What happened

Shares in copper miner Freeport-McMoRan (FCX -2.66%) rose a whopping 34.9% in November, according to data provided by S&P Global Market Intelligence. The move continues a remarkable 2020 for the stock, currently up 91% on a year-to-date basis.

The demand for the metal is usually seen as being highly aligned with the global economy. As such, it might seem surprising that Freeport-McMoRan's stock has done so well this year, and in particular in November. In essence, the reason for the move comes down to a combination of a recovery in demand from China and a growing recognition that copper is a play on the so-called "energy transition."

Copper wire.

Image source: Getty Images.

The former has led to surging copper prices in the second half of 2020. As such, Freeport-McMoRan revenue grew 22% in the third quarter. The latter simply refers to the shift toward a low-carbon economy through the use of electric vehicles and renewable energy to generate electricity.

So what

Frankly, it's very hard to tell whether the recent rise in copper is sustainable or not. After all, commodity prices often have sharp spikes at the beginning of an economic recovery as demand exceeds supply. However, history suggests that production catches up in time, and prices moderate. In addition, it's not easy to know where the global economy will be headed after the recovery in the third quarter.

On a more certain note, the "energy transition" is real and as Freeport-McMoRan points out, electric vehicles tend to use four times as much copper as internal combustion engines, and renewable energy requires four to five times as much copper as fossil fuels. As such, long-term demand for copper seems assured.

Now what 

Freeport-McMoRan investors will be hoping that copper prices continue their ascent, but be mindful that there could be some near-term volatility once the initial growth spurt from the economy settles down. Nonetheless, in theory at least, miners should be valued on their reserves multiplied by a long-term assumption for prices. As such, for long-term investors the volatility won't matter too much.