Copper’s Surge Amid Global Push for Green Energy – 3/17

With the world fighting to go green, investors should pay close attention to copper.

After all, copper is an essential part of global climate goals. 

Electric vehicles, for example, require five times more copper than a combustion engine.

In fact, according to S&P Global, “Deeper electrification requires wires, and wires are primarily made from copper. Technologies critical to the energy transition such as electric vehicles (EVs), charging infrastructure, solar photovoltaics (PV), wind, and batteries all require much more copper than conventional fossil-based counterparts.”

Unfortunately, we’re starting to run into a supply-demand issue with the metal. 

BMO Capital Markets, for example, which forecast a large surplus now sees a deficit for the year. Goldman Sachs sees a shortfall of about a half million tons. Even Jefferies sees a major deficit. Plus, according to Forbes.com, the “CEO of Glencore, Gary Nagle, has warned about an impending ‘massive copper deficit.’”

That being said, investors may want to look at copper stocks, such as:

Freeport-McMoRan (FCX)

With copper getting red-hot, Freeport-McMoRan (FCX) could push aggressively higher.

For one, according to the company, “There were the supply shortfalls throughout the industry for some significant mines, for a range of factors that are kind of common to our business,” said Kathleen Quirk, the president of Freeport-McMoRan, about the strong prices for copper in an earnings-related conference call earlier this week. “As a result, inventories of copper around the world are at historically low levels, and the inventory levels are really inconsistent with the current copper price.”

Two, should the economy continue to improve, we could see even more demand for copper, which could send prices rocketing higher. Three, FCX is in a position to ramp up supply at a time when the world is struggling to find more. 

Southern Copper (SCCO)

There’s also Southern Copper (SCCO) – another top copper stock that could see higher highs. And, as we wait for SCCO to push higher, investors can collect its current 80-cent dividend. The latest one is payable on February 29 to shareholders of record as of February 13.

Global X Copper Miners ETF (COPX)
Or, if you want to diversify at a lower cost, there’s an ETF like the Global X Copper Miners ETF (COPX). With an expense ratio of 0.65%, the fund exposes you to 38 copper stocks at less $36 a share. Some of its top holdings include Southern Copper, BHP Group, Freeport-McMoRan, Teck Resources, Taseko Mines, and Capstone Copper to name a few.