings statement that the company continues to “explore a range of options to realise the full potential of our world-class base metals business and to progress our overall copper growth pipeline”.
The Argentina Stock
Swiss miner and commodity trading firm Glencore [GLEN.L] made an $8.2bn bid to buy Teck in the early part of the year. After being rebuffed, it went back in with an offer to take on Teck’s steelmaking coal business. One confirmed deal Glencore has announced, however, is a 56.25% stake in Pan American’s [PAAS] Mara project for $475m. Located in Argentina, the mine has copper reserves of 5.4 million tonnes, as well as 7.4 million ounces of gold, and a mine life of 27 years.
The Pakistan Stock
Barrick Gold [GOLD] has set its sights on doubling its copper output by the end of the decade, to approximately a billion pounds, or 450,000 tonnes, by 2031, CEO Mark Bristow announced earlier in September “The value of [our] projects, and in particular of our substantial and growing copper business, is currently underestimated by the market,” said Bristow. For example, its Reko Diq project in Pakistan is on course to be among the world’s top 10 copper mines. The project is attracting “interest” from multinational mining firms, Bristow told Bloomberg last week.
Another Way to Invest in Copper
The iShares Global Clean Energy ETF
ETFs, or exchange-traded funds, offer an economical and diversified way to invest in a variety of stocks within a particular theme.
The Global X Copper Miners ETF [COPX], which holds BHP, Glencore and Teck, is almost a pure-play on the materials sector, allocating it 99.3%, with the other 0.7% allocated to industrials as of 31 August. The fund is up 35.8% in the past year through 21 September and up 0.6% in the past six months.
The iShares Copper and Metals Mining ETF [ICOP], which holds BHP, Glencore, Rio Tinto and Teck, is a pure-play on the materials sector. The fund is down 1.5% since it began trading on 26 June.