Copper demand is on track to double from 2022 to 2035, driven by the transition to a lower-carbon economy. Copper is crucial for electrifying the transportation sector and producing renewable energy.
This outlook bodes well for the copper industry. It suggests that copper prices could be much higher in the coming years. Here's a closer look at some of the top copper stocks that could benefit from the transition.
Top copper stocks
Top copper stocks to buy in 2024
Copper is the third-most-consumed industrial metal in the world behind iron ore and aluminum, according to the U.S. Geological Survey. Because of its importance to the economy, many mining companies operate copper mines.
However, while many companies produce copper, only a few can expand their copper production because they have reserves and commercially viable expansion projects. These resources position them to capitalize on the industry's growth. Top copper stocks include:
| Top Copper Stock | Ticker | Market Cap | Description |
|---|---|---|---|
| BHP Group | (NYSE:BHP) | $155.9 billion | A leading global natural resources company |
| Freeport-McMoRan | (NYSE:FCX) | $77.9 billion | A leading copper miner |
| Teck Resources | (NYSE:TECK) (TSX:TECK.B) | $27.9 billion | A diversified natural resources company |
| Southern Copper | (NYSE:SCCO) | $97.9 billion | The largest holder of reported copper reserves in the world |
| Rio Tinto | (NYSE:RIO) | $119.5 billion | A diversified mining company |
Here's a closer look at these five leading copper company stocks.
1. BHP Group
1. BHP Group
BHP Group is an Australian-based leading global natural resource producer that mines copper, iron ore, nickel, metallurgical coal, and potash.
BHP operates several copper mines in South America and one in Australia. Its business produced 1.7 million tons of copper in 2023. It's investing heavily to expand its copper production at existing mines to meet growing demand.
BHP is also a co-owner of Resolution Copper with Rio Tinto (45%/55%). Located in Arizona, Resolution Copper is among the world's largest undeveloped copper projects. It could take eight to 10 years to build the mine at an estimated total cost of $64 billion. It could produce 40 billion pounds of copper over the course of 40 years, about a quarter of the projected U.S. copper demand.
In mid-2024, BHP Group made a bold move to boost its copper business by offering to acquire rival miner Anglo American (NGLOY -1.88%) for $42.7 billion. The global mining giant made a couple of all-stock offers, which Anglo American rejected. The company was working to convince Anglo American investors that its deal was in their best interests since the combined company could produce even more copper at lower costs in the future.
The company's growing copper production should support higher dividend payments. BHP aims for a minimum dividend payout ratio of 50% of its cash flow. It often pays out additional dividends from its excess cash and repurchases shares.
2. Freeport-McMoRan
2. Freeport-McMoRan
Freeport-McMoRan is one of the world's largest publicly traded copper producers. It also produces gold and molybdenum, an element used in high-strength steel alloys.
The crown jewel of Freeport's portfolio is the Grasberg mine in Indonesia, one of the world's largest single copper and gold sources. Freeport also operates large-scale mines in Arizona and Peru. The company produced 4.2 billion pounds of copper in 2023.
Freeport's extensive organic development pipeline could add significant copper production in the coming years. Initiatives to improve leaching (a chemical process used to extract copper from ore) and a potential change in leaching technology could add 800 million pounds to its annual production capacity in the short and medium terms. Meanwhile, several potential expansion projects could add significant production capacity over the medium and long term.
The mining company's growing copper production should support increasing cash returns to shareholders. Freeport has set a framework to use as much as 50% of its excess cash flow for shareholder returns, including dividends and share repurchases.
Cash Flow
3. Teck Resources
3. Teck Resources
Teck Resources is a diversified mining company based in Canada. It produces copper, zinc, and steelmaking (metallurgical) coal. It had investments in oil sands mining projects but sold them in 2023.
In late 2023, the company announced the full sale of its steelmaking coal business. It agreed to sell a majority stake to leading diversified mining and commodity trading company Glencore (GLNCY -0.57%) for $9 billion. In addition, it sold a minority stake to Nippon Steel (NPSC.Y -0.11%). Teck plans to use the proceeds to strengthen its balance sheet, return cash to shareholders, and invest in expanding its copper business.
