2024 could be the best time to load up on copper equities!
Our experts predict a very bullish year copper in 2024. Get their forecasts for this red hot metal as well as trends and stocks that you need to watch.
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Copper prices on the London Metal Exchange (LME) saw upward momentum in the first quarter of the year on the back of tightening supply and increasing demand from the energy transition.
After bottoming out at US$7,800 per metric ton (MT) in the fall of 2023, copper prices bounced back to start 2024 in higher territory, but elevated supply kept the red metal trading in the US$8,000 to US$8,500 range until mid-March.
Since then, copper has seen strong gains, reaching a quarterly high of US$8,973 on March 18. With increasing market volatility since the start of April, prices continued trending up to reach US$9,365 on April 10.
At the time, independent metals and mining consultant Karen Norton told the Investing News Network (INN), “With the market now looking more finely balanced, prices are likely to prove more susceptible to broader swings in either direction in the advent of significant news that affects the market.”
Copper price, Q1 2024.
In an email to INN at the beginning of April, Exploration Insights Editor Joe Mazumdar said, “The concentrate market balance is accurately reflected in the fall of TC/RCs. To ensure the profitability of the domestic smelters, the Chinese manufacturers have decided to cut production, bring maintenance work forward and/or delay further expansions.”
According to Mazumdar, the cuts to smelter capacity will begin to put pressure on the availability of refined stockpiles and push copper closer to a deficit position sooner than expected.
This supply bottleneck caused significant gains for the metal’s price through the last half of March and into April.
While this is largely good news for copper producers as high prices and low TC/RCs improve margins, Mazumdar thinks the price will need to stay elevated to have any real impact on investment into the industry.
The event that has had the biggest impact on copper supply recently is the closure of the Cobre Panama mine in Q4 2023. The mine’s annual output of 331,000 MT of copper accounted for 1 percent of global production — a significant number for an industry set to face increasing demand and a lack of incoming new supply.
Panama will be holding elections in May as Cortizo completes his second and final term, meaning the country will soon have a new administration. Mazumdar told INN that First Quantum intends to negotiate with the incoming administration in the hopes of striking a deal that is favorable to both parties.
“The current president will not stand in the next election in May 2024; therefore First Quantum plans on working with whomever is elected to try and restart the mine and avoid the arbitration. Cobre Panama represents about 5 percent of the GDP of Panama and employs 30,000 to 40,000 people directly and indirectly,” he said.
Among its goals is advancing critical minerals projects that meet ESG standards.
Ultimately, the goal of the MSP, the IRA and other regional programs is to help accelerate critical minerals projects by working with government and industry to help secure funding, provide diplomatic support and diversify supply chains.
Copper’s supply stresses look likely to continue in 2024 and beyond due to a lack of new supply in the pipeline, and slow permitting times for assets that are underway. At the same time, the red metal is expected to see higher demand from renewable electricity generation, electric vehicle production and increasing infrastructure needs.
However, now that more governments are labeling copper a critical mineral, there’s hope that bottlenecks in supply may lessen and new projects may be able to make progress. Overall, a landscape is emerging that could benefit investors who are looking for long-term plays in an industry facing immense supply-side constraints in the coming years.
Still, given the challenges in discovery, permitting and approval, investors should do their due diligence, researching all aspects of a company, including its biggest projects and the risks associated with them.
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
The second quarter of 2024 saw copper prices surge on the London Metal Exchange (LME) on the back of supply bottlenecks and elevated demand, particularly from the energy sector.
Copper prices began the period at US$8,728 per metric ton (MT) on April 3, but supply and demand dynamics provided critical support for the base metal — by the end of the month, copper had climbed to US$9,973.50.
Copper prices pulled back to end Q2 at US$9,418. Although the metal had retreated to US$9,051.50 as of July 22, it remains at elevated levels, with conditions likely to continue providing support for the near future.
Copper price chart, January 1 to June 30, 2024.
Both a loss of existing supply and a lack of incoming supply are supporting copper prices this year.
In an interview with the Investing News Network, Joe Mazumdar, editor of Exploration Insights, spoke briefly about the situation in Panama. “From what I understand, most of the people that ran for presidential election were all against the project,” he commented. “I don’t think there’s anybody there that is for the project winning. So then it’s all about arbitration, which will drag on for a while as it’s a big number, US$20 billion.”
He believes the situation will impact investment decisions elsewhere as well. “It will also make people and companies rethink spending significant capital in jurisdictions if they don’t have government support,” he said.
“We’ve also had a secular negative trend in production with the largest copper producer, which is Codelco. They’ve got problems with large amounts of debt, so their ability to fund their expansions is problematic,” Mazumdar said.
Mazumdar said that the majority of mines produce copper concentrate, for which 50 percent of the smelting capacity is in China. The end price is dictated by treatment and refining charges, which he said have gone low and nearly turned negative due to the lack of concentrate available after Cobre Panama was suspended.
The Exploration Insights expert went on to say that the other price to look at when analyzing copper markets is copper cathode premiums, which reflect cathode supply and demand.
“So there’s the cathode price. That’s stated in the LME, and Shanghai and the COMEX in the states. But if the market is tight in any of those regions locally, you will see a cathode premium … over the price of the copper,” he said. “People are willing to pay more to incentivize people that have copper inventory to release it into the market.”
According to Mazumdar, if both treatment and refining charges are low and the cathode premiums are high, that is indicative of a tight near-term market.
Higher prices also reflect a recovery from the manufacturing sector, as well as higher demand from industries tied to the global energy transition. Electricity generation in general is a large driver of copper demand, and renewable energy options such as solar and wind consume even larger amounts of copper.
The report also indicates that solar generation is currently the fastest-growing source of electricity generation. Solar generation was up significantly in the US year-on-year in the first half of 2024, and the Energy Information Administration expects it to grow 42 percent year-on-year during the second quarter.
China held its position as the strongest EV market, accounting for 4.1 million of those sales.
EVs can use as much as 60 kilograms of copper versus the 25 kilograms in traditional internal combustion engine cars, and 29 kilograms in hybrids. Electrical demands on the grid will require even greater amounts of copper.
The forum also notes that the average copper production output of the top 10 mines is 472,000 MT per year, and in order to maintain current increases to demand, 1.1 new mines will need to be added every year until 2050. When EVs and their demands on the electric grid are factored in, that rises to 1.7 new mines per year, or 54 new mines by 2050.
In the short term, there is still copper supply in the market, but the situation could quickly change.
However, softer copper demand from the Chinese housing sector has largely been offset by increased demand from EVs, as well as the country’s attempt to move away from fossil fuel to meet its energy needs.
As for incoming supply, Mazumdar noted that funding for copper projects is tentative due to rising costs and the fact that copper prices haven’t been conducive to building new projects. Additionally, projects that have seen development won’t come online in time to fill gaps in production as they’ve been held back.
Additionally, while M&A is taking place in the industry, it has largely been focused on producing assets.
“They don’t mind paying a premium for a producing mine because it’s permitted for the tailings and other footprints, and the capital has been spent, so there is little capital escalation risk,” Mazumdar said.
“Why spend a premium on a project that might take 10+ years to permit when you can spend as much or less on a project that you can get funded in an area that might take half the time to put into production,” he said.
With limited supply and little to be done to ease permitting times, copper demand is likely to keep the market bullish. This demand may be good news for investors looking to find opportunities in the resource sector, as copper is critical in the medium and long term to energy transition goals around the world.
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
A copper crunch is coming as demand builds and the hunt for viable deposits comes up short.
“We see a crisis coming in physical markets, and we see a requirement for much, much higher copper prices,” he said in a recorded interview played at the Rule Symposium, held from July 7 to 11 in Boca Raton, Florida.
Speaking first about copper demand, Friedland described it as “essentially infinite,” noting that growing the global economy at 3 percent a year for the next two decades would require more copper than the world has ever mined.
In his view, the red metal is the most important element on the periodic table for humanity. It has well-known industrial uses, but Friedland also highlighted its ability to conduct electricity and heat — those characteristics make it essential in new applications like electric cars, artificial intelligence (AI) data centers and modern warfare.
“Military demand for this metal is going to go to infinity in the next few years,” he said, telling the conference audience that demand from this sector will put an “infinite value” on copper.
On a more basic level, Friedland pointed to the billions of people around the world that want to improve their quality of life with an electric fan or an air conditioner. Air conditioners alone require “astronomic amounts of copper,” he explained, but the red metal is also needed to generate and transmit the electricity they need to operate.
“There is no rational price for something you absolutely must have,” he said.
On the topic of supply, Friedland said the US is “ludicrously behind” other countries, especially China, when it comes to copper and other raw materials. “We’re facing a generational crisis, and we really need to educate our children on the necessity of raw materials,” he told listeners at the Rule Symposium.
To illustrate his point, Friedland said performing a Google search uses the same amount of power that it takes to run a 100 watt light bulb for 10 seconds; an AI query uses enough power to run that same bulb for 2 to 3 minutes.
At the same time, Friedland thinks American ingenuity can provide supply solutions.
“I think we may have hope for the future,” he said.
Investors looking to get exposure to copper can buy copper stocks, but Friedland said those who have space to store it could also consider physical copper — the key is to figure out a form of exposure.
“I don’t think any intelligent portfolio can be constructed without copper exposure,” he said. He sees copper as a long-term play that investors can buy and hold for their grandchildren.
Looking at timing, Friedland said that for the last few years a small community following mining stocks has traded copper equities between themselves. Now, however, he believes generalists are on the cusp of becoming interested, and he advised listeners to make sure they are early and not a day late.
“There is no rational price for something you absolutely must have,” Friedland said.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Copper prices saw some gains during Q1, but supply concerns and rising demand caused the metal to surge to a record COMEX high on May 20, reaching US$5.20 per pound, or US$11,464 per metric ton (MT).
Year-to-date gain: 75 percent; market cap: C$941.54 million; share price: C$3.22
Shares of Taseko reached a year-to-date high of C$4.05 on May 27.