Teck Resources has invested heavily in expanding its Quebrada Blanca (QB) mine in northern Chile. It completed its QB2 project in late 2023, which will double its copper production. The company has several other potential copper projects in development, which could grow its production from 600,000 tons as QB2 ramps up to 1.7 million tons in the future.
4. Southern Copper
4. Southern Copper
Southern Copper is one of the largest integrated copper producers in the world. It operates copper mines in Mexico and Peru. The company is majority-owned by Grupo Mexico (GMBXF -1.24%), a conglomerate focused on mining, transportation, and infrastructure.
Southern Copper is one of the largest copper producers in the world at more than 240,000 tons in the first quarter of 2024. In addition, it holds the biggest copper reserves, providing it with ample opportunity to expand its output.
Southern Copper sees significant production growth ahead. The company's board has approved several projects that will add 176,000 tons to its output by 2027. Meanwhile, it has several other projects in the pipeline that could add 545,000 tons to its annual output by 2032.
Its strong copper growth pipeline puts Southern Copper in an excellent position to capitalize on rising demand.
5. Rio Tinto
5. Rio Tinto
Rio Tinto is a diversified global mining company based in the U.K. It produces aluminum, copper, diamonds, gold, industrial minerals, iron ore, and uranium. It also produces other basic materials, including borates, lithium, salt, and titanium dioxide.
The company's copper business consists of two large-scale mining operations:
- Rio Tinto operates the Kennecott mine in Utah. The world-class copper mine also produces silver and gold.
- The company has a 66% interest in Oyu Tolgoi in Mongolia, one of the biggest known copper and gold deposits in the world. Rio Tinto boosted its share in late 2022 by acquiring the rest of Turquoise Hill Resources that it didn't own for $3.3 billion. The acquisition should significantly increase its copper production. By 2030, Oyu Tolgoi should be the world's fourth-largest copper mine.
Rio Tinto has several copper-related growth projects in the pipeline, including Resolution Copper in the U.S. and Winu in Australia. Discovered in 2020, the Winu copper and gold resource has the potential to become a large-scale mining operation.
Rio Tinto's growing copper production should enable it to continue paying attractive dividends. The company aims to return 40% to 60% of its earnings to investors via dividends each year.
Related investing topics
Copper-driven growth
The world needs more copper to support its transition to lower-carbon renewable energy. Demand for the metal should rise considerably in the coming years. The increased demand should support additional copper expansion projects from the world's top mining companies, allowing them to increase production and capitalize on higher prices.
The combination of rising production and prices should enable copper miners to increase their cash flow, providing more money to pay dividends, repurchase shares, and boost total returns. The upside potential makes the copper industry attractive for investors to consider.
In addition to copper mining stocks, investors could also consider investing in an exchange-traded fund (ETF) focused on copper. There are several top copper ETFs worth considering. ETFs provide similar upside exposure to rising copper prices. They're also less risky than investing in a single copper mining company that could underperform due to a number of issues.
Exchange-Traded Fund (ETF)
FAQ
Investing in copper stocks: FAQ
What are the best copper stocks to buy?
The best copper stocks to buy are BHP Group, Freeport-McMoRan, Rio Tinto, Southern Copper, and Teck Resources. These copper producers have extensive reserves, enabling them to grow their copper production in the future.
Are copper shares a good investment?
Shares of copper mining companies can be a good investment. Copper demand could double by 2035, powered by the transition to clean energy. Copper will play a crucial role in that transition because it's vital for electric vehicles and the increased electrification of the economy.
The trend should allow copper producers to increase their production while also driving up copper prices. The two catalysts should help copper producers increase their profits, sending their stock prices higher.
What is the biggest copper stock?
Freeport-McMoRan is the biggest copper stock. It's the second-biggest copper producer in the world and the largest publicly traded company focused on copper.
Which is the best copper ETF?
The best copper ETF is the Global X Copper Miners ETF (NYSEMKT: COPX). The fund provides investors with targeted exposure to the copper mining sector. It held about 40 mining companies with sizeable copper mining operations, providing investors broad exposure to the sector. The fund had a reasonable ETF expense ratio of 0.65%.