Year-to-date gain: 72.22 percent; market cap: C$52.2 million; share price: C$0.62
Alta Copper is a copper exploration company that is working to advance its flagship Cañariaco project in Northern Peru. The project includes the Cañariaco Norte and Cañariaco Sur deposits and the Quebrada Verde prospect.
On the production side, Alta reported that the projected mine life is 27 years, with average annual metal production in the first 10 years of 347 million pounds of copper, 70,000 ounces of gold and 1.5 million ounces of silver.
Shares of Alta reached their year-to-date high of C$0.79 on May 20.
Year-to-date gain: 67.61 percent; market cap: C$4.94 billion; share price: C$12.18
Hudbay Minerals is a copper production and development company with producing mines in Peru and Canada, as well as projects in Peru and the US states of Arizona and Nevada.
In addition to its mining assets, the company is advancing its Copper World project in Arizona. In its report for the first quarter, the company indicates that it is continuing to work on getting final state permits for the site and expects to receive them sometime in 2024. When complete, Copper World is expected to have a 20 year life.
The company is also working on its Mason project in Nevada. It is being developed as a long-term future asset and Hudbay expects it to have a 27 year life. A resource estimate shows measured and indicated average grading of 0.29 percent copper from 2.22 billion MT, with inferred grading of 0.24 percent copper from 237 million MT.
Shares of Hudbay reached a year-to-date high of C$14.15 on May 20.
Year-to-date gain: 64.23 percent; market cap: C$15.32 billion; share price: C$17.77
First Quantum Minerals is a copper mining and development company with a global portfolio of assets.
In addition to the updates on its mine in Panama, First Quantum reported the production of 100,605 MT of copper through Q1, down 59,595 MT compared to Q4 2023. The production drop was largely attributed to the closure of Cobre Panama.
The company is also operating several mines in Zambia, including its Kansanshi copper-gold mine, Sentinel copper mine and Enterprise nickel mine. First Quantum noted that production may be impacted in 2024 due to severe drought conditions in Zambia caused by El Nino, which has reduced water levels in the Kafue and Zambezi rivers. The government declared a national emergency in March, and power generation in the country has been impacted.
Year-to-date gain: 53.3 percent; market cap: C$7.81 billion; share price: C$9.74
Capstone Copper is a mining company with a portfolio of assets in the US, Mexico and Chile.
Capstone is the sole owner of the Cozamin copper and silver mine in Zecatacas, Mexico, which boasts a 1,000 MT per day throughput and is projected to generate 22,000 to 24,000 MT of copper in 2024. It also holds the Mantos Blancos copper mine in Antofagasta, Chile, which underwent an expansion in 2021 to extend its mine life significantly.
Shares of Capstone reached a year-to-date high of C$11.20 on May 16.
Article by Dean Belder; FAQs by Lauren Kelly.
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
Securities Disclosure: I, Lauren Kelly, hold no direct investment interest in any company mentioned in this article.
Year-to-date gain: 283.33 percent; market cap: C$353.06 million; share price: C$0.345
Sandfire Resources America is a copper development company focused on its Black Butte copper project located east of Helena, Montana, in the US. In 2021, a state district court revoked the company’s mine operating permit for Black Butte, halting construction activities for the underground operation.
Sandfire describes the project as one of the highest-grade undeveloped copper deposits in the world; a 2020 resource estimate for the project’s Johnny Lee deposit outlines measured and indicated resources of 10.9 million MT grading 2.9 percent copper for a total of 311,000 MT of contained copper.
Shares of Sandfire Resources America reached a year-to-date high of C$0.395 on May 13.
Year-to-date gain: 268.89 percent; market cap: C$38.47 million; share price: C$0.83
Formerly Deep-South Resources, the company changed its name to Koryx Copper in November 2023. The company is focused on the advancement of copper exploration projects in Namibia and Zambia.
President and CEO Pierre Léveillé said the results indicate the deposit’s average grade may exceed the number reported in its existing resource estimate. Assay results for the program’s remaining eight drill holes have yet to be released.
Shares of Koryx reached a year-to-date high of C$1.13 on June 10.
Year-to-date gain: 230.43 percent; market cap: C$10.98 million; share price: C$0.38
T2 Metals is a copper exploration company that has spent 2024 focusing on advancing its Sherridon copper, gold and zinc project near Flin Flon, Manitoba, Canada. T2 holds an option agreement with Halo Resources to earn a 90 percent interest in the property, which consists of 28 mining claims and one mineral lease over 4,968 hectares. The site was home to the Sherridon/Sherritt Gordon mine and hosts multiple volcanogenic massive sulfide-style ore deposits.
T2’s share price reached a year-to-date high of C$0.41 on July 7.
Year-to-date gain: 200 percent; market cap: C$18.45 million; share price: C$0.075
Shares of Freeport reached a year-to-date high of C$0.09 on July 3.
Year-to-date gain: 179.25 percent; market cap: C$75.59 million; share price: C$0.74
American Eagle Gold is a copper and precious metals explorer advancing its NAK property in Central BC, Canada.
Shares of American Eagle reached a year-to-date peak of C$0.81 on May 9.
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
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